EPF is a scheme under the Miscellaneous Provision Act of 1952. This guide will explain the eligibility criteria and required requirements for PF registration.
EPF is a scheme under the Miscellaneous Provision Act, of 1952. According to this Act, any organization under which more than 20 people are employed is required to register for the EPF scheme. Any employee with a salary under 15,000 Rs has to be mandatorily assigned an EPF account and get a monthly contribution credited to that account. If a person’s salary is more than 15,000 Rs, he is not eligible for PF registration. But with the consent of your employer and permission of the Assistant PF Commissioner, you can register into the EPF scheme. EPF scheme is managed and maintained by EPFO (Employees’ Provident Funds Organisation). Know when is PF registration mandatory in this article.
Contribution Percentage in EPF Scheme
The contribution from the employee’s side is 12% of his salary, which is calculated based on basic wages, dearness allowance, and retained allowance. Employers also have to contribute the same amount to the EPF scheme. However, if your organization consists of less than 20 employees, the percentage of the EPF scheme can be reduced to 10% of the salary.
From the employer’s contribution (12% or 10%), the 8.33% is moved to the Employee’s Pension Scheme. But, it depends on the wages you get. If you get a salary equal to or above Rs 15,000, then Rs 1250 will be moved to your EPS. If you earn less than Rs 15,000, only 8,33% is diverted into EPS.
When is PF Registration Mandatory?
Any Employer under whom more than 20 people are working has to register for PF mandatory. But, if the number of employees under an employer is less than 20, he is exempt from PF registration for its employees, and also if most of the employees give him consent to be free.
You still have to fulfill some of the formalities and undergo several processes. And if employees of an organization are getting benefits under Provident Funds, the benefits are much more than mentioned in the Act. In that case, the employer can apply for exemption from the EPF scheme.
How to Apply for the EPF Scheme?
If you want to get a new EPF account, you should approach your employer for this. Only your employer can get you into PF registration. You must provide all the required details about your previous employment and all other personal information.
As we mentioned, each company must register into the EPF scheme, where more than 20 people are employed. The process of PF registration (into the EPF scheme) can be done online at the official website of EPFO – https://www.epfindia.gov.in/site_en/index.php. You have to add all the required details about your company and share details about all the owners of the company.
When One Can Withdraw the Amount?
You can withdraw a partial amount after completing seven years of depositing before the retirement age by filling out the form 15h for pf withdrawal. And that is only for a specific reason(s) such as marriage, home loan, medical reasons, education, etc. You can withdraw only 50% of the total deposit.
For Home loan purchases or construction of the house, the deposit needs to be five years mature before the withdrawal. You can withdraw only 90% of the corpus amount.
And if you want to get money for the renovation of the house, you can withdraw money only when your home has been completed for five years. You can withdraw money for the same purpose a second time, but this would be after ten years from the first withdrawal.
For medical reasons, EPF allows you to withdraw money flexibly. You can withdraw cash without the restriction of minimum years criteria for any medical needs of your family.
Before retirement, you can get 90% of the total corpus after age 57.
Use Vakilsearch`s EPF calculator to decide how an entire lot coins is probably amassed for your EPF account even as you retire.
What Are the Benefits of EPF?
EPF is a beneficial welfare scheme for salaried employees. It provides a safe investment of their salary percentage to a PF account, which can be a support for their retired future self. Many salaried people have assets and savings accounts to save for their future. But many people do not know about all this. So, the EPF scheme helps them to protect and grow their savings regularly.
Interest on the EPF scheme and withdrawal of the amount from the EPF account is tax-free. You can’t withdraw the whole corpus amount before age 58, but if you are close to retirement age and remain unemployed for 60 days, you can withdraw 90% of it.
Women employees get a reduced percentage (i.e., 8%) of EPF from their salary so that they can get an increased bit in their take-home salary. EPF ensures compulsory savings for your future and that your employer contributes to it. In this way, your future needs can have support from your EPF scheme too.
What Are the Demerits of EPF?
EPF is an entirely debt-based scheme for investments. It has no exposure to equity or other funds. So that means you can get negative returns at higher inflation, i.e. you are losing your savings.
You can also plan to invest your EPF savings so that you can counter the loss due to higher inflation.
For more information, you can get in touch with the experts of Vakilsearch.
FAQs
PF is compulsory for eligible employees in many organizations, but certain categories of employees have the option to opt-out of making PF contributions.
In some cases, employees may negotiate a salary package that excludes PF contributions, especially if they fall under specific criteria.
Depending on your employment terms and eligibility, some employees may have the option to opt-out of PF contributions.
PF is mandatory for eligible employees in private companies with 20 or more employees.
PF contributions are mandatory not for employees earning a salary above 40000.
PF accounts can be closed under certain conditions, such as retirement or unemployment. The process involves submitting a withdrawal application to the EPFO.
The minimum mandatory PF contribution is a percentage of the employee's basic salary and dearness allowance, set by the government.
Employers with 20 or more employees are mandated to register under PF.
PF contribution is calculated as a percentage of the employee's basic salary and dearness allowance and not the CTC.
As per the latest rules in 2023, PF holders can withdraw upto three months of their basic salary plus dearness allowance or 75% of the net balance in their EPF account, whichever is the lowest.
Certain categories of employees, such as those earning above a specified limit or those engaged in specific industries, may not be eligible for PF.
Typically, both the employer and the employee contribute an equal percentage (around 12% each) of the employee's basic salary and dearness allowance to the PF account.
PF is optional for employees with a salary above 25000.
Companies with fewer than a specified number of employees or those in certain industries may be exempt from providing PF benefits.
The PF limit refers to the maximum basic salary on which PF contributions are calculated. Currently, the PF limit is INR 15,000 per month.
The CTC (Cost to Company) includes various components such as basic salary, allowances, and benefits. If no other benefits are provided, the CTC on a salary of 30,000 would be 3,60,000.
PF is mandatory for eligible employees in organizations that fall under the criteria specified by the EPFO.
The PF law in India is governed by the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, and is administered by the EPFO. Is PF compulsory or optional?
Can we have a salary without PF?
Can I opt not to take PF?
Is PF compulsory for a private company?
Is PF mandatory for salary above 40000?
How can I close my PF account?
What is the minimum mandatory PF?
Who is mandatory to register under PF?
What percentage of CTC is PF?
What is the new PF rule 2023?
Who is not eligible for PF?
How much PF is cut from the salary?
Is PF mandatory for salary above 25000?
Why do some companies not have PF?
What is the PF limit, 15000, or 21000?
What is the CTC if the salary is 30000?
Is PF compulsory for all employees?
What is the PF law in India?
