Employees’ Provident Fund or EPF

The Employees’ Provident Fund or EPF is a popular savings scheme that has been introduced by the EPFO under the supervision of the Government of India.

The employee and employer each contribute 12% of the employee's basic salary and dearness allowance towards EPF. The current rate of interest on EPF deposits is 8.15% p.a.

The accrued interest on the EPF is tax-free and can be withdrawn without paying for the same. Employees avail of a lump-sum amount on their retirement, which is inclusive of the accrued interest.

Individuals can apply to avail of various online services of EPF India by accessing the official portal. The EPF online portal is a user-friendly platform that ensures the flow of services is transparent, efficient, and hassle-free.

EPFO - Employee Provident Fund Organization

EPFO or Employees' Provident Fund Organisation is a non-constitutional body that promotes employees to save funds for retirement.

EPFO was launched in 1951 and is governed by the Ministry of Labour and Employment. It offers schemes that cover Indian and international workers.

Schemes Offered Under EPFO

Given below are the three schemes that are offered under EPFO:

  • Employees' Provident Funds Scheme 1952 (EPF)
  • Employees' Pension Scheme 1995 (EPS)
  • Employees' Deposit Linked Insurance Scheme 1976 (EDLI)

Objectives of EPFO 

The EPFO’s primary goals are as follows-

  • To ensure that each employee only has one EPF account.
  • Compliance must be made as simple as possible.
  • Ensure that organizations follow all of the EPFO’s rules and regulations regularly.
  • To assure the dependability of internet services and to increase their facilities.
  • All member accounts should be easily accessible online.
  • Claim settlement times will be lowered from 20 to 3 days.
  • Encouragement and promotion of voluntary compliance.

UAN and EPFO Portal

All EPF subscribers have online access to their PF accounts and can execute operations such as withdrawal and checking their EPF balance.

EPFO assigns each member a 12-digit number known as the UAN. Even if an employee changes employers, his or her UAN remains the same. 

The Universal Account Number (UAN) simplifies access to the EPFO member portal. When a member’s job changes, his or her member ID changes, and the new ID is linked to the UAN. Employees must, however, activate their UAN to use the services online.

EPF Eligibility

Here are the eligibility requirements that must be met to join an EPF scheme-

  • The Employee Provident Fund is open for employees of both the Public and Private Sectors, which means all employees can apply to become a member of EPF India.

  • Any organization that employs at least 20 individuals is deemed liable to extend the benefits of EPF to its employees.

  • After becoming an active member of the EPF scheme, the employees are eligible to avail of several Employees Provident Fund benefits, including insurance benefits and pension benefits.

EPF Interest

For the Financial year 2023-24, the pre-fixed rate of interest offered by the EPF scheme is 8.15%.

The interest amount accrued on the investments in a PF online account is tax-free.

Such interest is paid only on the operative PF accounts of employees who are yet to retire. But the interest thus accrued on such accounts is taxed as per an EPF employee member’s tax slab.

It should also be noted that the share contributed towards Employees Pension Scheme does not accrue interest. However, members are entitled to receive a pension out of this accumulated sum after they turn 58 years old.

How is Interest on EPF Calculated?

The interest extended on EPF schemes is calculated each month and is calculated by dividing the rate p.a. by 12.

Such a method helps to calculate the specific interest that is offered to member employees for a given month. 

For example –

If the rate of interest is 8.5% p.a., the rate for each month would be (8.5/12) %, i.e. 0.7125%. 

Now, 12% of an individual’s salary is directed towards their EPF account.

Assuming that the salary of an individual is Rs. 15,000 per month –

12% of Rs. 15,000 would accrue Rs. 18, 00 by month-end which would be transferred to the individual’s EPF account.

Now, employers contribute 3.67% towards their EPF account, while 8.5% is contributed towards their EPS account.

  • The contribution towards the EPF account would be –3.67% of Rs. 15,000 = Rs. 550.
  • The total contribution towards the EPF account would stand at Rs. (1800+550) = Rs.2350
  • The interest accrued in one month would be Rs. 2350 x 0.7125% = Rs. 16.75

It is to be noted that the interest accrued in a given month would only be credited to the account at the end of a current financial year.

EPF Calculation

The EPF calculator is a simulation that tells you how much money will build in your EPF account when you retire. You can compute the lump-sum amount, which includes both your contribution and the employer’s contribution, as well as the investment’s accrued interest.

It includes a formula box where you can enter your current age, basic monthly pay and dearness allowance, EPF contribution, and retirement age up to 58 years.

If you know the figures, you can also enter the current EPF balance. The calculator will show you the EPF funds available at retirement after you enter the necessary information.

EPF Form

EPF forms are vital for the processing of any activity in an EPF employee member’s EPF account. Be it registration, PF transfer, withdrawal or availing loans, an EPF form is mandatory for completing such activities.

The table below offers a brief idea about the different EPS forms and the purpose they are required for –

Form

Purpose Of The Form

Application 

Form 2

For nominating and declaring

Applicable to both EPF and EPS.

Form 5

For registering

Applicable to new employees registering for EPS and EPF.

Form 5 IF 

For availing a claim under EDLI scheme

 

Form 10C

For availing withdrawal benefits or scheme certification.

EPS

Form 10D

For availing monthly pension.

 

Form 11

For transferring EPF account.

EPF

Form 14

For purchasing LIC policy.

 

Form 15G

For availing tax-saving benefits on interest.

EPF

Form 19

For settling employees provident fund.

EPF

Form 20

For settling employees provide a fund in case of death.

EPF

Form 31

For EPF withdrawal.

EPF

How to Transfer EPF Money

Step 1: In the event of a job change, EPF can be transferred using the same Universal Account Number (UAN).

Step 2: Go to the official EPF member portal and fill out the registration form.

Step 3: Once you have obtained the login credentials, log in.

Step 4: Go to the Online Transfer Claim Portal and request an EPF transfer with the same login information as before.

Step 5: If you are eligible to make a transfer claim online, you may do so without submitting Form 13.

Step 6: Select ‘Request for Transfer of Funds’ and input your previous employment information as directed.

Step 7: Have your old or new employer authenticate it.

Step 8: After submitting your information, you will receive a PIN on your mobile device.

Step 9: Track your application using the tracking ID that was issued for you.

EPF Benefits

Here is a list of EPFO benefits that an EPF employee member can avail of through the said scheme-

  • Capital Appreciation

The PF online scheme offers a pre-fixed interest on the deposit held with EPF India.

Additionally, rewards extended at maturity further ensure growth in the employees’ funds and accelerate capital appreciation.

  • Corpus for Retirement

Around 8.5% of an employer’s contribution is directed towards the Employee Pension Scheme. In the long run, the sum deposited towards the employee provident fund helps to build a healthy retirement corpus.

Such a corpus would extend a sense of financial security and independence to them after retirement. 

  • Emergency Corpus

Uncertainties are a part of life. Therefore, being financially prepared to face such unwarranted situations is the best an individual can do to deal with exigencies.

An EPF fund acts as an emergency corpus when an individual requires emergency funds.

  • Tax-saving

Under Section 80C of the Indian Income Tax Act, an employee’s contribution towards their PF account is deemed eligible for tax exemption.
Moreover, earnings generated through
EPFO schemes are exempted from taxes. Such exemption can be availed up to a limit of Rs. 1.5 Lakh. 

  • Easy Premature Withdrawal

Members of EPF India are entitled to avail benefits of partial withdrawal.

Individuals can withdraw funds from their PF account to meet their specific requirements like pursuing higher education, constructing a house, bearing wedding expenses, or for availing medical treatment. 

EPF Withdrawal Rules

Individuals may opt for either partial or complete withdrawal of EPF. But such withdrawals can be made only under specific circumstances.

Here is a list of a few such circumstances under which individuals can withdraw EPF completely –

  • On retirement.
  • If their unemployment period extends more than two months.
  • While switching from one profession to another or in between jobs. But the duration without a job should be more than two months.

Here is a list of a few such circumstances under which individuals can withdraw EPF partially–

  • For a wedding.
  • For higher education.
  • For purchasing land or constructing a house.
  • Repayment of home loan.
  • Renovating a housing property.

EPF Taxation

If you withdraw your EPF before 5 years of employment, you will be taxed. PPF withdrawals are not taxed.

Investment in the EPF is tax deductible up to Rs 1.5 lakh per year under Section 80 C of the Income Tax Act. This is true for both employer and employee contributions. Unless you become unemployed, the interest on your EPF is likewise tax-free.

Withdrawals from the EPF are likewise tax-free if made within 5 years of creating the account. TDS is deducted from the withdrawal amount if it exceeds Rs 50,000 within 5 years of the date of opening the EPF account.

PPF account investments up to Rs 1.5 lakh per year qualify for a tax credit under Section 80 C of the Income Tax Act of 1961. The interest on the PPF is also tax-free, but it must be reported on the annual income tax return. The PPF maturity amount is likewise tax-free. In other words, PPF is tax-exempt, exempt, exempt.

Withdrawal Process of EPF

EPF India members can withdraw EPF by submitting a withdrawal application either offline or through EPF online portal.

Process of EPF Withdrawal Offline

Step 1

Individuals must fill up a ‘new composite claim form’ or a ‘composite claim form” and submit it to the EPFO office under their jurisdiction. 

Step 2

A composite claim form needs to be attested by their employer.

Process of EPF Withdrawal Online

Step 1

Individuals must have an active Universal Account Number (UAN).

Step 2

The mobile number used to activate the UAN should be active as well.

Step 3

UAN should be linked with Aadhaar. They would also need the PAN and respective bank details with their IFSC code.

Step 4

After ensuring all the prerequisites are in place, they must log into the UAN online portal.

Step 5

Individuals need to verify their KYC details and then proceed as per instructions.

EPFO Information for Grievance

Employees who want to register a grievance can do so using the EPFO's member site, where they can fill out a grievance registration form and make a complaint.

Employees frequently file complaints about withdrawals, PF settlements, account transfers, pension settlements, and other issues. Follow these procedures to register an EPF grievance if you are new to the EPF member website:

  • Go to https://epfigms.gov.in/ to access the EPFO grievance site.
  • On the top bar, click the 'Register Grievance' button.
  • After that, the grievance registration form will be displayed.
  • Fill out the registration form now:
  • Enter your current situation (Employer, employee, EPS pensioner.)
  • Fill up your PF account number.
  • Then, input the address of your regional EPF office.
  • After that, enter the name of your business and its address.
  • Then, input your name, address, zip code, country, phone number, and email address.
  • The final step is to file a grievance, whether it is a transfer or withdrawal issue, a pension settlement issue, or anything else. Choose your complaint from the drop-down menu.
  • Upload your grievance letter, enter the captcha, and complete the grievance registration process.
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