This EPF advance is very useful in situations where a person needs money to get out of a tight financial scenario. EPFO (Employees Provident Fund Organisation) authorizes emergency withdrawals, often known as EPF loans or EPF Advance, to assist EPF account holders in such situations. Key aspects of the EPF loan are described in the following sections of this article.
UPDATE: In response to the COVID-19 pandemic/shutdown and the resulting loss of income for many salaried individuals, EPFO has enabled all EPF subscribers in India to accept a non-refundable advance of up to three months’ basic wage and dearness allowance, or 75% of their EPF account balance, whichever is smaller. In the website “Afinoz.com” COVID-19 section you can also get information and collect more information on this EPF advance.
Reasons for availing EPF Loan
Here are the following key reasons for which you can avail of an EPF Loan:
- Wedding loan: You can take an EPF advance for your marriage or the marriages of your sons and daughters.
- Education loan: Education is another factor that can lead to PF withdrawal. You can acquire money to help you or your daughter, son, brother, or sister pay for their schooling.
- Purchase of home or plot: The Employee Provident Fund loan is offered to the applicant in this scenario since the purchase of a home or plot requires a considerable amount of money.
- Medical care: You can use your EPF to pay for medical treatment for your spouse, daughter, son, father, or mother. The loan against the EPF, on the other hand, can only be obtained in the event of serious sickness.
- Home loan payment: Payment of a home loan can also be made using an EPF advance, but only if the applicant meets certain EPFO Act requirements.
- Natural calamity: Any natural tragedy might cause significant financial losses, and EPF might be withdrawn in such cases.
- House addition/alteration: You can use an EPF loan to renovate or enlarge your current home.
- Lockout: In the event of a prolonged lockout, an applicant’s salary may be withheld. As a result, those who qualify for an EPF loan may cope with and afford the essentials of life.
- Withdrawal before retirement: Before one year of retirement, an applicant might remove the majority of his or her corpus.
EPF Loan Interest Rate
Because an EPF loan is a premature withdrawal, it is not obliged to be repaid, unlike a PPF (Public Provident Fund) loan. As a result, there is no interest rate on it. The cost of this loan is calculated as the amount of interest you could have received on the cash withdrawn if you had not made the withdrawal.
Step-by-Step procedure to claim COVID-19 EPF
If your UAN is authenticated with Aadhaar and your bank account’s KYC, you can get an EPF emergency advance by filling out an online claim form. To complete the withdrawal process, your mobile phone number must be linked to your UAN. The process for doing so is as follows:
- Step 1: Log in to the EPFO Unified Portal’s Member Interface.
- Step 2: Go to the Online Services>Claim portion of the website.
- Step 3: Verify your bank account by entering the last four digits.
- Step 4: Select “Proceed with Online Claim.”
- Step 5: From the drop-down menu, choose PF Advance/ Form 31.
- Step 6: Choose “pandemic (COVID-19)” as the aim.
- Step 7: Enter the required amount, a scanned copy of the cheque, and your mailing address.
- Step 8: Select “Get Aadhaar OTP” from the drop-down menu.
- Step 9: Submit the request by entering the OTP.
Eligibility criteria of EPF Loan
The purpose of the withdrawal determines your eligibility for an advance from your EPF account. These are summarised in the key points mentioned below:
- The Universal Account Number has been activated (UAN).
- For receiving OTP, the cellphone number used to activate the UAN must be active (one-time password).
- The EPFO database should have been seeded with your Aadhaar Card information. Furthermore, you should have used the OTP-based UIDAI eKYC verification service while filing the claim.
- The EPFO database should be seeded with your bank account information and IFSC number.
- If your service period was less than 5 years, you should have also seeded your PAN number in the EPFO database for PF final settlement claims.
Documents required for EPF Loan
To take any money from your EPF account, you’ll need to fill out a Claim Form. The following is a list of EPF withdrawal forms that can be used:
- Form 19 is necessary for the PF Settlement Final.
- It is necessary to complete Form 10-C in order to get a pension withdrawal benefit.
- In the event of an emergency, Form 31 is necessary for a partial withdrawal (advance) of EPF.
Note: Please note that no other documentation is necessary to apply for an EPF loan or advance. For such partial withdrawals, submitting a properly completed Form 31 is acceptable.
Employees can take money out of their PF accounts and utilize it as a personal loan with its EPF Interest rate at a low rate to deal with emergency problems, according to the Employee’s Provident Fund Organization (EPFO). While this is commonly referred to as an EPF loan, it is more accurately described as an advance because the amount withdrawn is not repaid (non-refundable) in most situations (unlike in the case of a personal loan). Thus, you can also get more information through Afinoz.com and we can help you to avail of a loan during this pandemic.