Employee Provident Fund Loan
EPF, or Employee’s Provident Fund, stands as a government-endorsed retirement benefits scheme tailored for eligible salaried individuals across India. Governed by EPF regulations, both employers and employees contribute equally to this fund, which not only provides tax-saving benefits but also accrues interest and can be accessed upon retirement.
This flexibility of EPF proves invaluable, particularly during times of financial strain. To cater to such needs, the Employees Provident Fund Organization (EPFO) extends emergency withdrawal facilities, commonly referred to as EPF loans or EPF advances, for the convenience of EPF account holders.
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EPF Personal Loan
The Employer’s Provident Fund Organization (EPFO) offers employees the option to partially withdraw funds from their PF accounts to address emergency situations. While commonly labeled as an EPF Loan, it’s more accurately described as an advance because the withdrawn amount typically doesn’t require repayment (non-refundable), unlike a traditional personal loan. However, it’s important to highlight that EPFO conducts thorough verification of the withdrawal reason, permitting withdrawals only for justifiable reasons.
| Marriage | You can take an EPF advance for your own marriage or for your son’s and daughter’s marriage. |
| Education | Education can also be the reason for PF withdrawal. You can get money to fund your own education or the education of your daughter, son, brother or sister. |
| Purchase of home or plot | As purchase of home or plot requires a significant amount, the Employee Provident Fund loan is available to the applicant in this case. |
| Medical treatment | If your spouse, daughter, son, father or mother is ill, you can withdraw your EPF for the treatment. However, the loan against the EPF can be received only in the case of serious illness. |
| Home loan payment | The payment of the home loan can also be done through EPF advance, only if the applicant satisfies certain necessary conditions as specified by the EPFO Act. |
| Calamity | Any natural calamity can bring you huge losses and EPF can be withdrawn in such a case. |
| Addition/ alternation of house | The EPF loan can also be taken to renovate or expand your existing house. |
| Lockout | During harsh situations of lockout, an applicant may stop receiving his salary. Thus, to cope with and afford basic necessities of life, the EPF loan is available to those applicants. |
| Withdrawal before the retirement | An applicant can withdraw the majority of his/ her corpus before one year of retirement. |
EPF Loan Interest Rate
The term “EPF Loan” refers to a premature withdrawal, eliminating the necessity for repayment, unlike a PPF (Public Provident Fund) loan. Consequently, an interest rate is not applicable. Instead, the “cost” associated with this withdrawal is quantified in terms of the potential interest earnings foregone on the withdrawn amount. Interest on EPF deposits is computed based on the monthly running balance, with the current rate standing at 8.25% (as of FY 2023-24).
COVID-19 Emergency Advance
In order to ensure cash flow and liquidity in the hands of EPF subscribers during this challenging time of Coronavirus disease outbreak and lockdown, EPFO has added a special provision in the EPF Act to provide a non-refundable COVID-19 emergency advance.
| Eligibility for COVID-19 Emergency Advance | All EPF members employed in a factory or establishment, which is located in the area declared to be affected by the COVID-19 outbreak by the appropriate government are eligible. Since COVID-19 has been declared as a pandemic for the entire country, all employees across India are currently eligible for the EPF advance. |
| Documents Required for COVID-19 Emergency Advance | No documents or certificates are required to be submitted by the employee or the employer to avail this benefit. |
| Quantum of COVID-19 Emergency Advance | You can avail the non-refundable advance up to the sum of 3 months’ wages and dearness allowance or up to 75% of the EPF account balance, whichever is less. |
Please note that the withdrawal is non-refundable, hence you need not pay back the amount and no interest charges will be levied.
Procedure to Claim COVID-19 EPF Emergency Advance
You can avail the EPF emergency advance by filing the online claim form, if your UAN is validated with Aadhaar and KYC of your bank account. Moreover, your mobile number should be linked to your UAN to complete the withdrawal process. Following is the step-by-step procedure for the same:
Visit the Member Interface of EPFO Unified Portal and login. Hover to Online Services>Claim section. Enter the last 4 digits of your bank account to verify. “Proceed for Online Claim”. Select PF Advance/ Form 31. Select purpose as “outbreak of Pandemic (COVID-19)”. Enter the required amount and upload a scanned copy of cheque and enter your address. Click on “Get Aadhaar OTP”. Enter the OTP to submit the request.
EPF Loan Eligibility Calculation
The eligibility to avail an advance from your EPF account depends on the purpose behind the withdrawal. These are summarized in the following table:
| Reason for Withdrawal | Withdrawal Limit | Number of years in Service | Maximum frequency of Withdrawal |
| Marriage | Up to 50% of employee’s share | Minimum 7 years | 3 times |
| Education | Up to 50% of accumulated funds | Minimum 7 years | 3 times |
| Medical Treatment | 6 times the monthly wage of employee and dearness allowance | N/A | No limit |
| Purchase of home/plot | For a plot: Up to 24 times the monthly wage and dearness allowance of the employee For home: Up to 36 times the monthly wage and dearness allowance of the employee | 5 years | only once |
| Home Renovation | 12 times employee’s wage | ||
| Home Loan Repayment | Up to 90% of the employee and employer’s contribution | 10 years | Only once |
| Lockout | Withdrawal amount is equal to the unpaid wages | N/A | No limit |
| Natural Calamity | Up to 50% of the employee’s share in EPF | N/A | No limit |
| Withdrawal prior to Retirement | Up to 90% of the accumulated balance in the fund + the interest | At the age of 57 years or above | Only once |