PF: Money kept in PF can help in building a house, this is how you can take advantage of it without paying tax, read to know...

If you have also taken a home loan and its EMI is spoiling your budget every month, then it can be paid in advance. For this, the money lying in your PF account can help.

We need a lot of money while buying or building a house. A bank loan is a good option to meet its requirement, which is later paid through EMI. However, there is a solution, in which prepayment of a home loan can be done and it will not directly affect your pocket.

The Employees' Provident Fund Organization (EPFO) allows a subscriber to make partial withdrawals or advance withdrawals from his PF savings under certain circumstances, which can be used to buy or construct a house. So, today we will tell you how you can use PF for home loan prepayment.

Can be used for loan repayment

According to Section 68-BB of the EPF scheme, if a person has taken a loan to build a house, then the amount deposited in his PF can be used to pay the loan. For this, the person needs to complete at least 3 years of service. Also, the home loan should be taken from financial institutions registered with the state government, public financial institutions, non-banking housing finance companies, state housing boards, and municipal corporations.

When and how much PF can be withdrawn

If the house is registered in the name of the person or if he holds the house jointly, then the PF account holder can withdraw up to 90 percent of the amount for the payment of the home loan. It is worth noting that a person cannot withdraw this amount repeatedly. PF withdrawal facility for a home loan can be availed only once in a lifetime.

Will the government have to pay taxes?

The first rule to not pay tax in the PF amount withdrawn for a home loan is that it should be withdrawn after the completion of five years from the opening of the PF account. If you withdraw PF money before this, then tax will have to be paid under 'Income from other sources'. Under this, TDS (Tax Deducted at Source) is deducted at the rate of 10 percent on the EPF balance.

Tax for not giving PAN card

If the employment service is less than five years and the PAN card is not submitted at the time of withdrawal, TDS can be deducted at the slab rate of 30 percent. So, take care of these important things.