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Employees Provident Fund (EPF) Scheme is one of the most popular forms of long term retirement savings in India. It is managed by the Employees Provident Fund Organisation (EPFO) and is covered under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. Under the scheme, every establishment with 20 or more employees, has to contribute a certain percentage of an employee’s salary to the scheme with an equal matching contribution by the employer. On retirement, the employee gets a lump sum which includes the amount contributed by the employee himself and that by the employer along with the interest earned on this money. Current EPF interest rates are 8.5%.Latest Update in EPF Balance Transfer
From April 1, 2019, EPF members are no longer required to fill the transfer forms in case of job change and go through numerous steps. As soon as their new employer files the monthly EPF return the PF balance from the previous employer of the member will be automatically transferred through UAN.
For this process to work for you, your Aadhaar and bank account must be linked with UAN and verified by your ex-employer.
All current and new employees should know the following EPFO rules :
- It is mandatory for any organization with more than 20 employees to register under the EPFO Scheme.
- Further, it is mandatory for organizations under EPFO to offer the scheme to all employees withdrawing a monthly salary of Rs. 15,000 or more.
- The employer and the employee make a contribution of 12% of Basic Salary to EPFO. Basic Salary for the purpose of the provident fund includes Basic Salary plus Dearness Allowance plus Retaining Allowance.
- Out of the 12% employer’s contribution that goes to the EPF, 8.33% is deposited in Employees’ Pension Scheme (EPS).
- The employee gets his full share plus the employer’s share to his EPF account, with earned interest on retirement.
- EPF interest rates are declared annually. EPF interest rate revised for FY19-20 is 8.5%.
- EPF investments enjoy Exempt, Exempt, Exempt (EEE) status as contributions, interest income and withdrawal of funds are all exempt from tax.
- The Voluntary Provident Fund (VPF) scheme is an extension of the EPF wherein the salaried employee can invest above the 12% contribution that’s there in traditional EPF accounts. VPF doesn’t require the employer to make any additional contributions. VPF fetches the same interest as EPF.
As per the rules of the EPF Act, the final PF withdrawal or partial EPF withdrawal is allowed under three situations:
- Post-retirement: When an individual retires from employment after attaining the predetermined retirement age, he can withdraw the entire amount of EPF which includes an employer’s and employee’s contribution along with the interest earned.
- Unemployment: EPFO subscribers have an option to withdraw their PF in two parts; 75% after the completion of one month of unemployment and the remaining 25% of their funds after completion of two months of unemployment, thus settling the account. They can also withdraw their PF kitty directly after two months of unemployment and settle the account in one go. A subscriber can withdraw the full PF amount and the interest earned over it. One is also allowed to withdraw the EPS amount if the service period has been less than 10 years and not later on. The employee compulsorily gets pension benefits after retirement, if he withdraws anytime after 10 years of service.
|Reason||EPF withdrawal limit||Minimum years of service required|
|Marriage||Up to 50% of employee’s share||7 years|
|Education||Upto 50% of employee’s share||7 years|
|Purchase of land/construction of a house||Upto 36 times of monthly pay + DA||5 years|
|Home loan repayment||Upto a maximum of 90%, from both employee’s and employer contribution||10 years|
|Renovation of house||Up to 12 times the monthly pay||5 years|
|After 57 years of age||Upto 90% of accumulated balance with interest||57 years of age|
EPF Tax Rules
As mentioned above, EPF investments enjoy EEE status on contributions, withdrawal and interest earned. Please read the following to know the detailed EPF Tax rules.
- EPF Contributions: EPF contributions are non-taxable. You can claim deduction under Section 80C of the Income Tax Act on your annual EPF contribution. The maximum limit on the number of investments for claiming deduction under Section 80C is Rs. 150,000.
- 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 you remain unemployed for a period of 2 months or more, you can withdraw your 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: There are various instances where you can withdraw your EPF amount partially as we have learned from the above section. EPF withdrawal becomes taxable if you withdraw more than Rs. 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 >Rs. 50,000||Before 5 years of opening EPF account||With PAN: TDS @ 10% Without PAN: TDS @ 34.6%|
|After 5 years||No TDS|
|PF withdrawal amount < Rs. 50,000||Anytime||No TDS|
Please note: If you are out of a job because of uncontrollable termination, such as, a lockout, 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.
EPF Balance Check
For your EPF Balance Enquiry, you can visit the Member Passbook portal on the EPF website (https://passbook.epfindia.gov.in/MemberPassBook/Login.jsp). Upon entering your login details, you are directed to your EPF account. Here, you can see passbook of your PF balance, with details of employee’s and employer’s contributions.
Online PF Withdrawal
Online PF withdrawal facility has made the entire process of provident fund withdrawal easier and less time-consuming. Follow the online PF withdrawal procedure as given, after confirming that your UAN is activated, and linked with your KYC.
- Go to the EPFO member portal and fill your details in the EPFO login
- Go to Manage >> KYC, and verify your Aadhaar, PAN and bank details
- Once confirmed, return to the home screen and go to Online Services >> Claim >> Proceed for Online Claim
- In your Claim Form, select the claim you want to apply for i.e full EPF Settlement, EPF Part withdrawal or pension withdrawal, under the tab ‘I Want To Apply For’. If you are not eligible for any of the withdrawal services, then that option will not be visible in the drop-down menu.
- Your online PF claim will be processed and your bank account will be credited with the amount of the claim.
- You can track your EPF claim status through the ‘Track Claim Status’ tab, under the ‘Online Services’ tab.
- You can also check your EPF balance at the same portal.
Frequently Asked Question on EPF
You can check your EPF balance by visiting the official website of the EPFO. You also have the option to check your EPF statement through leading online loans marketplaces like MyLoanCare.in by verifying your phone number and some basic details. You can see passbook of your PF balance, with details of employee and employer’s contributions just with the help of your registered mobile number.How many days it will take to get EPF amount?
When an employee applies for EPF claim online, it takes around 5-15 days to get the amount in your bank. When an employee applies for the claim in offline mode, it takes 20-30 days.How can I recover my EPF password?
Go to the EPFO website. Click on forgot password and then enter your UAN number and Captcha. Click on Get Authorized Pin. If OTP is successfully sent, you will get the OTP on your mobile number registered with the UAN. Enter the OTP. Enter the New Password. Confirm the New Password and then click on the Submit button.How can I check my PF balance through a call?
You can inquire about your EPF balance by giving a missed call to 011-22901406 from your registered mobile number. After placing a missed call, you will receive an SMS providing you with your EPF balance.How can I update my EPF KYC?
You can update your EPF KYC by logging in to your EPF account using your UAN and password. Click on the KYC option under the Manage section. Click on the box in front of the document that you want to update. Enter your name as per the document, document number and other details. It will be saved under pending KYC section until details are approved by the employer. The status will change to approved by the employer once your employer approves it.Can we withdraw EPF amount?
As per the rules of the EPF Act, the final or partial PF withdrawal is allowed in the case of retirement, wedding, unemployment, medical emergencies, repayment of home loan, renovation of house and purchase or construction of the house. EPF rules specify the minimum duration after which funds can be withdrawn for each of these purposes as well as the amount that can be withdrawn.How many days will take to get EPF claim online?
It takes around 5-15 days to get the EPF claim processed online and receive the amount in your bank account if you apply for EPF claim online.Can I withdraw my EPF before 5 years?
You can withdraw your EPF before 5 years only in the case of unemployment. You can withdraw 75% of your fund if you are unemployed for more than a month. If you remain unemployed for more than two months, you are eligible to withdraw the remaining 25% of EPF.How can I withdraw my EPF amount online?
You can withdraw your EPF amount online by logging in to EPFO portal. Visit the ‘Our Services’ tab and click on the option ‘Claim’ from the drop-down list. Click on ‘I Want to Apply For’. If the subscriber is eligible to avail it then only the drop-down box with the types of withdrawal will be displayed. The claim is then sent to the employer for approval. Once approved, the PF amount will be credited to the subscriber’s account within a few days.How do I know my UAN number?
You can easily get your UAN number allotted to you by the EPFO from your employer, as they maintain your EPF records. Some employers print the UAN number on the salary slips too. You can also obtain you UAN number through EPFO portal.