Can Employees Take a Loan from EPF? Understanding Eligibility and Repayment Options

Hi there,

Please guide me with information regarding a loan from EPF. Can an employee take a loan from PF during their employment? What is the eligibility criteria? How should it be repaid? What are the reasons for which they can avail a loan?

Kindly reply.

Smile

Dear Samihr (I hope this is your name),

Withdrawl from PF account is limited to 50% of your own contribution after completion of 5 years of service.

Other provisions for the same is as follows:

(A) Member is entitled to withdraw full amount:

On attaining the age of 55 years at the time of termination of service.

On retirement on account of permanent and total disablement due to bodily or mental infirmity.

On migration from India for permanent settlement abroad or for taking employment abroad

In case of mass or individual retrenchment

(B) A member can withdraw up to 90% of the amount of Provident Fund at credit after attaining the age of 54 years or within one year before actual retirement on superannuating whichever is later.

Partial Withdrawal/Advances

A member of Provident Fund is allowed non-refundable advance for the following contingencies:

For acquiring dwelling site or house

Advances in special cases such as lockout in factory/establishment for a period more than two months

Where a member has challenged the retrenchment/dismissal by the employer in a court of law

For treatment of illness

For marriages or post matriculation education of the children

Under abnormal conditions such as damage to movable or immovable property by calamity of exceptional nature

Financing of member's Life Insurance Policy

I hope this solves your query.

Regards,

Nilendra

The answer to your query is as follows:

1. A member of PF can take a loan from PF after continuous service of 7 years.
2. The loan is given from only the member's share of contribution. The loan taken cannot be repaid but if the member wants to repay the same, he has to repay it with interest.
3. A member can take a loan from PF due to the following reasons:
- For his/her marriage.
- For daughter's marriage.
- For the construction or renovation of a house.
- For higher studies.
- During a layoff or lockout of the factory.

Re: PF Account Transfer

Hi, recently I joined a hotel industry as an HR executive. I have a doubt regarding PF account transfer from an exempted employer, i.e., Taj Hotel (TATA Group). They are saying they can't provide Form 3A. What are the further steps I need to take? Please help me.

Maruthi

This material was earlier shared by our HR site member. Please go through it; I hope it is up to your desire.

Advances from PF Account

The members are eligible to withdraw monies as advances from their PF Account for purposes like marriage, education, medical treatment, etc., subject to the prescribed conditions as mentioned below. Note that the said advance is totally tax-free and interest-free.

01 Marriage

- Only for self, son, daughter, brother & sister

- The member should have completed at least 7 years of service (not necessarily with the same employer but should have transferred the PF monies from previous employers for a consecutive period of 7 years)

- A maximum of 3 times in the entire service

- The maximum amount is 50% of the employee's share at the time of tendering the application.

- The member should apply in Form 31 through the employer

- Marriage Invitation card should be submitted along with the form as proof for marriage through the employer.

02 Education

- Only for self, son & daughter

- The member should have completed at least 7 years of service (not necessarily with the same employer but should have transferred the PF monies from previous employers for a consecutive period of 7 years)

- A maximum of 3 times in the entire service

- The maximum amount is 50% of the employee's share at the time of tendering the application

- The member should apply in Form 31 through the employer

- Bonafide certificate duly indicating the fees payable from the educational institution.

03 For Medical Treatment

- Only for self, spouse, son, daughter, dependent father & mother

- Applicable for major surgical operation in a hospital and 1 month or more hospitalization for the operation or suffering from TB, leprosy, paralysis, cancer, mental derangement, or heart ailment.

- For this purpose, no minimum service is required.

- The members should obtain a certificate from ESI or from the employer that E.S.I. facilities are not available for the member.

- A doctor (or registered medical practitioner) of the hospital certifies that a surgical operation or hospitalization for 1 month or more is/was necessary.

- In case of TB or leprosy, etc., a specialist doctor should certify

- The maximum amount given is 6 times of wages or full employee share, whichever is less.

- A certified proof for the said disease has to be submitted along with the application in Form 31 through the employer.

04 For Purchase of Site and Construction thereon

- Should have completed 5 years of service

- Member's contribution with interest should not be less than 1,000

- Site should be free from encumbrances

- Site should be in the name of the member or spouse of the member or in the joint names of the member and the spouse

- The maximum amount given is the least of Basic+DA for 24 months or total contribution & Interest or the total cost of the site.

Purchase of Flat/House (from agency/promoter)

- Should have completed 5 years of service

- Member's contribution with interest should not be less than 1,000

- House/Flat should be free from encumbrances

- Flat/house should be in the name of the member or spouse of the member or in the joint names of the member & spouse.

- The Agreement with the Flat promoter should be registered under the Indian Registration Act.

- The maximum amount given is the least of Basic+DA for 36 months or total contribution & Interest or the total cost of the site.

Alteration / Modification of House

- Should have completed 5 years of service

- Only after 5 years of the completion of construction of the dwelling house

- The maximum amount given is 12 months Basic+DA or the member's share of contribution with interest, whichever is less.

Repayment of outstanding principal / Int. of a loan obtained from State Govt, Regd Co-operative Society, State Housing Board, Nationalized Bank, and Public Financial Institution.

- Should have completed 10 years of service

- Member's contribution with interest should be more than 1,000

- The amount will be paid directly to the agency and not to the member

- The maximum amount paid is 36 Months Basic + Member's accumulation with interest or Outstanding Principal plus interest which is sought to be repaid, whichever is less.

Regards,

Mohan

Re: Query - EPF Loan

Hi, I need an EPF loan for my sister's marriage. I have been in service for 5 years, with 2 years in one organization (EPF amount has been claimed) and 3 years with another organization where I am currently working.

Am I able to avail a loan for my sister's marriage? How long will it take to proceed with the loan process?

Please clarify.

Regards,

Kumaraguru R.

You are not eligible to take a PF loan because you have not worked continuously in the company. Those who have worked continuously for 5 years are eligible to take a PF loan.

Hi Mafun, I received an advance from my PF amount for purchasing the site. Do I have to pay any interest on this loan, or do I have to repay the advance money? Please help me.

Regards, Mafun

Advances from PF Account

The members are eligible to withdraw monies as advances from their PF Account for purposes like marriage, education, medical treatment, etc., subject to the prescribed conditions mentioned below. Note that the said advance is totally tax-free and interest-free.

01 Marriage

- Only for self, son, daughter, brother, and sister.
- The member should have completed at least 7 years of service (not necessarily with the same employer, but should have transferred the PF monies from previous employers for a consecutive period of 7 years).
- Maximum of 3 times in the entire service.
- Maximum amount is 50% of the employee’s share at the time of tendering the application.
- The member should apply in Form 31 through the employer.
- A marriage invitation card should be submitted along with the form as proof for marriage through the employer.

02 Education

- Only for self, son, and daughter.
- The member should have completed at least 7 years of service (not necessarily with the same employer, but should have transferred the PF monies from previous employers for a consecutive period of 7 years).
- Maximum of 3 times in the entire service.
- Maximum amount is 50% of the employee's share at the time of tendering the application.
- The member should apply in Form 31 through the employer.
- A bonafide certificate duly indicating the fees payable from the educational institution.

03 For Medical Treatment

- Only for self, spouse, son, daughter, dependent father, and mother.
- Applicable for major surgical operations in a hospital and 1 month or more hospitalization for the operation or suffering from TB, leprosy, paralysis, cancer, mental derangement, or heart ailment.
- For this purpose, no minimum service is required.
- The members should obtain a certificate from ESI or from the employer that E.S.I. facilities are not available for the member.
- A doctor (or registered medical practitioner) of the hospital certifies that a surgical operation or hospitalization for 1 month or more is/was necessary.
- In case of TB or leprosy, etc., a specialist doctor should certify.
- Maximum amount given is 6 times of wages or full employee share, whichever is less.
- A certified proof for the said disease has to be submitted along with the application in Form 31 through the employer.

04 For Purchase of Site and Construction Thereon

- Should have completed 5 years of service.
- Member's contribution with interest should not be less than 1,000.
- The site should be free from encumbrances.
- The site should be in the name of the member or spouse of the member or in the joint names of the member and the spouse.
- The maximum amount given is the least of Basic+DA for 24 months or total contribution & Interest or total cost of the site.

Purchase of Flat/House (from agency/promoter)

- Should have completed 5 years of service.
- Member's contribution with interest should not be less than 1,000.
- The house/flat should be free from encumbrances.
- The flat/house should be in the name of the member or spouse of the member or in the joint names of member & spouse.
- The agreement with the flat promoter should be registered under the Indian Registration Act.
- The maximum amount given is the least of Basic+DA for 36 months or total contribution & Interest or total cost of the site.

Alteration / Modification of House

- Should have completed 5 years of service.
- Only after 5 years of completion of the construction of the dwelling house.
- The maximum amount given is 12 months Basic+DA or member share of contribution with interest, whichever is less.

Repayment of Outstanding Principal / Int. of a Loan Obtained from State Govt, Regd Co-operative Society, State Housing Board, Nationalized Bank, and Public Financial Institution

- Should have completed 10 years of service.
- Member's contribution with interest should be more than 1,000.
- The amount will be paid directly to the agency and not to the member.
- The maximum amount paid is 36 Months Basic + Member's accumulation with interest or Outstanding Principal plus interest which is sought to be repaid, whichever is less.

Regards,
Prabhuloyola