Provident Fund is a product which helps salaried people to accumulate funds while they are earning for the period the income flow stops. So generally it is not supposed to be withdrawn before its maturity and jeopardise one’s retirement. However there are circumstances when resorting to the money accumulated in the provident fund account becomes inevitable and thus is allowed by the law to be withdrawn partly or fully. Let us discuss the circumstances in which you are allowed to withdraw the money from your Provident Fund.
Earlier one was allowed to withdraw the full balance in provident fund account and close it if remained unemployed continuously for two month and close the account. In order to help one retain the account and meet expenses while remaining unemployed you can now make an application for withdrawal of 75% of balance in the PR account if you are without any employment for more than one month.
Likewise in a similar situation where though one is still in employment but has not received any salary/wages continuously for 2 months for any reason other than a strike, one is allowed to take advances against the balance in PF account. Likewise in case of lockout or closure of the for more than 15 days and the employee does not receive any wages/salary, one can take advance against balance in PF account. While in employment can take advance upto the amount of own contribution and interest accumulated on such contribution. This facility can be availed any time without any requirement of completion of specific period of employment.
Money from PF can be withdrawn for purchase of land for construction of house upto 24 months equivalent of your basic salary and Dearness Allowance (DA). However if you wish to withdraw the month for purchase or construction of a house the eligibility goes upto 36 moths equivalent of salary and D. A. However the withdrawal allowed cannot exceed the employee’s own contribution and interest accumulated on it. The total eligibility in both the cases cannot exceed cost of the land or cost of construction or purchase price of the house. The assets need to be purchased in the name of either the subscriber or spouse of the subscriber or jointly by both.
It is not for buying the land or house that you are allowed to withdraw money from PF but also for repayment of your existing home loan that you can resort to it. You can withdrawn upto 90% of your balance in PF account for repaying your home loan outstanding provided that at least 10 years contributions have been made in the account and there is a minimum balance of Rs. 20000/- in the PF account.
One can withdraw from PF for the purpose of medical treatment of any member in the family including the subscriber. The withdrawal for this purpose is restricted to an amount equal to the basic salary and DA for 6 months at the time of withdrawals restricted however to aggregate of his own contribution in the PF account. You can avail this withdrawal facility for surgery or treatment of any disease which requires hospitalisation for more than one month. The requirement of hospitalization for more than one month is a condition which is difficult to satisfy these days as there are hardly any treatment which require hospitalisation for 30 days or more.
Likewise you one can withdraw from your PF account for the purpose of marriage of any members in the family like subscriber himself, any siblings and children as well as for meeting the educational expenses for children. The amount which you can withdraw for both the purposes is restricted to 50% of your own contribution with interest accumulated thereon. You can avail this withdrawal facility for both these purposes if you have contributed to the PF for minimum of 7 years on the date of making the application for withdrawal. For the purpose of withdrawing the money for education purpose, certificate from the educational institution where the child is going to pursue the studies is required to be submitted. You can not avail this facility more than three time during currency of the PF account.
The Provident fund rules also allow you to withdraw upto 90% of the accumulated balances in your PF account any time after you have completed 54 years of your age. This facility however can only be exercised within one year before the age of retirement or superannuation stipulated in your organisation. Once you retire from your employment you can withdraw the full balance any time and as much as you want.
Balwant Jain is a tax and investment expert and can be reached on firstname.lastname@example.org