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EPF Rule Change 2026 : First-Time Homebuyers Can Now Withdraw 90% of EPF Corpus After 3 Years

  • Harsh Jain
  • Jul 14, 2025
  • 4 min read

Updated: Jan 30

Overview

In a major step towards making homeownership more accessible, the Employees’ Provident Fund Organisation (EPFO) has announced a new rule in 2026: First-time homebuyers can now withdraw up to 90% of their EPF corpus after just three years of membership. This landmark change is expected to help millions of salaried Indians arrange funds for their first home, especially for the crucial down payment.


EPF Rule Change 2025


Thinking about using your EPF for a home purchase? Book a Free Consultation with Kustodian to understand your eligibility and documentation process.


What Has Changed?


Previous Rule


  • Eligibility: Members could withdraw for home purchase after 5 years of EPF membership.

  • Withdrawal Limit: Up to 36 months’ basic wages plus dearness allowance, or the total cost of the property (whichever is less).

  • Frequency: Not clearly specified for first-time home purchase.


EPF New Rule Change (2026)

  • Eligibility: Now, just 3 years of EPF membership is required.

  • Withdrawal Limit: Up to 90% of the accumulated EPF corpus.

  • Purpose: Can be used for the purchase of a ready house, construction of a new home, or purchase of land for residential purposes.

  • Frequency: This facility is available once in a lifetime for first-time homebuyers.


Legal Basis


  • The change is implemented under the newly added Para 68-BD of the EPF Scheme, 1952.

  • Note: The rule applies to members of registered housing societies or those purchasing through government housing schemes (like PMAY).

  • Note 2: EPF withdrawals are only tax-free if you have completed 5 years of continuous service.

The Impact: A first-time homebuyer withdrawing 90% after only 3 years will face:

  • TDS (Tax Deducted at Source): 10% if PAN is provided; up to 30%+ if not.

Income Tax: The amount will be added to their taxable income for that year and taxed at their slab rate


Why Is This Important?


  • Easier Down Payment: Arranging the down payment is often the biggest hurdle for salaried homebuyers. This rule allows members to tap into their retirement savings for this purpose.

  • Faster Access: With the reduced waiting period, younger employees can plan for homeownership earlier in their careers.

  • Boost to Affordable Housing: The move is expected to stimulate demand in the housing sector, particularly among first-time buyers.


How to Avail the New Benefit

  1. Check Eligibility: Ensure you have completed at least 3 years of EPF membership and are a first-time homebuyer.

  2. Apply Online: Use the Composite Claim Form (Aadhaar/Non-Aadhaar) available on the EPFO portal.

  3. Attach Required Annexures: Specific annexures related to Para 68-BD must be submitted.

  4. One-Time Use: Remember, this facility is available only once in your lifetime for home purchase/construction.


    EPFO 3.0 Update: The Central Board of Trustees (CBT) approved a guideline that members must generally maintain at least 25% of their own contribution balance to keep the account active for retirement. Withdrawing 90% is often permitted only if the remaining 10% (plus employer share) meets minimum thresholds.



Expert Insights

Financial planners and real estate experts have welcomed the move, calling it a “game-changer” for India’s middle class. However, they also caution that members should balance their immediate housing needs with long-term retirement planning.


FAQs


1. Can I use the 90% withdrawal for any house, or are there specific conditions?

The 90% withdrawal under Para 68-BD is specifically designed for members of registered housing societies (with at least 10 members) or those purchasing through government-backed schemes like PMAY. If you are buying a private property independently, you may still be subject to the standard 5-year membership rule.


2. Will I have to pay tax on the 90% amount I withdraw? 

Yes, if you have not completed 5 years of continuous service. While the 2026 rule allows you to access the funds after 3 years, the Income Tax Act still considers EPF withdrawals taxable if done before the 5-year mark. TDS (Tax Deducted at Source) will be applied, and the amount will be added to your taxable income for the year.


3. Is the "3 years of membership" cumulative or continuous with one employer? 

It is cumulative. As long as you have transferred your EPF balance from previous employers to your current UAN, the total period of membership across all organizations is counted toward the 3-year eligibility.


4. Can my spouse and I both withdraw 90% from our respective EPF accounts? Yes. If both spouses are EPF members and are joint owners of the property, you can combine your balances to fund the purchase. This is often the best way to cover a large down payment.


5. Does this rule apply if I already own a home but want to buy a second one? 

No. This specific benefit is a "once-in-a-lifetime" facility intended exclusively for first-time homebuyers. You will likely need to provide a declaration stating that you do not own any other residential property at the time of application.



Conclusion

The 2026 EPF rule change is a significant step towards empowering salaried Indians to achieve their dream of homeownership. By allowing first-time homebuyers to withdraw up to 90% of their EPF corpus after just three years, the government is removing a major financial barrier and supporting the goal of ‘Housing for All’.


For more details or to check your eligibility, visit the official EPFO website or reach out to contact@kustodian.life.


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