Context
Article is concerned with a new idea floated by EPFO wherein group housing scheme has been proposed against an individual scheme at present
What has happened?
The Employees’ Provident Fund Organisation (EPFO) has mooted a group housing scheme which will enable members to form cooperative housing societies and use their entire provident fund savings towards buying land, constructing homes or paying housing loan instalments
The proposal
- Addition of new paragraph 68BD: The Employees’ Provident Fund Organisation has proposed addition of a “new paragraph 68BD as a group housing scheme so that Employees’ Provident Fund members forming a cooperative society of 10 or more employees may be given not only a one time Employees’ Provident Fund withdrawal but also an option to pay loan instalments towards housing loan to banks from the monthly contributions received in Employees’ Provident Fund Scheme, 1952.”
- At least 3 years of subscription required: Employees with at least three years’ subscription to the Employees’ Provident Fund scheme will be allowed to withdraw their savings for housing purposes, including repayment of loans from their monthly contributions
- No cap:There will be no cap on the amount of Employees’ Provident Fund savings that can be drawn for purchasing land, constructing a house or repaying housing loans, under the proposed scheme
- Present situation: At present, an employee who has completed five years of service is allowed to withdraw Provident Fund savings equivalent to 36 months of the member’s salary (basic salary and dearness allowance) for construction of a flat or 24 months of the salary for purchasing land
Who can avail the benefits of the scheme?
According to the proposal, members of an existing cooperative society formed under any present law can avail this scheme, provided at least 10 members of the housing society were subscribers to the Employees’ Provident Fund scheme.
