EPF is a statutory benefit for Indian workers. The Central Board of Trustees (CBT) manages the Employees' Provident Fund (EPF) on behalf of the government, employers, and employees. Learn more about Various Provident Fund Schemes in this blog.
The Employees’ Provident Fund Organisation, also known as EPFO, is a non-constitutional organisation that promotes retirement savings among workers. The organisation was started in 1951 and is run by the Ministry of Labour and Employment of the Government of India. The Board is helped by the EPFO. Learn more about Various Provident Fund Schemes in this blog.
To accommodate individuals from other nations as well as Indian laborers, measures are now being taken (from countries with whom the EPFO has signed bilateral agreements).
Employees’ Provident Fund as a Concept
EPF is a welfare program that was put in place to help employees have a better future. It is a legal benefit that employees can get when they retire or quit their jobs. If an employee dies, those who depend on them will get the benefits. In accordance with the EPF plan, employees as well as the employers of those employees must pay contributions to the Employees’ Provident Fund (EPF).It is the employee’s right to access their interest-bearing funds in their Provident Fund Account (PF account) when they retire or quit their position, provided that certain conditions are met.
What Is the EPF?
- There is a law governing the Employees’ Provident Fund and Miscellaneous Provisions Act, which was passed in 1952. (EPFS). This is a long-term savings plan for retirement that is run by the Employees’ Provident Funds Organisation (EPFO)
- According to the Employee Retirement Income Security Act, both the employee and his or her company must make an equal contribution (ERISA). Retirement benefits are paid in a lump sum at the end of the employee’s career, including payments from both the employee and the employer, as well as interest
- All of India excluding Jammu and Kashmir is covered by the Provident Fund Scheme.
EPFO Scheme
- EPF Scheme is set up to help government, public, and private sector workers financially by giving them a lump sum when they retire or leave their jobs. It does this by managing its provident funds.
- It helps the members of the provident fund scheme get social security
Who Is Eligible for the EPF Scheme?
- This scheme applies to all workplaces with 20 or more employees who aren’t excluded. In some cases, workplaces with fewer than 20 employees are also covered, as long as they meet certain conditions and exception
- But employees who aren’t in the provident fund scheme can join if the Assistant PF Commissioner gives them permission
- Here, “excluded employees” means people whose monthly pay is more than ₹ 15,000.
Objectives of EPFO
- Providing Retirement Benefits: The primary objective of EPFO is to provide financial security and support to employees upon their retirement. It ensures that employees have a corpus of savings to depend on when they stop working.
- Promoting Savings: EPFO encourages regular savings by both employees and employers. A portion of the employee’s salary is mandatorily contributed to the provident fund, fostering a savings habit.
- Social Security: EPFO serves as a social security net for employees and their families. In case of unforeseen events like disability, illness, or death, the provident fund and Employee Pension Scheme (EPS) provide financial support.
- Facilitating Housing: EPFO’s schemes allow members to utilize their provident fund savings for housing-related purposes, such as purchasing or constructing a house, thereby promoting homeownership.
- Education and Skill Development: EPFO helps members meet their educational expenses by permitting withdrawals for higher education and skill development of their children.
- Promoting Financial Inclusion: EPFO encourages the inclusion of informal and organized sector employees in the formal financial system by facilitating the creation of Individual Employee Accounts and linking them with Aadhar and bank accounts.
- Providing Interest on Accumulations: EPFO ensures that members’ provident fund contributions earn interest. The interest rate is periodically declared by the government and provides a competitive rate of return.
- Monitoring Compliance: EPFO monitors compliance with the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, by employers, ensuring that they contribute the mandatory amount to their employees’ provident fund accounts.
- Digital Transformation: EPFO aims to provide convenient online services to its members, reducing paperwork and administrative hassles in various EPF-related transactions.
- Promoting Financial Literacy: EPFO conducts awareness and education programs to enhance financial literacy among its members, empowering them to make informed decisions about their retirement savings.
- Facilitating Portability: EPFO has introduced the concept of Universal Account Number (UAN) to ensure the portability of provident fund accounts, making it easier for employees to continue their contributions when changing jobs.
Benefits
Employees insured by one of the Act’s several programmes are eligible for the following perks:
- Employees can get advances or take money out of their UAN accounts – https://unifiedportal-mem.epfindia.gov.in/
- The nominees or legal heirs of a deceased member receive the PF amount
- The employer not only puts money into the PF, but also puts money into the employee’s pension, which the employee can use when they retire
- Under the EDLI Scheme, employees are properly insured so that they can get a lump sum payment if they die while working. Income Tax Act’s EEE (Exempt, Exempt, Exempt) tax benefit provides tax-free returns for workers
- Employees receive additional money in the form of interest on their savings as a perk of working for the company. If a member moves jobs while the Provident Fund programme is still in effect, the PF account can be moved with him or her.
Information on the various types of provident funds and associated taxes can be obtained from Vakilsearch’s experts. As you proceed, you’ll have the assistance and direction of professionals.
What Are the Requirements to Sign Up for the EPF Scheme?
Every place of business with 20 or more employees who are not excluded must sign up for the Scheme within one month of the date it starts to apply Schemes.
The EPF calculator simplifies your financial planning. Use our PF interest rate calculator to get accurate results.
How Does Employees’ Provident Fund Work?
Understanding How Employees’ Provident Fund (EPF) Operates:
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Step 1: Salary Deductions and Contributions
Every employed individual is familiar with the various deductions made from their monthly salary, and one such deduction is for the Employee Provident Fund (EPF). As per EPF rules, 12 percent of your salary is allocated to the provident fund, with your employer matching this contribution. Out of the employer’s share, 8.33 percent is directed towards the Employee Pension Scheme (EPS), while the remaining 3.67 percent is deposited into your EPF account.
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Step 2: Pooling and Investment of EPF Funds
All contributions from employees are pooled together and invested by a trust. These pooled funds generate interest, typically ranging from 8 to 12 percent, as determined by the government. The EPF amount grows steadily due to monthly contributions and yearly compound interest. This continues until you decide to withdraw the EPF after retirement.
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Step 3: Provident Fund Withdrawal Options
There are two primary methods for withdrawing your provident fund:
- After reaching the age of 58, which is the retirement age, you can apply to withdraw your EPF through your employer.
- If you find yourself unemployed for an entire month, you are eligible to withdraw 75 percent of your provident fund before reaching retirement age. Notably, the employer’s contribution can only be withdrawn after reaching 58 years of age.
Understanding the intricacies of the EPF process ensures that individuals can make informed decisions about their provident fund, whether it be through regular contributions, understanding growth through investments, or making withdrawals when needed.
What Are the EPF Interest Rates?
The interest rate on the Employees’ Provident Fund (EPF) is subject to an annual review, and for the financial year 2022-23, it stands at 8.15%. It’s crucial to note that once the EPFO declares the interest rate for a particular financial year, the calculation is done monthly based on the closing balance and then aggregated for the entire year.
Here are some key points to know about the EPF Interest Rate for the fiscal year 2022-23:
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Applicability Period:
The interest rate of 8.15% is applicable to EPF deposits made between April 2022 and March 2023.
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Yearly Transfer:
Although interest is calculated monthly, it is transferred to the Employees’ Provident Fund account annually on March 31st of the applicable financial year.
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Calculation Process:
The transferred interest is combined with the balance of the subsequent month (April) for the next round of interest calculation.
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Inoperative Accounts:
If there is no contribution to an EPF account for thirty-six consecutive months, the account becomes dormant or inoperative.
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Interest on Inoperative Accounts:
Interest is provided on inoperative accounts for employees who have not yet reached retirement age.
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Tax Implications:
The interest earned on inoperative accounts is taxable according to the member’s slab rate.
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Employees’ Pension Scheme Contributions:
Contributions made by the employer towards the Employees’ Pension Scheme do not accrue interest. However, a pension is disbursed from this amount after the employee reaches the age of 58.
Types of EPF Form
| Form Number | Purpose | Application Process |
| EPF Form 31 | Partial withdrawal of funds from the EPF account. | Offline and online through the EPF Member Portal. |
| EPF Form 14 | Application for financing a LIC policy from the Provident Fund. | Fill the form, get it attested by the employer, and submit to the EPF Commissioner. |
| EPF Form 10D | Availing pension benefits after completing 10 years of service. | Filled at the time of retirement. |
| EPF Form 10C | Withdrawal of pension corpus in the member’s EPS account. | Also used for obtaining the EPS Scheme Certificate. |
| EPF Form 13 | Transferring the old EPF account to the new PF account. | Now incorporated in the Composite Claim Form. |
| EPF Form 19 | Claim for Final Settlement of old EPF accounts. | Can be filled online or offline through the EPF Member Portal. |
| EPF Form 20 | Final settlement by nominees/heirs of a deceased member. | Filled by the guardian if the nominee is a minor/lunatic. |
| EPF Form 2 | Declaration and nomination for EPF and EPS accounts. | Filled after marriage; can be done online or offline. |
| EPF Form 5(IF) | Claiming insurance benefits under EDLI after the member’s death in service. | Attested by the employer or a gazetted officer if employer attestation is not possible. |
| EPF Form 15G | Submitted to save tax on interest earned from EPF. | Also applicable for EPF corpus withdrawal before 5 years of service if the amount exceeds ₹ 50,000. |
| EPF Form 5 | Employer’s submission of details for new employees eligible for EPF for the first time. | Submitted monthly by the 15th of every month. |
| EPF Form 11 | Submitted when switching jobs for transferring EPF amount. | UAN remains the same, but Member ID and PF account number change. |
Different Programmes Offered by EPFO:
The different programmes offered by the EPFO are listed below:
- 1952 Employees’ Provident Funds Act (EPF)
- Employees’ Deposit Linked Insurance Scheme (1976) (EDLI)
- Employees’ Pension Scheme (1995) (EPS)
- Employees’ Provident Fund Act, 1952: The Employees’ Provident Fund Scheme was established by the Act to support employees or a group of employees, or their legal heirs in the event of death, who worked for a business that this Act applies to after they retire. In the event of death, the Employees’ Provident Fund Scheme was established to support the employees’ legal heirs.
- Employees’ Pension Scheme, 1995: The Employees’ Pension Scheme was established by the Act in order to provide pensions to employees of any establishment or class of establishments to which this Act applies in the event that the employee retires, becomes permanently and fully incapacitated, or retires. The Act created the Employees’ Pension Scheme in 1995.The beneficiaries of these employees could also get pensions for widows or widowers, children, or orphans.
- Employees’ Deposit-linked Insurance Scheme, 1976: The Act created the For employees of an establishment or class of establishments to which this Act applies, the Employees’ Deposit-linked Insurance Scheme (EDLI Scheme) will offer insurance benefits should they die while working. This Act was passed in 1976.
Applicability
The Employees’ Provident Fund was established in 1952 by the Employees’ Provident Fund and Miscellaneous Provisions Act (the “Act”), a piece of legislation that is applicable across the entirety of India. The Act applies to every factory or industry listed in Schedule 1 of the Act that employs 20 or more people, as well as to any other business that the Central Government tells the official Gazette about, even if it only has fewer than 20 workers.
How to Become a Member of EPF?
PF membership is required for
- Anyone who works for a company and gets paid, no matter what kind of work they do
- Anyone who works for a contractor or is hired as an apprentice but isn’t an apprentice under the Apprentices Act of 1961
- Except for personnel who are excluded and exempted under Section 17 of the Act, anyone on a company’s regular payroll who is paid less than or equal to ₹ 15,000 per month is subject to this tax.
Account Withdrawals From the EPF
- The money in an EPF account can be taken out in full settlements using form 15g for pf withdrawal when the account holder turns 58 or when the person retires. If an employee is out of work for two months or more or dies before reaching retirement age, the nominees or legal heirs can take out the money
- You can take some money out of your EPF registration for education, medical care, paying off a home loan, getting married, buying land, a house, or a flat, if your business or factory closes, if there is a natural disaster, a year before you retire, or if you are out of work for more than a month.
Money Transfer from an EPF Account With an Employer’s Trust
Facilitating Money Transfer from an EPF Account With an Employer’s Trust:
- Step 1: Begin by logging into your account on the Member Sewa portal, where you’ll need to input your UAN (Universal Account Number) and password for authentication.
- Step 2: Once successfully logged in, navigate to the ‘Online Services’ section and choose ‘One Member- One EPF Account (Transfer Request)’ from the available options.
- Step 3: A new tab will open, displaying details of the new EPF account where you intend to transfer funds. You’ll need to input the account number of your new EPF account, which can be found on your salary slip or EPF statement from your new employer.
- Step 4: Choose whether attestation for your online transfer will be conducted by your present employer or the previous one. It’s advisable to confirm with your current employer if they can be selected for the attestation of the EPF account transfer.
- Step 5: Provide the Member ID (previous EPF account number) if the UAN of both your old and new employers is the same. If the UAN is different, input the UAN of your old employer. Click on ‘Get Details’ to retrieve and display information about your EPF account. Select the account from which you wish to transfer the funds.
- Step 6: Click on ‘Get OTP,’ and a one-time password will be sent to your Aadhaar-linked mobile number. Enter the OTP as prompted, and your transfer request will be successfully submitted. A tracking ID will be generated, and you can download the submitted form in PDF format for your records. This streamlined process ensures a secure and efficient transfer of funds within your EPF accounts.
EPF Withdrawal Rules
The Employee Provident Fund (EPF) serves as a crucial savings avenue for both employers and employees. However, withdrawing funds from an EPF account is subject to specific rules to ensure the financial security of the account holder. Here’s a breakdown of the key EPF withdrawal rules:
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Retirement Norms:
Withdrawal can only occur after retirement, setting EPF apart from a regular bank account. During employment, the funds remain securely invested for the future.
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Partial Withdrawal:
Partial withdrawals are permitted in specific circumstances such as medical treatment, higher education expenses, or for the purchase or construction of a residential house. The application for partial withdrawal can be conveniently done online.
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Pre-Retirement Withdrawal:
EPFO allows the withdrawal of 90% of the EPF corpus one year before retirement, provided the account holder is not less than 54 years old.
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Unemployment Conditions:
In cases of unemployment due to lockdown or retrenchment, EPF corpus withdrawal is permissible. After one month of unemployment, 75% of the corpus can be withdrawn, with the remaining 25% transferred to the new EPF account upon securing new employment.
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Tax Exemption:
EPF withdrawals are tax-exempt if the account has been actively contributed to for five continuous years.
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TDS Deduction:
Premature withdrawal incurs a TDS deduction. However, if the entire amount is less than ₹ 50,000, TDS is not deducted. With PAN submission, TDS deduction is 10%, whereas it rises to 30% plus tax if PAN is not provided.
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Online Verification:
EPF status can be checked online, directly through EPFO, if UAN and Aadhar are linked, and employer approval has been granted.
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Declaration of Unemployment:
A crucial step for EPF withdrawal involves the account holder declaring unemployment. This is a prerequisite for accessing the EPF amount.
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Old Rule Provision:
As per the previous rule, 100% EPF withdrawal is permissible after two months of unemployment.
Full Withdrawal
Full withdrawal of the Employees’ Provident Fund (EPF) balance is a significant financial decision, and it is governed by specific circumstances. Here’s a detailed look at the scenarios that permit a complete withdrawal:
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Retirement:
The primary condition for a full withdrawal is retirement. EPF is designed to serve as a financial cushion during retirement, ensuring individuals can access their accumulated funds to support their post-employment life.
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Unemployment:
Individuals facing unemployment for more than one month have the option to withdraw 75% of their total accumulated EPF amount. If the unemployment period extends beyond two months, the remaining 25% can be withdrawn. This provision acknowledges the financial challenges individuals may encounter during job transitions or periods of involuntary unemployment.
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Interim Period Between Jobs:
Notably, individuals cannot make a complete withdrawal of their EPF balance when switching employers if the unemployment period is less than two months. This precaution is in place to ensure that individuals have a sufficient interim period between changing jobs to warrant a full withdrawal.
Partial Withdrawal
The Employees’ Provident Fund (EPF) offers a safety net for individuals, and under specific circumstances, partial withdrawals can be made to address various life needs. Below is a detailed breakdown of the permissible partial withdrawals, their limits, and the associated conditions:
Medical Purposes:
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- Limit: Lower of six times the monthly basic salary or the total employee’s share plus interest.
- No years of service requirement.
- Conditions: For medical treatment of self, spouse, children, or parents.
Marriage:
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- Limit: Up to 50% of the employee’s share of contribution to EPF.
- 7 years of service required.
- Conditions: For the marriage of self, son/daughter, and brother/sister.
Education:
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- Limit: Up to 50% of the employee’s share of contribution to EPF.
- 7 years of service required.
- Conditions: For the account holder’s education or child’s education (post matriculation).
Purchase of Land or House:
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- Limits: For land – Up to 24 times of monthly basic salary plus dearness allowance. For the house – Up to 36 times of monthly basic salary plus dearness allowance. The limits are restricted to the total cost.
- 5 years of service required.
- Conditions: The asset (land or house) should be in the employee’s name or jointly with the spouse. Withdrawal permitted once for this purpose during the entire service. Construction should begin within 6 months and be completed within 12 months from the last withdrawn instalment.
Home Loan Repayment:
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- Limit: Least of up to 36 times monthly basic salary plus dearness allowance, or the total corpus with interest, or total outstanding principal and interest on the housing loan.
- 10 years of service required.
- Conditions: The property should be registered in the name of the employee or spouse. Withdrawal permitted subject to furnishing requisite documents as stated by the EPFO relating to the housing loan availed. Accumulation in the member’s PF account (or together with the spouse) must be more than ₹ 20,000.
House Renovation:
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- Limit: Least of up to 12 times monthly wages and dearness allowance, or employee’s contribution with interest, or total cost.
- 5 years of service required.
- Conditions: The property should be registered in the name of the employee or spouse. The facility can be availed twice: after 5 years and after 10 years of the completion of the house.
Partial Withdrawal Before Retirement:
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- Limit: Up to 90% of the accumulated balance with interest.
- Once the employee reaches 58 years, and withdrawal should be before one year of retirement or superannuation.
How to Transfer EPFO Money?
To transfer your Employees’ Provident Fund (EPF) money from one account to another, follow these steps:
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Check Eligibility:
Ensure that you are eligible for an EPF transfer. You should have an existing EPF account, and the transfer can be initiated when switching jobs or if you have multiple EPF accounts.
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Activate UAN (Universal Account Number):
Make sure your UAN is activated and linked to your Aadhar, bank account, and PAN. You can do this by visiting the EPFO portal (https://www.epfindia.gov.in/site_en/For_Employees.php) and following the instructions.
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Login to the EPFO Portal:
Log in to the EPFO portal using your UAN and password. If you haven’t registered yet, you can register as a member.
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Click on ‘Online Services’:
Once logged in, navigate to the ‘Online Services’ section on the portal.
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Select ‘One Member – One EPF Account (Transfer Request)’:
From the ‘Online Services’ menu, choose the ‘One Member – One EPF Account (Transfer Request)’ option.
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Verify Your Details:
Verify your personal and employment details displayed on the screen.
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Request for Transfer:
Select the previous employer’s EPF account (the one from which you want to transfer funds). Click on ‘Get OTP.’ An OTP will be sent to your registered mobile number.
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Enter OTP:
Enter the OTP received on your mobile and click on ‘Submit.’
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Authorise Transfer:
A preview of your transfer request will be displayed. Confirm the details and click on ‘I agree’ to authorize the transfer.
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Final Submission:
After authorization, the transfer request will be sent to your previous employer for approval. Once they approve the request, the transfer will be initiated.
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Tracking Transfer Request:
You can track the status of your transfer request online through the EPFO portal. It may take a few weeks for the transfer to complete.
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Acknowledgment:
You will receive an acknowledgment once the transfer is successful, and the funds will be moved from your old EPF account to the current one.
FAQs on Provident Fund Scheme
How does the PF amount from defaulting members get recovered?
The EPFO can recover PF contributions from defaulting members through legal means, including attaching the defaulter's assets, garnishing their wages, or taking legal action against the employer for non-compliance.
Who should an employee contact if he or she is denied PF membership?
If an employee is denied PF membership by their employer, they should contact their company's HR department or the regional EPFO office to resolve the issue. If necessary, they can file a complaint with the EPFO.
Is it possible for an employee to contribute to EPF after leaving a job?
Yes, it is possible. An employee can voluntarily contribute to their EPF account after leaving a job, as long as their EPF account remains active. They should contact the EPFO to understand the process and guidelines for voluntary contributions.
Is there an age criteria for employees who want to join EPF?
Generally, any employee who is between 18 and 60 years old can join the EPF. However, some exceptions may apply depending on specific circumstances or industries.
When an employee is paid on a daily or partial basis, how is the EPF contribution calculated?
EPF contributions for employees paid on a daily or partial basis are calculated as a percentage of their basic wages and dearness allowance, as per the rules set by the EPFO. The current contribution rate is 12% of the basic wages and DA from both the employee and the employer.
What are the restrictions on EPF withdrawal in India?
In adherence to the recent regulations, individuals with PF accounts have the flexibility to withdraw an amount equivalent to the lesser of three months' worth of their basic salary plus dearness allowance or 75% of the net balance in their EPF account.
Can an employee opt-out of EPF for the salary?
If your monthly basic salary exceeds ₹ 15,000, you have the choice to abstain from contributing to your EPF, although it is not advisable to exercise this option. This opportunity is exclusive to individuals who are in their initial employment, have never made any previous EPF contributions, and do not possess a PF account number.
At what age can an employee become a member of EPF?
There is no age limitation for joining the Provident Fund, but an individual who has surpassed the age of 58 is ineligible to enrol in the Pension Fund.
How to withdraw the previous company’s PF after joining some other company?
Complete and submit a transfer request form to the EPFO to migrate your PF account balance from your former employer's account to your current employer's account. Ensure that you fill out this form with precision and completeness.
What is the UAN Employees Provident Fund Organisation in India?
UAN, or Universal Account Number, is assigned by EPFO and serves as a centralised identifier for individuals with multiple Member IDs from various employers. The goal is to connect diverse Member Identification Numbers (Member IDs) allocated to an individual under a unified Universal Account Number.
How can I check my PF account details?
Individuals enrolled on the UAN portal can retrieve their information from EPFO by providing a missed call to 9966044425 from their registered mobile number. If the member's UAN is linked to any one of the Bank Account numbers, AADHAAR, or PAN, they will receive details regarding their last contribution and PF balance.
How can I check my PF status on mobile?
To ascertain the status of their PF claim, employees can initiate a missed call to 011-22901406 from their registered mobile number. However, it's imperative for the employee to associate their mobile number with their UAN.
