EPF Auto-Settlement & Withdrawal Updates claim rules for medical, education, marriage, housing
The Employees’ Provident Fund Organisation has simplified auto-settlement rules for EPF members. Medical, education, marriage, and housing claims up to Rs 1 lakh are processed automatically. Higher withdrawal limits and faster settlements aim to benefit members. Rules for different withdrawals vary, requiring specific documentation and membership durations. Online initiation via Form 31 streamlines the process.
To ease the life of Employees’ Provident Fund (EPF) members, the Employees’ Provident Fund Organisation has eased the rules of auto-settlement for medical claims, education, marriage and housing. The facility of auto-settlement was recently introduced for education and marriage under Rule 68K and for housing under Rule 68B, via a press release dated May 13, 2024. In case of getting an advance for medical illness, the amount has been hiked in Rule 68J via a circular dated April 16, 2024. The facility was introduced in April 2020.
Now all claims up to Rs 1 lakh under these heads will be auto-processed without any human intervention.
Rule 68J of the EPF Scheme, 1952, deals with withdrawing a portion of the money from an EPF account, called an advance, to treat illness in certain cases. The advance is given either for members’ treatment or for the treatment of their family members.
Rule 68K rule allows withdrawing money from EPF accounts for marriage or higher studies of children. The withdrawal is allowed for marriage of self, daughter, son, brother or sister or for higher studies of son or daughter.
Rule 68B of the EPF scheme allows members to withdraw money for the purpose of buying or constructing a house. The advance can be withdrawn to also make alteration or improvement to a self-owned house.
ET Wealth Digital explains how the new facility helps EPF members who want to withdraw money from EPF accounts for different purposes.
Noorul Hassan, Partner, Lakshmi kumar an & Sridharan Attorneys, says, “The introduction of auto-settlement facility for marriage, higher education and buying a house up to Rs 1 lakh will help EPF members to get faster claim settlement. Further, the increase in the limits for auto-settlement of claims as per Para 68J of the EPF Scheme would enable the EPF members to now withdraw a higher amount of up to Rs 1 lakh for one’s own or dependent’s medical expenses – including hospitalization for a month or more – such as major surgical operation, leprosy, paralysis, TB, cancer and hearing ailments. The auto-settlement of claims for all the specified rules will happen if the EPF account is KYC-compliant, details of the bank account for crediting the money are correct and all the required documents are submitted for taking an advance under the section.”
Unlike Rule 68K and 68B where it is clear the purpose of taking advance from EPF account, Rule 68J of the EPF Scheme specifies that an advance can be taken in certain specified cases. Hasaan says, “Auto-processing of claims under Para 68J is only applicable for specific instances like hospitalisation for at least one month, and for major surgical operation, or illnesses like leprosy, paralysis, TB, cancer and hearing ailments. Therefore, the benefit cannot be claimed for general illnesses.”
How auto processing will make EPF claim settlement faster
The EPFO usually takes some time to process a claim as it checks the eligibility of the EPF member, documents submitted (if any) for claim processing, KYC status of EPF account, valid bank account details, etc. Will the auto-processing of claims make the EPF claim settlement faster?
The EPFO in the press release states, “The entire process in auto-settlement is IT system driven, eliminating human intervention. Any claim with KYC, eligibility and bank validation is processed for payment by IT tools automatically. As a result of this, the periodicity of claim settlement is reduced significantly from 10 days to within 3-4 days for such advances. The claims that are not validated by the system are not returned or rejected. They are further undertaken for a second level of scrutiny and approvals.”
Rules for applying claim from EPFO
An EPF member should know the rules to apply for EPF withdrawal for medical illnesses under Rule 68J, marriage or higher education under Rule 68K and housing advance under Rule 68B. The eligibility criteria for an advance vary in each case.
Advance for medical illness under Rule 68J: The EPF member can apply for a withdrawal at any time irrespective of the number of years completed with the EPF scheme. This is unlike other EPF withdrawals, where a minimum EPF membership period is required. The EPF withdrawal amount that can be claimed by an individual is defined under the scheme. The rule states that an EPF member can withdraw an amount equal to 6 months of basic salary and dearness allowance, or the employee’s share with interest, whichever is lower.
To apply for EPF withdrawal, a member is required to submit a certificate signed by an employer or doctor.
Advance for marriage or higher education under Rule 68K: The money can be withdrawn from the EPF account only after the EPF member completes 7 years with the EPFO. According to EPF scheme rules, such an advance can be withdrawn three times. An EPF member can withdraw a maximum of 50% of his share with interest. To withdraw money for marriage, the EPF member is required to submit a declaration in the online format. However, if the money is withdrawn for children’s higher education, a certificate regarding the course of study and the estimated expenditure from the head of the educational institution concerned is required to be submitted.
Advance for purchasing a house under Rule 68B: This rule allows EPF members to take advance from EPF account for buying or constructing a flat/house. The rule also allows advance withdrawal for repairs and renovation of the house; this can be done twice. The EPF member must have completed five years of membership to file a claim for buying or constructing a house. The amount that can be withdrawn depend on the purpose.
If the advance is taken for purchase or construction of flat or house (including acquisition of site), then the least of the following is allowed:
- a) 24 months’ basic salary and dearness allowance for purchase of site or 36 months’ basic salary and dearness allowance for purchase of house/flat/construction
- b) Total employee and employer share with interest
- c) Total cost
Withdrawal of an advance from EPF account for repair and alteration of the house is allowed after 5 years of buying/construction the house. The amount allowed is the least of:
- a) 12 months’ basic salary and dearness allowance
- b) Employee share with interest
- c) cost
An advance for this purpose can be taken again, but only 10 years after the first advance was taken. The amount will be calculated using the same rules mentioned above.
So a member can withdraw once for purchase or construction and twice for repairs and renovation. A declaration form has to be submitted along with the claim form for the withdrawal.
The EPF withdrawal process can be initiated online through the Member e-Sewa portal. An individual is required to submit Form 31 online to file a claim.
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