Nearly the majority of the people who work for private sector organizations in India save money through Employee Provident Funds (EPF), one of the key platforms. What are Employee Provident Fund (EPF), Employee Pension Scheme (EPS), and Employees Deposit Linked Insurance Scheme (EDLIS)? How are contributions determined based on basic pay and dearness allowance? What is the EPF interest rate? How much would one save in the EPF? How would one find out how much has been accumulated in PF? All questions will be addressed here.
Employee Provident Fund Overview
Employee Provident Fund: What is it?
A provident fund is established with the intention of giving older persons financial stability and security. When someone first starts working for an organisation, they frequently make recurrent donations to these funds (monthly in most cases). Its goal is to assist employees in saving a portion of their monthly pay to be utilized if they become temporarily disabled or are unable to work, as well as for retirement. A trust invests the investments that a number of individuals or workers have made. The EPF account must typically receive 12% of the Basic, DA, and cash value of food allowances.
- Employee Provident Fund (EPF): Employer matches employee contribution up to a maximum of 12%. While the employee contribution is taxable but deductible under section 80C of the Income Tax Act, the employer contribution is tax-exempt. As stated by the government, interest is earned on the EPF sum.
- Pensions on disability, widow pensions, and pensions for nominees are all provided under the Employees’ Pension Scheme (EPS) of 1995.
- In the case of death due to natural causes, disease, or an accident while on the job, the Employees Deposit Linked Insurance Scheme (EDLIS) pays a lump amount to the insured’s designated beneficiary.
The EPF & MP Act, of 1952 was passed by the legislature and went into effect on March 4, 1952. This was accomplished by a number of legislative initiatives, such as the Employees’ Provident Funds & Miscellaneous
The Acts now implement the following three schemes: If you’re interested in reading the acts, which are available in pdf format, click on the link.
- Employees’ Provident Fund Scheme, (EPS)1952
- Employees’ Deposit Linked Insurance Scheme (EDILS), founded in 1976
- Employees Family Pension Scheme, 1971 was replaced by the Employees’ Pension Scheme, 1995.
The contribution rates for India’s EPF, EPS, EDLI, and administrative fees are listed in the table below.
| Scheme Name | Employee contribution | Employer contribution |
| Employee provident fund | 12% | 3.67% |
| Employees’ Pension scheme | 0 | 8.33% |
| Employees Deposit linked insurance | 0 | 0.5%(capped at a maximum of Rs 15,000) |
| EPF Administrative charges | 0 | 0.85% (From Jan 2015) |
| PF Admin account | 1.1% | |
| EDLIS Administrative charges | 0 | 0.01% |
What distinguishes EPF from EPF Private Trust?
If an employer has more than 20 employees, he has three options for making contributions to the provident fund of those employees. Exempt refers to being exempt from a responsibility, obligation, or liability that applies to others.
- One is to invest in a non-exempt fund, such as the EPFO’s EPF. Un-exempted businesses are those that have their employees’ PF accounts on file with EPFO. The EPFO manages the accounts of more than five crore active customers.
- Invest in the EPF Private Trust, a company-run exempt fund that is acknowledged by the EPFO and that pays at least the same interest as the EPF. EPF Trust is required to perform the same obligations as EPFO. Companies that manage the funds and accounts of their employees directly and are excused from filing PF reports create EPF Private Trusts. Members of these trusts receive income tax benefits and other advantages on par with EPFO members.
- Invest in a company-run excluded fund that has the resident income tax commissioner’s blessing but is not EPFO-regulated. This kind of self-regulated fund manages all investments and fund operations.
How does EPFO’s EPF membership work?
Employees in the private sector who earn a basic income of up to Rs. 15000 (the previous salary cap was Rs. 6500; as of September 1, 2014, it was Rs. 15000) are required to make contributions to the Provident Fund, while those earning more than Rs. 6501 have the choice of doing so. It is advantageous for employees who get salaries above Rs. 15001 (the minimum before September 1, 2014, was Rs. 6501) to join the Provident Fund since it is withheld from the salary before it is deposited in a bank or delivered, requiring employees to save money.
People who began working after September 1, 2014, and make more than 15,000 rupees per month in basic pay and DA are not required to pay into the EPS or pension plans.
Every employee who starts a new job at a company that is registered with the EPF Scheme of 1952 must file a declaration, Form 11. When new employee joins an organization, they must fill out the EPF Form 11, which asks for basic information about them. In order to opt-out of EPF, new hires must fill out EPF Form 11, which is a self-declaration about their position as EPF/EPS members or non-members.
Since 2004, government employees have not made EPF contributions; instead, they have made NPS contributions. Except for the military forces in the first stage, all government employees who begin their employment on or after January 1, 2004, must contribute to Tier-I, but Tier-II will be voluntary and up to the employee’s decision. A government employee in Tier-I will be required to contribute 10% of his basic pay + DA, which will be deducted from his income each month by the PAO in question. The government will contribute in an amount that is exactly matched. Those who are not government employees, however, will not receive any assistance from the government.
How are UAN and EPF related?
A Universal Account Number The UAN is a 12-digit number given to each employee who makes EPF contributions. The introduction of the universal number is a significant step in moving EPF services to an online platform and improving their usability. Please take notice that a person’s universal account number does not change during the course of their employment. With a change in employment, nothing changes. One now has a UAN number and a PF number, which is also known as a member ID.
Each employee will have a single UAN, or universal account number, which will never change. It will keep track of each of your Member IDs.It’s similar to being able to have many savings accounts but having just one PAN, or Permanent Account Number, to link them all together. Therefore, if your new company contributes to EPF, they will issue you a new Member ID when you move jobs. Your UAN number has to be connected to this new Member ID.
The EPFO offers a variety of services to its members through a single interface using the Universal Account Number (UAN)-driven Member Portal, available at http://uanmembers.epfoservices.in. To use a variety of services, including downloading a UAN card, a member passbook, updating KYC information, adding all of his member IDs to the UAN, and filing and viewing transfer claims, the member must activate his registration. The next articles go into further depth about UAN.
Who oversees EPF?
The Employees Provident Fund Organisation (EPFO) of India administers the Employee Provident Fund (EPF). A business should register with EPFO if it employs 20 or more people in any of the more than 180 sectors listed below. The Indian government’s EPFO is a statutory organization under the Labor and Employment Ministry. In terms of the number of members and the total value of financial transactions, it is one of the biggest social security organizations in the world.
Q. interest rates What is the PF accumulation interest rate?
A: The amount that was in an employee’s account as of April 1st of each year receives compound interest as stated by the Central Government.
With input from the Central Board of Trustees, the central government of India determines the EPF interest rate. The interest rate on the sums kept in the fund throughout the course of several decades has varied between 8 and 12%. Every year, EPF India posts an announcement about its interest rates on its official website. In all cities, the same is reported in the major daily newspapers. Please click the image to expand to view the interest rate over time starting in 1952.
How does EPFO afford the interest?
The annual interest paid to subscribers each year is “declared” by the EPFO. The returns over the last four years have averaged about 8.75 percent annually. The excess of its income over costs determines this interest. The interest on the government deposits, gilts, corporate bonds, and other assets it owns in its portfolio generates revenue for the fund. It has expenses and payments to subscribers. In 2015–16, EPFO allocated 5% of its additional corpus—or a little over Rs. 6,000 crore—to stock investments. Officials from the labour ministry predict that in 2016–17, the sum might reach Rs. 10,000 crore.
How are the interest and total amount of the EPF calculated?
Each year’s opening balance, or the total of all previous payments, would be recorded. Although contributions are paid regularly, interest is determined annually. On the initial sum and the monthly payment, interest is paid. Therefore, the new starting balance for the next year would equal the previous opening balance plus any contributions made throughout the year plus interest.
How much money might be saved by contributing to an EPF?
Consider Swayam’s starting salary to be Rs. 20,000. He receives a 5% increase, usually every year. His working career lasted 35 years because he began at age 25 and continued until age 60.
His employer matches his 12% of his basic income in PF contributions (EPF contribution is 3.67%, EPS is 8.67%). In this instance, during the course of his 35-year working career, he has contributed a total of Rs. 26.01 Lakhs. Of course, his business contributes 7.955 lakh rupees, for a total of 33.967 lakh rupees. And when he retires, this sum rises to be worth Rs. 1.38 Crore!
Can I voluntarily pay more to the EPF than the allowed amount?
By depositing VPF, you can make additional provident fund contributions (beyond the minimum required of 12%). (Voluntary Provident Fund). The employer is not required to provide a matching contribution, though. The only basic wage for which the employer is required to make a contribution is the 6500–15000 range. This is referred to as a voluntary contribution, and a Joint Declaration Form must be completed with declarations from both the employer and the employee regarding the rate at which PF would be withheld. It is thoroughly explained in our article, Voluntary Provident Fund.
How do I find out my EPF balance?
The EPFO has been utilizing technology to become a more expert and adaptable organization. You may now view your passbook and check your EPF balance by SMS. The ability to transfer a balance to a new account online has been added. All users will soon receive a Universal Account Number (UAN) that they may use for different jobs and cities. Active contributors to the EPF Annual Statement have already received UANs: The employee used to get a yearly statement from EPFO that included information regarding PF accumulations via the employer. The piece of paper is large.
EPF balance through SMS: As of July 2011, the EPF Account balance may be seen online.
- Visit epfindia.com/site en/KYEPFB.php. www.epfindia.com/MembBal.html. Choose an EPFO office.
- Enter your PF Account Number, which should be entered using the following format: EPFO Office Code/Establishment Code (maximum 7 digits)/Extension (maximum 3 digits)/Account Number (maximum 7 digit) (PF Account Number may not have Extension code, in that case, leave it blank).
- Enter your name and phone number, agree to the terms, and click submit.
- EPFO will send you a text message alert: As per Today’s Date>, the EE amount is Rs. XXXXX and the ER amount is Rs (Account updated up to Date).
- EPFO will send you a text message alert: As per Today’s Date>, the EE amount is Rs. XXXXX and the ER amount is Rs (Account updated up to Date).
- On the date (represented in the Account updated date) specified in your SMS, EE stands for Employee Contribution and ER for Employer Contribution. It does not display the PF Account’s current balance as of Today.
EPF Passbook: On November 30, 2012, EPFO introduced the e-passbook feature. The employee’s provident fund account, often known as the online EPF or EPF ePassbook, is accessible online. To obtain the passbook, you must register at members.epfoservices.in. Keep in mind that registration activation takes time. When you can download the passbook, you will receive an SMS notification. It displays information in detail, including the initial balance, employee and employer contributions made each month, and the breakdown of employer contributions into EPS and PF. if any withdrawals from the EPF account have been made.
Passbook for EPF with UAN
Each employee provident fund member is given a 12-digit number called a UAN by the Employee Provident Fund Organization (EPFO), which gives him authority over his EPF account and lessens the employer’s responsibility. The activation of UAN numbers began in October 2014. If your UAN number has been activated, you can download the EPF passbook. How to register for a UAN is covered in our post, UAN or Universal Account Number and Registration of UAN.
Mobile and EPF As described in our post-EPFO Mobile App, SMS Service, and Missed Call: You Can View It, you can also do so using the mobile app that EPFO introduced in September 2015. Employee Pension Plan
EPF Withdrawal and Transfer
Q. What happens to EPF when a job is changed? Can the whole sum be withdrawn?
A: Yes, legally speaking, moving an EPF account while changing jobs is required. However, most individuals tend to withdraw the money instead of sending it. Employer contributions to the EPF cannot be withdrawn prior to age 58 as of February 10, 2016. It is covered in depth in our post, Changes in EPF Withdrawal Rules from 10 Feb 2016.
If you have fewer than 10 years of EPS service, you have the choice of either withdrawing your corpus or having it transferred by getting a “Scheme Certificate.” The withdrawal option expires after a service tenure of ten years.
Q If I remove my EPF amount before five years, would there be any tax repercussions?
A: If you are a member of a recognized provident fund, it depends on whether or not your contributions span more than five years and include transfers from several businesses. The tax benefits you received on your own contribution under Section 80C/88 in prior years will be lost if you withdraw before the completion of a 5-year period. In addition, the employer contribution and interest received will be added to your current income, subject to relief under Section 89, as if the fund had never been recognized in the first place.
Q. What is the TDS for EPF withdrawals? Describe Form 15G.
A. Provident fund withdrawals made prior to five years after the end of employment are subject to tax deducted at source (TDS) at a rate of 10% as of June 1, 2015.
Q. If a PAN is not submitted, TDS will be deducted at a rate of 34%.
A. Subscribers without taxable income are exempt from TDS as long as they submit a 15G/15H form. If the amount of provident fund payable is less than the basic exemption limit, which for AY 2016–17 is 2,50,000 for senior citizens and Rs. 3,00,000 for those who are not senior citizens, Form No. 15H (for senior citizens) or Form No. 15G (other than for senior citizens) may be submitted to avoid the imposition of TDS.
Q. If I remove my EPF amount after five years, would there be any tax repercussions?
No, if you withdraw from your EPF account after 5 years of cumulative contributions (which may include contributions from different employment), your withdrawal is tax-free. In your income tax return, indicate it as exempt income.
Q. Can I take an EPF withdrawal while I’m working?
For the purposes of marriage, illness, further education, home construction, etc., the EPF system permits partial withdrawals.
Q. How is EPF transferred?
Ideally, you should start the transfer procedure for your EPF balance as soon as you start working for your new company and receive a new PF account number. Since October 2014, the Employee Provident Fund Organization (EPFO) has assigned the majority of workers a universal account number (UAN), a 12-digit identifier that gives them authority over their EPF accounts and minimises the employer’s participation. In September 2014, the Universal Account Number (UAN) Member Portal (www.uanmembers.epfoservices.in) became live. Many services are available to workers or EPF members using this platform. EPF Online Transfer Claim is still unavailable, nevertheless. For the time being, you must submit your EPF Transfer claims online using the following links: http://epfindia.com/Employee OTCP.html or http://memberclaims.epfoservices.in.
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