Tagged: EPFO

ATM :: Planning to invest in home? Here is how you can raise your down payment

With interest rate-cuts and increased liquidity with banks following the demonetisation, loan products have more accessible.
Adhil Shetty | Published: May 11, 2017 4:02 PM | Financial Express


Consumers with healthy credit scores today would be receiving loan offers aplenty. With interest rate-cuts and increased liquidity with banks following the demonetisation, loan products have more accessible. Yet availing a home loan for the very first time remains a complex experience that loan seekers view with trepidation.

There are often misconceptions about what a home loan can do, and what it costs. For instance, you may be of the belief that the loan granted will match the property price. That is untrue, as financial establishments expect you to pay the margin amount.

The margin amount is another term for down payment for your new home. It could be anything between 15% and 20% of the home’s net value. For a first time home buyer, it is no easy task raising this money.

Here are some ways to help.
1. Strategic savings
Nothing beats strategic savings and for this you need to start your planning early. It involves you visualizing your long-term fund needs—including the need to buy a home—and beginning to save and invest accordingly. Begin with simple and accessible investment tools such as mutual funds or recurring deposits. Slowly and surely, you’ll be able to build your deposit over time. You can be efficient at this by locking in your savings at the start of the month. The earlier you start, the sooner you build this fund for your down payment.

2. Take loans but exercise restraint
There could be a situation where you are in urgent need of funds for the down payment. You could consider taking a personal loan to meet the need. Yet, you need to do this in a controlled manner. Having an existing loan will reduce your ability to take on, and repay, additional loans such as a home loan. You would find your finances stretched as you attempt to pay two EMIs at once. This isn’t an ideal situation to be in and is recipe for a financial disaster, in case you were to temporarily lose your ability to generate income. Therefore any loans for down payments need to be taken thoughtfully, and settled as soon as possible to reduce monthly EMI liabilities.

3. Mortgage another property
If you are confident that your current income can take care of EMIs of more than one loan, you could consider a loan against property. You can claim this loan against several options. For example, an existing property or home could be mortgaged. You could also claim it against assets such as shares, jewelry, PPF account, and LIC policies. There also exists the option of taking a loan against rent.

4. Withdraw from your PF account
As per the new EPFO norms, you are now allowed to withdraw up to 90% of your EPF corpus. Not just that, you could also withdraw from this corpus to pay for your EMIs. This scheme was recently implemented keeping in line with the Housing For All initiative of the central government. A word of caution: your PF corpus is meant to help you generate a pension income in retirement, so if you intend to redeem it for a property purchase, you must replenish it soon, or create a backup pension fund to meet your future needs.

5. Deferred down payment
You have the option of requesting a deferred down payment when purchasing a house from a well-known property developer. Under this, you will have the choice of dividing the down payment into multiple instalments. These instalments can be paid over a jointly agreed period of time. Let us say that you have to make a down payment of Rs. 10 lakh. Ask the builder for a time frame of five months to pay Rs. 2 lakh per month.

6. Liquidate your investments
Before you decide to make a property purchase, take stock of your savings, investments and assets. Anything from a vehicle to a part of a property you own can be liquidated for a down payment. Bank deposits, gold, mutual funds, shares etc. can be disposed. This should be carefully done so as to not disturb other financial objectives.

7. Approach an NBFC/ HFC
Non-Banking Financial Companies (NBFCs) and House Finance Companies (HFCs) provide loans that can help you cover a larger part of your fund requirement. For example, they may provide a loan to cover your registration and home repair costs as well. The entitlement of the loan, of course, will be calculated on the basis of your ability to repay.

Always remember to not act in a hurry. Think long and wise about the route you are taking to raise the down payment for your house. It is also advisable to wait and let an offer go if you cannot make the down payment, as there will always be another good offer in the future.

(The writer is CEO, BankBazaar.com)

Source : https://goo.gl/8ixiEW


ATM :: How to withdraw 90% of your provident fund to buy a house

May 12, 2017 | 11:39 IST | SOURCE : Economic Times | Retrieved from Timesnow.tv


In an effort to make its ‘Housing for all by 2022’ a success, the government has allowed for EPFO members to withdraw up to 90 percent of their provident fund (PF) accumulations to make down payments to purchase a house and to pay housing loan EMIs.

Pre-requisites for PF withdrawal

In order to dip into the provident fund saving, the new rule highlights that the PF holder will only be eligible if he/she has been a contributing PF member for at least 3 years, and is buying property in a registered housing society that has at least 10 members.

Further, the property has to be purchased in the member’s name and cannot be purchased jointly with anybody else, except your spouse.

How the money can be used

The money withdrawn can only be used for an outright purchase, as a down payment for a home loan, for buying plots or for the construction of a house. The transactions can be made through central government, state government and even from a private builder, including promoters or developers.

Can the money be used to buy resale flats as well?

Unfortunately no, EPFO will only make payments directly to a co­operative society, the state government, central government, or any housing agency under any housing scheme, or any promoter or builder, in one or more installments. The rule will not apply to real estate purchases in the secondary market or resale transactions.

Can you withdraw both employee and employer contribution?

An EPFO member can withdraw his own share of PF contribution plus interest as well as the employer’s share of contribution plus interest.

Can you EMI payment through PF?

A PF member can use his PF contribution to pay full or part EMIs for a home loan taken in the member’s name. The EMI will be directly paid by EPFO to the government, housing agency or the bank.

How to apply

A PF member can apply individually or jointly through a housing society to get a certificate from the EPFO.

Through Annexure I form, an employee can ask for the balance and the deposits made in the last three months before applying. This will help the EPFO determine how much EMI can be arrived at.

Also, the employee has to mention the name and details of the bank or housing society to whom such certificate is to be issued.


The EPFO then issues a certificate showing the outstanding balance and last three month’s deposit in the account. Alternatively, members can take printouts of their PF passbook downloaded from the EPFO website and submit it to housing agencies or banks.


If a member wishes to use PF money to meet EMI’s, then in addition to Annexure I, an authorisation by the member is to be filled in a prescribed format. It will carry details such as PF amount, PF and loan account number, lender name, address etc. One has to get this form authorised from the lender i.e. branch manager of the lender who has sanctioned the loan. Once approved, EPFO will start transferring EMI’s online to the lender’s account.


What if an employee leaves his/her job?

The EPFO has made it clear that under no circumstances would it be liable for any default of payments to the lender. The EPFO will not be party to any agreement made between an EPFO member and a society or builder.

In case a member quits his job, the responsibility of repaying the loan would rest with the employee and not the EPFO.


While dipping into your PF account to make a down payment makes your life easier, it is important to remember, your PF is meant to take care of your post­ retirement needs, and depleting it may jeopardise your retirement.

So make sure you have a backup plan to meet post­retirement needs through equity mutual funds or PPF.

Source: https://goo.gl/egUXjH

NTH :: Should you withdraw 90% from EPF account or take a home loan for buying your dream home?

The government has decided to allow Employees’ Provident Fund Organization (EPFO) subscribers to withdraw up to 90% from their EPF account for the purpose of purchase and construction of their homes. However, would it be a wise decision to withdraw money from your EPF account to buy a home or availing a home loan would be a better option?
By: Sanjeev Sinha | Updated: March 17, 2017 5:02 PM | The Financial Express


The government has decided to allow Employees’ Provident Fund Organization (EPFO) subscribers to withdraw up to 90% from their EPF account for the purpose of purchase and construction of their homes. However, would it be a wise decision to withdraw money from your EPF account to buy a home or availing a home loan would be a better option?

Experts say that buying your first home is rarely an easy task. Now the amendments to the EPFO suggested by the government would certainly allow more individuals to raise the funds needed for their home purchase. In that sense, it is a welcome move since it allows EPFO members access to their own funds in order to achieve a vital financial objective.

However, allowing the EPFO subscribers to withdraw up to 90% from their EPF account for the purpose of purchase and construction of their homes has its share of merits and demerits. “The use of EPF to fulfill these purposes would depend upon the quantum of provident fund deposits which would have accumulated over the years. Buying or constructing a home would require a lot of cash to be spent on as the costs to undertake the said activities can be very high. So, you must check how much EPF balance you have,” says Rishi Mehra, CEO of Wishfin.com.

On the basis of the balance, you can take a calculative decision. If the balance is on the higher side, say in lakhs, and you have more than a decade of the professional journey left before the retirement, you can use the reserve. But make sure not to consume the entire 90% as you can have a challenging post-retirement life to live.

For instance, if 70% of the retirement corpus is sufficient to buy or construct a house, you should consume only 20%-30% and opt for an attractive home loan deal to pay the remaining amount as required to buy or construct a house. This will allow the unused portion of the EPF balance to accumulate and enable you to lead a comfortable life post-retirement besides having a home.

However, “if 20%-30% of the EPF reserves is enough to serve your purpose of home buy or construction, then you can avoid paying the interest that comes with a home loan offered by the banks and housing finance companies (HFCs). If that is not the case, you can either avail a home loan or use both EPF and home loan. The latter option can reduce the interest liability to a considerable degree,” says Mehra.

For example, you have a PF balance of Rs 12 lakh and require a sum of Rs 20 lakh to pay to the property dealer to buy a house. You can then take out Rs 2.5 lakh-Rs 4 lakh from the PF deposits and avail a home loan of Rs 16 lakh-Rs 17.5 lakh. Now, look at the savings you could have using both deposits and loan over the option of loan alone through the calculation in the below table.

In the table, you can see the saving of Rs 2,250-3,599, Rs 2,89,836-4,63,737 and Rs 5,39,837-8,63,737, in EMI, interest payout and the overall payment, respectively, by preferring the combined option of PF and home loan over home loan only.

Pros of EPF Option
# It allows you to buy or construct a home without or paying a lower amount of interest.
# Beneficial for those who need few bucks to fulfill the purpose of buying or constructing a home.

Cons of EPF Option
# Retirement corpus gets used up for an expensive deal of home buy & construction.
# You are left with a very little or virtually nothing to enjoy post-retirement.
# Availing the PF option without having other savings could prove doomsday for your financial health.

Who Should Avail EPF & Who Should Avoid?
As far as who should use the provident fund deposit and who should avoid would depend upon the overall EPF contribution, the financial state and the goals of an individual. “Retirees, who have a huge bulk of EPF balance even after using a portion of the same for a home deal, would like this option. But for some who are in the middle of their professional life can’t go solely with the EPF option. These individuals would have to avail a home loan alongside EPF to find the key to their dream home. With this, they can enjoy an affordable home loan journey while securing their future at the same time. Newcomers would have to wait for a fair length of time before they can think of using the EPF for the home purpose,” says Mehra.

You should also note that the EPF’s primary purpose is to ensure income in retirement for its members. If you withdraw from this fund, you’ll miss out on the benefits of the great returns EPFO provides along with compounded growth over the long term. You’ll then have to find another way to regenerate your retirement fund, which is a challenging proposition. Also, “if you have a large EPF corpus, you can let it earn a handsome 8.65% per annum at the moment (with the possibility of earning higher in the years to come), and take a home loan which you can avail at interest rates around 8.6%. Taking a home loan also allows you additional tax savings through principal and interest repayments up to Rs. 350,000 per annum,” says Adhil Shetty, CEO, BankBazaar.com.

However, if we look at the development thoroughly, the government is also looking to allow EPFO subscribers to use their PF deposits as a mean to repay the home loan EMIs. Well, “to ensure you save for the future and at the same time reduce your interest liability, you should partly use the PF deposits towards the payment of the home loan EMI. The option of paying the EMIs partly through PF deposit could appeal to the most,” informs Mehra.

Source: https://goo.gl/hH2F5v

NTH :: EPFO may invest up to 15% of investable amount in equity markets

Sun, 19 Mar 2017-12:14pm | PTI | DNA India


Buoyed by the surging stock markets, the Employees Provident Fund Organisation (EPFO) may propose to invest up to 15 per cent of its investable amount in equity markets during the next fiscal, Union Labour Minister Bandaru Dattatreya said.

“We are proposing to invest up to 15 per cent during the next year. Central Board of Trustees (CBT) meeting will be held on March 30. We will seek its opinion. So far, during the past one-and-half year we have invested Rs 18,069 crore. We are getting good yield. It is encouraging,” Dattatreya told

Source: https://goo.gl/xcxAk6

NTH :: Centre to invest more PF money in equities

SPECIAL CORRESPONDENT | Updated: July 9, 2016 00:13 IST | Hindu Business Line


The Employees Provident Fund Organisation (EPFO) has earned 7.45 per cent returns from its equity investments since August last year due to an uptick in the capital market, Union Labour Minister Bandaru Dattatreya said.

A status report on equity investments has been sent to financial, investment and audit committee of EPFO and a final call on increasing equity investments will be taken in the next central board of trustees meeting to be held later this month.

“World over, the investments in exchange traded funds are going up. The investment in exchange traded funds will benefit in the longer run and lead to an increase in the rate of return we offer to our subscribers,” Mr. Dattatreya said at a press conference after the 213 Central Board of Trustees (CBT) meeting of the EPFO. He said the EPFO has invested around Rs.7,000 crore in exchange traded funds since August 2015.

Labour Secretary Shankar Aggarwal said the yield on investment in equity till date is “almost equal” to return on government securities investment. “Soon, we will take a decision on how much the equity investments should be increased,” the labour minister, who is also the Chairman of the CBT, said. He said a special CBT meeting may be held between 18 and 22 July to discuss the various proposals including increasing equity investments.

The EPFO started investing five per cent of its corpus in equities beginning August last year. It can invest up to 15 per cent in equity and its related instruments such as exchange traded funds.

Trade unions were not in favour of equity investment as they feared higher risk being involved due to market fluctuations. “We should not look at fluctuations. Ultimately, the interest rate in the long-term will be gainful. We are keeping the workers’ interest in mind but we are not going ahead in a hurry. We are moving forward cautiously,” Mr. Dattatreya said.

UTI to manage equity
UTI will manage the equity investments of Employees’ Provident Fund Organisation (EPFO) along with State Bank of India (SBI), Central Provident Fund Commissioner VP Joy said.

“We have decided to rope in UTI to manage our exchange traded fund investments along with SBI. We have not yet taken a final call on the proportion of funds that each of them will handle,” Mr. Joy said. The finance investment and audit committee of EPFO had proposed that UTI Mutual Fund be allocated 10 per cent of total ETF investments of EPFO and the rest 90 per cent be handled by SBI Mutual Fund.

The asset management companies in the race were: HDFC Mutual Fund, ICICI Prudent Mutual Fund, Reliance Mutual Fund, UTI Mutual Fund, SBI Mutual Fund and Kotak Mahindra Mutual Fund.

“Considering the fact that ETFs as an investment vehicle are relatively nascent in the Indian market, it would be prudent to invest only with asset management companies with majority ownership under public sector,” according to official documents.

Source : http://goo.gl/Q7bqln

NTH :: No tax deduction for PF withdrawals of up to Rs 50,000, says new notification

PTI | May 31, 2016 08:08 IST | First Post


New Delhi – No tax would be deducted at source for PF withdrawals of up to Rs 50,000 from June 1.

The government has notified raising the threshold limit of PF withdrawal for deduction of tax (TDS) from existing Rs 30,000 to Rs 50,000, a senior official said.

“The Finance Act, 2016 has amended section 192A of Income Tax Act, 1961 to raise the threshold limit of PF withdrawal from Rs 30,000 to Rs 50,000 for Tax Deducted at Source (TDS),” the notification stated.

The provision will come into effect from 1 June 2016, providing relief to subscribers of retirement fund body EPFO.

The government had introduced the proposal to deduct TDS on PF withdrawals in order to discourage pre-mature withdrawal and to promote long-term savings.

According to existing provisions, TDS is deducted at the rate of 10 percent provided PAN is submitted. TDS will be deducted at the rate of 10 percent provided PAN is submitted.

However, in case Form 15G or 15H is submitted by the member, then TDS is not deducted. These forms are to declare that their income would not be taxable after receiving payment of their PF accumulations from retirement fund body EPFO.

While Form 15H is submitted by senior citizens (above 60 years of age), Form 15G is submitted by claimants below the age of 60 years.

TDS is deducted at the maximum marginal rate of 34.608 percent if a member fails to submit PAN or Form 15G or 15H. However, there are certain exceptions to deduction of TDS by EPFO.

However, there are certain exceptions to deduction of TDS by EPFO. TDS shall not be deducted in case of transfer of PF from one account to another PF account.

Also, no tax is deducted if employee withdraws PF after a period of five years.

Source : http://goo.gl/smH1ab

NTH :: Seven macro triggers that may move your market today

Nandini Sanyal | May 16, 2016, 08.38AM IST | ECONOMICTIMES.COM


News about progress of monsoon, next batch of quarterly earnings , wholesale inflation data along with outcome of assembly polls in five states and will be key driving factor for the stock market this week.

Here’s a look at seven triggers that may move the market today

Under Mauritius pact, no tax exemption for quasi equity investments: There will be no free ride for those wanting to invest in India through quasi equity investments such as convertible debentures via Mauritius under the recently amended treaty between the two countries, officials said. Those holding such instruments would do well to convert them into shares before April 1, 2017, to enjoy the exemption on capital gains tax, or grandfathering, that’s available until then. There has been some confusion over whether entities making an investment in such instruments before April 1, 2017, can enjoy grandfathering with the full capital gains tax exemption benefit even after the amended India-Mauritius Double Taxation Avoidance Convention comes into effect.

Shareholder base for private banks may be broadened: Wealthy individuals and finance companies can pick up more equity in private banks while non-state lenders struggling to make money could emerge as acquisition targets for those on the hunt, following the Reserve Bank of India’s recent relaxation of rules aimed at shoring up capital and encouraging consolidation. Analysts said lenders of interest may include IndusInd Bank , Yes Bank , Kotak Mahindra Bank , Karur Vysya Bank , Lakshmi Vilas Bank , Tamilnad Mercantile Bank and Dhanlaxmi Bank.

Monsoon over Kerala may be delayed by a week: The onset of the southwest monsoon over Kerala is likely to be delayed from the normal date of June 1, the weather office said, the first negative signal since it forecast above-normal rainfall this season after two years of drought. “The statistical model used by IMD for predicting the onset of monsoon indicates that the southwest monsoon is likely to set over Kerala on June 7, with a model error of ± 4 days,” the India Meteorological Department said on Sunday . Last year, the monsoon arrived six days late on June 5, compared with the forecast onset date of May 30.

FSSAI plans comprehensive recall policy: Almost after a year of no food product being pulled out of the market, The Food Safety and Standards Authority of India (FSSAI) has decided to bring a comprehensive recall policy this financial year. The last big food recall was in June 2015, of Nestle India’s Maggi noodles. In the making for five years, the draft procedure for a food product’s recall was put up for public comment on the body’s website last year by FSSAI. Its latest newsletter lists “final notification of recall regulations” as among the 12 important things it plans for 2016-17.

EPFO may invest over Rs 6,000 cr in equity market in 2016-17: Union Labour Minister Bandaru Dattatreya has said the Employees Provident Fund Organisation (EPFO) may invest more than Rs 6,000 crore in equity market during the current financial year. The minister, however, said a final decision will be taken by the Central Board of Trustees at the next meeting. Last year, EPFO had invested about Rs 6,000 crore through SBI Mutual Fund’s two index-linked ETFs (exchange-traded funds) — one to BSE’s Sensex and the other NSE’s Nifty.

Sebi planning to tighten listing norms: The Securities and Exchange Board of India (Sebi) is planning to attach bank accounts and properties of promoters who repeatedly flout listing and disclosure norms and fail to take corrective steps. The penalty structure may also be changed to deter publicly traded firms from taking listing regulations casually.Sebi’s latest proposals come amid widespread violations of listing and disclosure norms

Employees’ rights to be foremost in Bankruptcy law: The new Bankruptcy Law will fast- track recovery of dues from defaulters and employees will be first in line to get their share from liquidation of assets if a company goes belly-up, says Union Minister Jayant Sinha. Besides, it would also bring down drastically the time taken to wind up a sick company while making the entire process much easier, the Minister of State for Finance said.

Rupee down: The rupee ended weak by 15 paise at 66.77 due to increased demand for the us dollar from importers amid a weak domestic equity market. Rupee sentiment was also hit as the IIP growth plunged to 0.1 per cent in March and retail inflation soared to 5.39 per cent in April.

Bonds: The 7.88 per cent government securities maturing in CG2030 traded value at Rs 300.00 crore at weighted yield of 7.75 per cent, the 7.59 per cent government securities maturing in CG2026 traded value at Rs 225 crore at weighted yield of 7.45 per cent and the 7.72 per cent government securities maturing in CG2025 traded value at Rs. 100 crore at weighted yield of 7.63 per cent. The weighted yield on government securities with a maturity period of 0-3 years, 3-7 years, 7-10 years and more than 10 years was quoted at 7.11 per cent, 7.51 per cent, 7.52 per cent and 7.76 per cent, respectively.

NSE bond auction on May 16: The National Stock Exchange (NSE) will auction investment limits for overseas investors on May 16, for the purchase of government debt securities worth Rs. 3,340 crore. The auction will be conducted on NSE’s ebid platform from 3.30 pm to 5.30 pm, after the close of market hours, the exchange said in a circular today.

Source : http://goo.gl/ntxH8X