Employee Provident Fund (EPF) Loan

EPF or Employee Provident Fund is a retirement savings scheme backed by the government of India to provide financial security to salaried employees. Under this scheme both the employee and the employer make contributions towards the fund and the amount is deducted from the employee's monthly salary. The provident funds are managed and regulated by the Employee's Provident Fund Organization (EPFO).

Employee's Provident Fund Organization (EPFO) allows employees to partially withdraw money from their PF accounts and use it as a personal loan to deal with emergency situations. While this is often referred to as an EPF Loan it is not exactly a loan but actually an advance as the amount withdrawn does not have to be paid back (non-refundable) in most cases (unlike in case of a personal loan). However, it should be noted that EPFO first verifies the reason for withdrawal and allows you to withdraw money from your EPF account if the reason is justifiable.

The EPF advance comes in handy especially in circumstances where a person may need money to overcome a stressful financial situation. To help EPF account holders in such situations, EPFO (Employees Provident Fund Organisation) allows emergency withdrawals, popularly known as EPF loan or EPF Advance. In the subsequent sections, key aspects of the EPF loan are discussed.

Following are the key reasons for which you can avail an EPF loan:

• 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• Calamity: Any natural calamity can bring you huge losses and EPF can be withdrawn in such a case.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 actually refers to a premature withdrawal, and hence it is not required to be paid back unlike PPF (Public Provident Fund) loan. As a result, it does not have an interest rate. The cost you have to pay for this loan is in terms of the amount that you could have earned as an interest on the amount withdrawn if you had not made the withdrawal. The interest on EPF deposits is calculated on the basis of monthly running balance and the present rate is 8.25% (as of FY 2024-25).

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.

Please note that the withdrawal is non-refundable, hence you need not pay back the amount and no interest charges will be levied.

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:

Step 1: Visit the Member Interface of EPFO Unified Portal and login.

Step 2: Navigate to Online Services>Claim section.

Step 3: Enter the last 4 digits of your bank account to verify.

Step 4: Click on “Proceed for Online Claim”.

Step 5: Select PF Advance/ Form 31 from the drop down menu.

Step 6: Select purpose as “outbreak of Pandemic (COVID-19)”.

Step 7: Enter the required amount and upload a scanned copy of cheque and enter your address.

Step 8: Click on “Get Aadhaar OTP”.

Step 9: Enter the OTP to submit the request.

Alternatively, you can use the mobile app UMANG (Unified Mobile Application for New-age Governance) to claim the emergency advance. Go to Home> EPFO> Employee Centric Services> Raise Claim> Login with the help of your UAN and OTP received on the mobile number to file the claim.

Claim Forms are required to withdraw any sum from your EPF account. Following is a list of the EPF forms that can be used for the withdrawal:

• Form 19: It is required for the Final PF Settlement.
• Form 10-C: It is required for pension withdrawal benefit.
• Form 31: It is required for partial withdrawal (advance) of EPF in case of an emergency. It can be directly accessed from the Member Interface of EPFO Unified Portal.

Please note that no additional document is required to claim EPF loan/ advance. Submitting a duly filled Form 31 is sufficient for such partial withdrawals.

Read More: EPF Form 31: Instructions, Filing Procedure & How to Download

Following is the step by step procedure to file an online claim for EPF advance:

Step 1: Visit the Member Interface of EPFO website to login with your UAN and password.

Step 2: Go to “Manage” tab and verify your KYC details, including Aadhaar, PAN and bank account details.

Step 3: Go to the “Online Services” tab and select “Claim (Form-31, 19 , 10C &10D)” from the drop down menu.

Step 4: Member details will be displayed on the subsequent screen. Enter your bank account number and click “Verify”.

Step 5: Sign the certificate of undertaking by clicking on “Yes”.

Step 6: Next click on “Proceed for Online Claim” and select the claim type from the tab “I Want to Apply for”. Furthermore, provide the purpose for claim, the required amount, the employee’s address and upload a scanned copy of your passbook/ cheque.

Step 7: Generally, the amount is credited to your account within 15-20 days following the submission of the online request and employer’s approval.

Let’s understand the calculations associated with EPF Advances with the help of the following example.

For instance: Mr. Kamal Nayak has applied for an EPF Advance due to the COVID-19 emergency.

The balance in his EPF account as on date is Rs. 1.5 lakh.

Sum of his monthly basic wage and dearness allowance is Rs. 15,000.

Thus, the amount for three months is Rs. 45000.

75% of balance of Rs. 1.5 lakh is Rs. 1.12 lakh.

Since, sum of 3 months’ basic wage and dearness allowance is lower than 75% of the EPF account balance, Mr. Nayak is eligible to get Rs. 45,500 as COVID-19 Emergency EPF Advance.

Step 1: Visit the EPFO website. Go to the “Services” tab and click “For Employees”.

Step 2: You will be redirected to the following page. Go to the “Services” section and click on “Know Your Claim Status”.

Step 3: Enter your UAN and password to login. Further provide your EPF account number, establishment code and state of your PF office to check the status of your claim.