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EPF - Employees Provident Fund

EPF Details

Last Updated 20th Jan 2022

  • The current interest rate on EPF is 8.50%.
  • Funds in EPF are pooled by the employer and the employee.
  • The EPF scheme provides various tax benefits.
  • EPF is mandatory for the organization with more than 20 employees.
  • You can also take a loan against EPF by submitting Form 31, 19 and 10C.
  • The EPF contribution has been revised to 12% from August 1 which was reduced to 10% during the Covid period to tide over the immediate liquidity crisis.
  • News: Last Deadline to Add Nominee in EPF Account New

See how to add an Employee in EPFO Portal

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What is EPF?

EPF or Employee Provident Fund is a fund maintained by Employee Provident Fund Organisation of India (EPFO). PF is a retirement benefit saving scheme under which every employee must contribute 12% of the basic pay into the fund. The fixed-rate of 12% is contributed equally by the employer, of which 8.33% is directed towards the employee pension scheme by the employer. The employee can withdraw the amount saved in the PF after retirement. However, in case of financial contingencies, the partial portion of EPF can be utilized by withdrawing the funds under EPF form 31.

Benefits of EPF Scheme

The Employee Provident Fund scheme provides financial security and stability to the EPF employee members. Here are some other benefits for the EPF scheme.

  • Under the EPF scheme, 8.33% of the EPF funds is directed towards the employee pension scheme by the employer. Thus, in the long run, it can help to build a retirement corpus.
  • EPF funds can also be used in case of a financial emergency by withdrawing a partial portion of this fund through EPF form 31.
  • Under Sec 80 C of the Income Tax Act, employees can also claim tax benefits upto a threshold limit of ₹ 1.50 Lakh on the EPF funds contributed by them.
  • EPF Members can also withdraw funds from their PF account to meet their specific requirements like pursuing higher education, house construction, wedding expenses or for availing medical treatment.

PF Eligibility Criteria

Following is the eligibility criteria for employees provident fund:-

  • Any Indian citizen above 18 years
  • Salaried employees
  • If your salary is less than ₹ 15,000 then it is mandatory to open a epf uan
  • Organisations with more than 20 employees

Services offered by EPFO - Employees' Provident Fund Organisation

Services which are offered by pf online portal :-

  • Withdraw epf online
  • Helpdesk for inoperative account
  • Online transfer of EPF
  • UMANG App
  • Organisations can register online
  • Online payments of pf account
  • Generate a certificate of coverage
  • Claim status and passbook
  • Missed call and SMS
  • Grievances

EPF Interest Rate

EPFO reviews the interest rate of EPF each year after negotiations with the ministry of finance. For the fiscal year 2020-2021, the interest rate stands at 8.50%.

How Employee and Employer Apply For EPF?

Steps for employee EPF are as follows:-

  • Visit official website of EPFO
  • Click on ‘Member Portal’ under Employees category
  • A new screen will appear, Click on Register
  • Enter the details like PAN number, Aadhar number, Passport number, Ration card number etc
  • Enter the Captcha
  • Click on ‘I Agree’
  • Click on ‘Get PIN’ and now enter the PIN
  • Now you can login using selecting document type and document number

Steps for employer EPF are as follows:-

  • Visit the official website of EPFO and register
  • Click on ‘ESTABLISHMENT REGISTRATION’
  • You will be redirected to a new page, download the user manual and read the terms and condition carefully
  • After this sign up on USSP (Unified Shram Suvidha Portal) of epfo portal
  • Click on ‘Sign Up’
  • Enter the required details like name, email, mobile number, and create an account
  • Login to USSP and click ‘Registration For EPFO-ESIC’
  • Select ‘Apply for New Registration’
  • Two options will be displayed, select ‘Employees’ Provident Fund and Miscellaneous Provision Act, 1952’
  • Click ‘Submit’
  • A new page will open up- ‘Registration Form for EPFO’
  • Now enter all the details like establishment details, eContacts, employment details etc
  • Attach Digital Signature Certificate (DSC) and other documents

EPF Contribution

EPF contributions are made by the employer and employees regularly every month. The percentage of EPF contribution stands as follows.

Contribution Percentage contributed
Employee 12%
Employer 12%

Employee Contribution in EPF

An employee has to contribute 12% of the basic pay every month. In the following cases, the employee contribution rate for EPF is 10%:

  • An establishment in the industry of Jute, Beedi, Guar Gum Factories, Coir, and Brick.
  • Any industrial company which is declared sick by the Board for Industrial and Financial Reconstruction.
  • Any company or establishment with less than 20 employees.
  • An establishment which has incurred losses equal to or more than its net worth in a financial year.

Employer Contribution in EPF

An employer has to contribute 12% of the employee's salary to the EPF account. However, inclusive of some administration costs, a total of 13.61% of the salary towards the EPF is borne by the employer. Of these, the fixed rate of 8.33 % is contributed towards the employee pension scheme, and the remaining 3.67% of funds are contributed towards EPF. An additional 1.61% is also paid as administration costs related to EPS and insurance.

Example

Consider this example to have a better understanding of the contribution of EPF..

If an employee has a monthly salary of ₹ 40,000, in which the basic pay is ₹ 20,000. The break-down of the EPF stands as follows:

Contribution by employee: 12% of ₹ 20,000 = ₹ 2,400
Contribution by employer: Towards EPS = 8.33 % of ₹ 20,000 = ₹ 1,666
Towards EPF: 3.67% of ₹ 20,000 = ₹ 734
Additional cost: 1.61 % of ₹ 20,000 = ₹ 321

Employee Provident Fund Forms

The registration of new employees for EPF and withdrawal of funds from EPF can be done using EPF forms which can be downloaded from the e-portal of EPFO. Here is the list of some essential forms that you can find on the website.

  • Form 14 - To buy LIC policy
  • Composite Claim Forms - Partial withdrawal, Full settlement, and Pension Withdrawal benefit.
  • Form 5 - Registration of new employees
  • Form 13 - EPF account transfer.
  • Form 11 - Auto transfer of EPF

EPF Withdrawal

Unlike any other bank accounts, funds can be withdrawn from EPF with subject to following terms and conditions:

  • 90% of the funds can be withdrawn from EPF before one year of retirement provided the person is 54 years or above.
  • EPF withdrawal is also permitted if a person is unemployed for more than one month. In such a scenario, 75% of the withdrawal is permissible after the period of 1 month of unemployment.

Thus, primarily there are three types of EPF withdrawal: Partial withdrawal, Full settlement, and Pension Withdrawal benefit, which can be claimed through composite claim forms available on EPFO’s e-portal.

EPF Personal Loan

In the case of financial contingencies such as marriage, education, medical treatment, purchasing house or lockdown etc., the employees can partially withdraw the contributions made towards an EPF account as an advance which is known as EPF loan. Employees can avail a PF loan through online or offline mode by submitting EPF Loan Form-31, 19 & 10C provided they meet the PF loan eligibility criteria of EPFO. To avail an EPF loan online, they need to login to EPFO portal using their UAN member login details.

EPF Tax Rules

EPF investments enjoy EEE status on contributions, withdrawal and interest earned.

  • EPF Contributions: EPF contributions are tax exempted. You can claim deduction under Section 80C of the Income Tax Act on your annual EPF contribution. The maximum limit on the investments for claiming deduction under Section 80C is ₹ 1,50,000.
  • EPF Withdrawals: EPF withdrawals are exempt from tax, if you withdraw the EPF amount at retirement age or as allowed under EPF rules. Taxation on EPF withdrawals depends on when and how much you withdraw out of your account. There could be three different scenarios for EPF withdrawal and tax exemption status will differ in each of these scenarios.
    • Post Retirement: Your EPF contribution and the interest earned on it is not taxable if you withdraw it duly. However, if you do not withdraw immediately, the interest earned from your retirement to till you withdraw from the EPF account will be taxable income for you.
    • Unemployment: If one remains unemployed for a period of 2 months or more, he can withdraw his contribution to the EPF account and its earned interest. The interest income on such withdrawal will be taxed in the year in which it is accrued if the accumulated amount is not immediately transferred to the next employer or withdrawn. Tax on such withdrawal of the contribution is also subject to when you withdraw the money and how much, as explained in the table below.
    • On the job, pre and partial withdrawal: EPF withdrawal becomes taxable if you withdraw more than ₹ 50,000 before completing five years of employment. The deduction claimed under Section 80C on your contribution gets added to your income in the year of withdrawal. Switching jobs in less than five years but transferring the EPF to the new employer is counted as continuous service and the amount transferred is not taxable.
    Amount Time of withdrawal TDS
    PF withdrawal amount > ₹ 50,000 Before 5 years of opening EPF account With PAN: TDS @ 10% Without PAN: TDS @ 34.6%
    PF withdrawal amount > ₹ 50,000 After 5 years No TDS
    PF withdrawal amount < ₹ 50,000 Anytime No TDS

    Please note: If you are out of a job because of uncontrollable termination, such as, a lockdown, retrenchment or medical condition, the rule of TDS would not be applicable.

  • EPF Interest: According to tax laws, interest income is not taxable. However, if you are unemployed, be it on account of termination, resignation or retirement, the amount of interest that is credited to your EPF account from the time of leaving the job till you withdraw from the EPF account is taxable. Suppose, you retire at 55 years of age, but do not withdraw from your EPF until 58 years of age because of the interest earned. In this case, the amount of interest you earn during these three years will be taxable.

Latest News about EPF Account

  • Add Nominee to Your EPF Account
    As per the latest update, the deadline for adding the nominee to your EPF account is December 31, 2021. If you fail to add a nominee, it can cause the loss of benefits such as insurance money and pension.

FAQs

What is the age cap to withdraw the full amount of EPF?

You can withdraw the full pension if you are more than 58 years old. However, EPF withdrawals are exempt from tax, if you withdraw the EPF amount at retirement age or as allowed under EPF rules.

Can an employer be part of the EPF scheme?

The employer can be part of the EPF scheme, to contribute to the EPF account of the employer. An employer has to contribute 12% of the basic pay of the employee to the EPF account.

What happens to EPF after the death of a member of PF?

In case of the death of the EPF account holder, the entire fund is transferred to the nominee, that is mentioned on the EPF form while PF account opening. These could be the widow/widower or the children if they have attained the age of 25 years.

What is a composite claim?

Several claims forms like form no. 19, 10C, and 31 and UAN form no. 19, 10C, and 31 have been consolidated into a single form known as a composite claim form. This form can be used for partial and full withdrawal of pension.

Can you view the balance of your EPF account?

Yes, EPF balance can be viewed by activating UAN, and you can see your balance by downloading the EPF passbook, by logging to your EPF account through UAN, or through SMS.

How is the interest rate of EPF credited to the account?

As per the interest rate for a financial year when the current year ends, EPFO estimates the month-wise closing balance and then the Compound interest for the whole year. It is calculated by adding the balance of all months, multiplied by EPF rate/1200.

How to link aadhar card & pan card on PF account?

To link aadhar card and pan card on a pf account you must go to the official site of EPFO, enter your details on the login page, click on e-KYC portal and go to your UAN account. Now select the UAN number and enter the OTP. Once verification is done your aadhar will be linked to your EPF account.

How epfo employee portal work?

Employees can login to the EPFO employee portal using the UAN or PF number. On EPFO employee portal, employees can check their balance, update job leaving date, KYC documents, claim status and passbook, withdraw amount online. Any information updated here, is reported to the employer and is recorded on the UAN passbook.


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Our News - Jan 2022
  • 2022-01-17 : Air India Employees Shift to EPFO
    The Centre has brought thousands of employees of the airlines under the EPFO (Employees’ Provident Fund & Miscellaneous Provisions Act 1952) coverage, thus taking another step towards completing the privatization process for Air India.
  • 2021-12-31 : EPFO Extends Deadline for E-nomination
    EPFO has extended the deadline for E-nomination beyond 31st December. In addition, it has not specified any date and asked to file E-nomination at the earliest.
  • 2021-12-14 : Last Deadline to Add Nominee in EPF Account
    As per the latest update, the deadline for adding the nominee to your EPF account is December 31, 2021. If you fail to add a nominee, it can cause the loss of benefits such as insurance money and pension.
  • 2021-11-25 : EPFO Makes Crucial Announcement Regarding EPF Transfer
    As per the latest update, EPFO has approved a centralized IT system that will automatically transfer the old PF amount to the new EPF account in a job change.
  • 2021-09-14 : Aadhaar-PF Linking Extended till December 31
    The government has extended the last date to link your PF account with Aadhaar until December 31, 2021. The deadline is extended for the administrative zone of the North Eastern Region and in certain classes of establishments.
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