Employees Provident Fund (4th Amendment) Scheme, 2017: Withdrawal and Financing for Housing Projects

In exercise of powers conferred under Section 5 read with Section 7(1) of the Employees Provident Fund and Miscellaneous Provisions Act, the Central Government has notified the Employees Provident Fund (4th Amendment) Scheme, 2017, amending the 1952 Employees Provident Fund Scheme. The amendment introduces Paragraph 68BD, which provides for the withdrawal and financing from the Fund for the purchase or construction of a dwelling house or flat.

Key Provisions of Paragraph 68BD:

1. Eligibility for Withdrawal (Clause 1)
   A member of the Provident Fund who is:

   • A member of a cooperative society or a society registered for housing purposes (with at least 10 Fund members), and
   • Desires to purchase a dwelling house or flat, including a flat in a jointly owned building, or to construct a dwelling house, may apply for a withdrawal from their Provident Fund account.

   The member may apply for the withdrawal in a form and manner prescribed by the Commissioner.

2. Withdrawal Limit and Certification (Clause 2)

   • The amount of withdrawal cannot exceed the member’s share of contributions and interest, or the cost of the property acquisition—whichever is lesser.
   • Withdrawals are allowed only after certification by an engineer, architect, or chartered accountant regarding the project’s progress.
   • 90% of both the employer’s and employee’s share of the contributions can be withdrawn, subject to the limitations.

3. Conditions for Withdrawal (Clause 3)
   The withdrawal is subject to the following conditions:

   • The member must have been a Provident Fund member for at least 3 years.
   • Withdrawal can be made only once.
   • The member’s share in the Fund must be at least ₹20,000, including the contributions of the spouse, if applicable.

4. Repayment from Provident Fund Account (Clause 4)

   • Members can authorize the monthly installment repayment for the principal or interest of loans (taken by the member or spouse) to be paid from their Provident Fund account.
   • The payment is made to the concerned Government agency, housing agency, or bank.
   • The Commissioner is not liable to make payments if the account balance is insufficient or if membership has ceased.

5. Payment to Housing Agencies (Clause 5)

   • The withdrawal or financing for housing projects will not be made to the member but will instead be made directly to the cooperative society, government, housing agency, or promoter.
   • Payments may be made in installments as authorized by the member.

6. Refund of Excess Amount (Clause 6)

   • If the amount withdrawn exceeds the actual cost of the property, the excess amount must be refunded within 30 days of project completion.
   • The refund will be credited to the employer’s share of contributions in the member’s Provident Fund account.
   • If the project fails to allot a property or is canceled, the withdrawn amount must be refunded within 15 days. This refund will be credited proportionally to the employer and employee shares in the Provident Fund account.

The Employees Provident Fund (4th Amendment) Scheme, 2017 introduces significant changes, allowing members to utilize their Provident Fund balances for purchasing or constructing a home. The amendment aims to provide financial support for housing needs while ensuring proper transparency and accountability in the withdrawal and usage of the funds.

The procedures and safeguards outlined in the amendment ensure that the withdrawals are in proportion to the project’s completion and protect the fund’s integrity. The introduction of refund provisions in cases of project non-completion or cancellation also ensures that the member’s funds are protected.

This amendment serves as a beneficial provision for Provident Fund members looking to invest in their housing projects while maintaining the financial stability of the fund.