Employee Provident Fund (EPF) India: All you need to know



  • Employee Provident Fund is a famous saving scheme operated by the Indian Government for salaried individuals. This scheme is aimed to flourish retirement savings for all Indian employees. Precisely, it is a corpus of funds, regulated by contributions of employee & employer. The contributions will regularly be made, mostly monthly by both parties. The contribution amount will be fixed from the start. Interest will be paid on the EPF balance. Both EPF balance and interest accrued are non-taxable. Tax benefits are the main attraction associated with this scheme. The withdrawals are allowed once the maturity period is finished. But still, pre-mature withdrawals can be made in the case of resignation or death of the employee. In exceptional circumstances when the employee cannot work, this saving scheme comes handy.

    What Are The Benefits Of Employee Provident Fund Scheme?
    The EPF scheme is considered as the most attractive retirement saving plan in India. Here are the key benefits that make EPF as the most significant saving scheme:

    Tax Benefits: The employee earns the interest on his/her EPF balance. The interest accrued is completely tax-free. Withdrawals made after the maturity are non-taxable too. That is why people always fall for this scheme. The contributions made for EPF account are taxable as per section 80C of Income Tax Act.
    Financial Security: This scheme provides financial security after retirement. The withdrawals are allowed after completion of the maturity period. But premature withdrawals are available for special circumstances. Such as, resignation, death, disability or discharge from the work.
    Long-Term Investment: It acts as the long term investment with tax benefits.
    Source Of Funds: In a case of emergency, the EPF serves as the source of liquid funds.
    Pension & Insurance: Every employee who is eligible for EPF also contributes towards pension and insurance scheme. Both are beneficial after retirement.
    Universal Account Number(UAN): The employee can access the account via single point thanks to Universal Account Number.
    Who Is Eligible For Employee Provident Fund?
    All the members of an establishment are eligible for EPF, when they join the institution. The only requirement is the number of employees. The establishment should have 20 or more employees in order to avail this scheme. If you are eligible for EPF, so does for insurance and pension plans. This way, EPF, insurance and pension makes the best retirement trio plan!
    Employee Provident Fund Contributions
    An EPF account is comprised of contributions. Here are the key facts about contributions:

    Both employee and employer make the contributions
    It is always fixed and predetermined
    Regular on monthly basis
    The rate will be determined as per the employee's basic salary plus DA
    The current rate of contribution is 12%. But in following cases, it is down to 10%:
    If the establishment has employees less than 20
    Sick industries, which are recognized by BIFR
    The establishments with net losses which are higher than net worth
    Establishments which produces jute, beedi, coir, brick or guar gum
    Establishments which have set fixed wage limit of Rs. 6,500
    Interest Rate On Employee Provident Fund
    The account holder earns the interest on the EPF deposit. The current interest rate determined by Government is 8.5 per annum. Every year, the Indian Government decide the interest rate for EPF account. Here are the prime facts about interest rate on EPF:

    Interest is earned on every EPF balance, which is completely tax-free. The interest earned is calculated and accrued as per the predetermined interest rate for the year.
    The financial year starts from April 1st to March 31st. It means, 8.8% interest rate is set for EPF balances for tenure of April 1st 2016 to March 31st 2017.
    The interest is calculated monthly but accrued annually.
    No interest will be credited if EPF account is inactive or inoperative.
    No interest is allowed for withdrawn amounts.
    No interest will be credited for amounts transferred to EPS by the employer.
    Employee Provident Fund Forms
    The most common problem people face is the lack of information about EPF forms. For different functionalities, there are different types of forms. You may want to register, make withdrawal or take advances from an EPF account via forms. Now question is which form is mandatory for particular action. This section is about various types of EPF forms created for different circumstances.
    EPF forms are divided into following three broad categories:

    EPF claim forms
    EPF registration forms
    EPF return forms
    Form 31 (EPF Advance Withdrawals):
    Premature withdrawals are restricted when it comes to employee provident fund. As this scheme was initiated for long term savings. But in special circumstances, one can make premature withdrawals. For this, the employee needs to submit Form 31.
    In following case, the premature withdrawals are allowed:

    To buy or build a residential house / purchase a plot of land
    To renovate the house, specifically making the additions or removing the parts of the house
    For the repayment of home loan
    For the payment of medical treatment
    To fund the wedding expenses
    For financing the education
    To make withdrawal before retirement
    To make withdrawal if the establishment has been locked down
    Form 14 (Funding An LIC Policy):
    An employee can use its EPF account for funding the LIC policy. This service is allowed, if following conditions are met:
    ⦁ The employee must have finished two years of service
    ⦁ The employee must sign the declaration stating account balance that can meet payments and premium payments for two years
    ⦁ The premiums will be paid from the employee's contribution only

    Form 10D (Employee Pension Scheme):
    The employees over the age of 58 years with 10 years of service, can use this form to settle their pensions funds. Following pension schemes can be claimed via this form:

    Disablement pension
    Orphan pension
    Superannuation pension
    Widow & Children pension
    Nominee pension
    Reduced pension
    Dependent Pension

    Form 10C (Withdrawal benefit under EPS):
    The employee can avail the facility of withdrawal benefits under Employee Pension Scheme. In following cases, the application for claim can be made:

    For the employees over age of 58 years but haven't finished 10 years of service
    For the employees who haven't finished 10 years of service before turning to age of 58 years
    For the employees who have completed 10 years of service before discontinuing the employment below age of 50 years
    For the employees who have finished 10 years of service having age between 50 - 58 years, but don't want to opt for reduced pension
    This family or nominee can avail this claim in case of death of employee before completing the 10 years service tenure, after age of 58 years
    For the employees, who are members for 180 days or more. Regardless of the period, for which contributions are not applicable
    For this claim, you need to fill and submit Form 10C along with required documents.

    Form 13 (Transfer of EPF account):
    The employee has the option of transferring old EPF account to new one. For this task, you need a Form 13. A set of certain rules is followed while making a transfer of EPF account. First of all, the PF contributions are sent to CTO and details to the EPFO. The pension contributions won't be transferred unless the establishment is exempt from the pension scheme. If the establishment is exempt from pension, PF contributions will be held in the Trust. Otherwise, both will be held with EPFO.

    Form 19 (Final EPF Settlement):
    The employees can claim the final settlement when they leave the employment, but don't get involved in any other employment. Before retirement, if employee changes the employment, the EPF transfers will be allowed using Form 13. Otherwise, you need a Form 19.
    In the following case, final settlement of EPF account will be carried out:

    Retirement
    Resignation, but did not join any other establishment, which is eligible for EPF scheme
    Discharged from the establishment along with compensation under Industrial Dispute Act, 1947
    Retrenchment

    Emigration to a foreign country
    In the case of resignation or discharge, a waiting period of 2 months is mandatory before the final settlement of EPF account. An EPF account can stay active for 3 years even without making contributions. The interest will be earned and credited to such EPF accounts. After three years, the account will become inactive.

    Form 20 (Final settlement in case employee's death):
    In case the employee has died, the family or nominee can claim the final settlement by submitting Form 20. Along with Form 20, the requisite forms have to be submitted to claim insurance and pension. The types of forms to be submitted depends on the time of employee's death.

    If employee died before turning to 58, while in service, Form 20, Form 10D and Form 51F are required
    If the deceased was above 58 years of age, had completed 10 years of service, Form 20, Form 10D and Form 51 are needed
    If the deceased was above 58 years of age, had not completed 10 years of service, Form 20, Form 10C and Form 51F are required
    How To Transfer EPF Account Online Or Offline?
    While in service, the employees contribute to their EPF accounts. When they change the employments, they can either withdraw or transfer the current EPF account. In a case of transfer, the EPF account balance will be transferred from old account to new one. The balance will have interest earned on the contributions made.
    A few years back, the transfer was possible via an offline method. Recently, the government has introduced online channel to transfer EPF account online. Due to convenience, online method is preferred over the offline.
    But for your guidance, we have explained both methods right here:

    How To Transfer EPF Account Offline?
    First of all, the employee has to fill and submit the attested Form 13 to the past or current employer. Both past or present employer can attest the form.
    Now Form 13 will be submitted to regional EPF office associated with the attesting employer. All PF contributions will be sent to the Trust from an old account.
    Now the old employer has to submit the Annexure K to the regional EPF office. This Annexure K shows the details about service and tenure of the employee. After verification, the PF trust will make the transfer via NEFT. The EPF balance from the old account will be moved to the new one.

    How To Transfer EPF Online?
    First off, the employee should check whether both past and present employer owned digital signatures with the EPFO. Otherwise, you need to use offline method
    Now visit the official website of EPFO, here you will find the option for Online Transfer Claim Portal.
    Next you have to click on eligibility to file or transfer claim online.
    To check eligibility for Online Transfer Claim Portal, you need to submit PF details, i.e. old and new EPF account details.
    If you have registered the account, log in with your member ID. Otherwise, register yourself to get login details.
    You will be directed to Online Transfer Claim Application.

    Under the "Claim" button in the menu, click on request for an account transfer.
    Now you will see three subforms Part A, Part B and Part C of Form 13. Part A includes personal details. Part B demands details about old EPF account. Part C requires details about current EPF account.

    Now click on the form/claim attested by the old or present employer.
    Preview the form for final changes and proceed.

    You will get the PIN on provided mobile number. Enter the PIN and accept the declaration.

    Now print out the form to sign and submit for attestation to the chosen employer. The employer will verify the form on the portal. Once the verification is finished, the EPFO will transfer the EPF balance to a new one.

    Final Verdict
    Hopefully, this comprehensive guide on Employee Provident Fund proved to be helpful for you. EPF is popular long term saving scheme in India, which comes with insurance and pension benefits. But people have so many questions about this scheme. We made sincere effort to provide necessary information for people who are looking for such answers. In case, you have any question related to EPF; please feel free to share with us!



  • Hello Dear ,

    Hope you are fine,

    I have three quries regarding my current PF account as below:

    FIRST

    I worked for a company in 2014 and left the same in 2015 total PF deduted as per column wise

    INR 9200 INR 2400 and INR 5600

    The question is how much i get at the time of withdrawal.

    SECOND

    I switch from first company to other now I in the current company I use the same UAN in for PF deduction , new account is also update in the system and properly deduction going on. But in the column of previous company DATE OF RESIGNATION is not reflecting and the same company and when I try to transfer the amount message reflect no employer available or something like that information.

    also note that i had applied (APPLIED EARLIER IN 2016) for claim online status and when i check online claim status then message reflect as below.

    Claim-Form-13 (Transfer Out)(Transfer (Unexempted to Unexempted in other region or to Exempted Establishments)) Claim id-DSNHP160350001797 Member id-DSNHP10471130000000012 has been rejected due to :- CALL FOR FORM 9/OK

    Also note when i apply for ONE MEMBER ONE EPF ACCOUNT then message reflect

    Details of previous account are different than present account. Hence claim request cannot be processed.

    THIRD

    Please confirm if I apply for withdrawl for Mother illness then the same amount will withdrawn from both or current. As I dont want to withdraw from the current company.

    Please help if you have understand the same situation.



  • I like the post Its has nice article It’s really effective and very impressive, We hope this information will help everyone.We are interested in looking for more of such topics.



  • Nice,

    very helpful. really awesome information share with us.
    One my question about PF interest rate

    8.5 rate or 5 % something?



  • I think it is really a helpful fund for the employees of Indian Government in order to save something for their special occassions. They can utilize this fund in the emergency situations. Moreover, the premature withdrawal's availability is interesting feature as well. Am I right?



  • I think EPF rate of interest has been slashed recently. It is 8.55% only for financial year 2017-18 which is lower than previous 5 years rates. It used to be:
    For FY 2016-17 - 8.65%
    For FY 2015-16 - 8.80%
    For FY 2014-15 - 8.75%
    For FY 2013-14 - 8.75%
    For FY 2012-13 - 8.50%
    Hope this clarifies!


  • Banned

    Employee Provident Fund is an excellent scheme run by the government. In this scheme, everyone is a winner. The employer and employee both contribute to EPF and the employee gets the money back in the form of retirement fund. What do you think needs to amended in this scheme?


  • Banned

    India is getting better and better economically as the management team has quite talented personnel who knows how to promote a new scheme. EPF is a great gift for the employees to save some amount for their retirement fund. It is good to plan now for the next 20-30 years.



  • @sdadwal Hi, I have applied for EPF withdrawal recently. How many days it usually takes to receive it? Can I check the status of transfer of funds? Please guide.



  • I think nowadays the EPF processing is a bit faster. The amount shall be credited to your account in 15 days. In some cases, it may take a bit longer based on individual details.
    If you have your UAN, You can check status online.



  • @sdadwal Quite an informative post 🙂 I am also a salaried person. I joined my job recently. My company told me that EPF contribution shall be made. But, I was not clear what exactly it is and how I will get it back. This detailed post cleared my different doubts. Thanks a lot.



  • I have heard that EPF transfer & withdrawal process has become a bit faster. But, it varies from individual to individual. If you have linked UAN then its easy. But, what about an earlier EPF account with an old employer?

    I left a company few years back. I had my EPF account long back then. At that time this online system wasn't there. I couldn't withdraw from that EPF account. I thought I was earning interest on it, so let it be. But, now I am working in a new company and they have opened my EPF account plus I have been alloted UAN also. That's ok.
    But, how can I transfer my earlier EPF amount. Do I need to visit my old employer which is in a different city? Can it be transferred online? Please guide me how to do it.



  • Such an excellent article on the Employee Provident Fund in India.This article vastly covers all the important points of employee provident fund in India. These type of funds are very useful for the Government employes as both employer and employee make contribution to it. Rate of contribution is also explained in the article.



  • Interest rates just keep on fluctuating every year. How will one save big this way? There should be an increase in interest rates rather than reducing. EPF counts for our retirement savings. We need to have a good lump sum in any of our retirement plans.



  • @sdadwal UAN has simplified the entire process of EPF withdrawal. There is esay online access and all details can be fetched online. In some cases, one still might have go to EPF office for claims. But, overall the process has become quick.



  • @sdadwal EPF is a good way to build a lump sum for retirement of salaried people. Both, employer and employee contribute towards EPF. At least, this is some saving that we can start as and when we get a job.


 

Disclaimer: Any views/recommendations expressed in the forum, of the individuals are their own only. Fintrakk doesn't endorse or recommend any financial product or views by the users of the forum. The information/comments on the forum should not be considered as a financial advise. Please do your own due diligence before investing. Fintrakk is not responsible for any financial loss to any of its visitor/user.