Provident Fund (PF)

The Central Board of Trustees (CBT), formed by the Central Government regulates and manages the Employees' Provident Fund (EPF). This Board comprises employers, employees, and government representatives.

Features and Benefits of Provident Fund

The features and benefits of the provident fund are as follows:

1. The EPF can serve as an emergency corpus during an unexpected financial crisis. 

1. It provides a retirement corpus thereby instilling a sense of financial security.
2. It is one of the most popular tax-saving instruments.
3. Investing a large amount of money is not required. A portion of the employee’s salary is deducted regularly enabling them to save a substantial amount of money over time.
4. Section 80C of the Income Tax Act applies to the employee’s provident fund. Thus, an employee’s provident fund contribution is tax-free.
5. In the EPF India scheme, a fixed interest rate is available. The EPF receives interest even while it is dormant.

1. An employee can transfer their EPF corpus from one employer to another when switching jobs.
2. The EPF has assisted in reducing the claim settlement period from 20 days to three days.

Eligibility Criteria for Employee’s Provident Fund

The eligibility conditions to enrol in the EPF scheme are mentioned below:

1. A salaried employee with a monthly income below Rs.15,000 must register under the EPF scheme.
2. A salaried employee with a monthly income above Rs.15,000 will require permission from the Assistant PF Commissioner to enrol in the EPF scheme.

1. An organisation that has less than 20 employees can voluntarily register for EPF.
2. It is mandatory for an organisation that has 20 or more employees to register for the EPF scheme.

Types of Provident Fund

Here are the three types of provident funds:

• General provident fund: The general provident fund is managed by government entities such as the railways, local authorities, etc.
• Public provident fund: The public provident fund is a long-term investment that provides attractive returns on the investment. It comes with a lock-in period of five years. This type of PF account can be opened with a minimum investment of Rs.500 and a maximum of Rs.1.5 lakh per year.
• Recognised provident fund: Privately-owned organisations with more than 20 employees use the recognised provident fund. If you have a valid claim to the PF connected with your company, you will be assigned a Universal Account Number (UAN). This allows you to transfer your PF money from one employer to another if you change jobs.

Objectives of Employee’s Provident Fund

EPFO has the following key objectives:

1. Facilitating Single EPF Account: Ensuring that every employee maintains only one EPF account throughout their employment.
2. Simplifying Compliance: Making compliance with EPFO rules and regulations as simple and user-friendly as possible for organizations.

1. Ensuring Rule Adherence: Ensuring that organizations consistently follow and comply with all the rules and regulations set forth by EPFO.
2. Enhancing Online Services: Enhancing the reliability and accessibility of EPFO's internet services, providing members with convenient online access to their accounts. 
3. Expedited Claim Settlement: Reducing the time taken for claim settlements from the current 20 days to a significantly faster duration of 3 days.
4. Encouraging Voluntary Compliance: Promoting and encouraging voluntary compliance among employers and employees to foster better adherence to EPFO guidelines.

UAN and EPFO Portal

UAN and EPFO Portal play a crucial role in providing convenient online access to EPF subscribers' accounts. EPFO provides all its subscribers with online access to their PF accounts, enabling them to perform various operations such as withdrawals and checking their EPF balance.

To streamline the process, EPFO assigns a unique 12-digit number called the Universal Account Number (UAN) to each member. The UAN remains the same even if an employee switches employers. The UAN simplifies access to the EPFO member portal. When an employee changes jobs, their member ID may change, but it is linked to the UAN. However, employees need to activate their UAN in order to utilize the online services provided by EPFO.

EPF Interest

The EPF scheme offers a pre-fixed rate of interest of 8.25% for the financial year 2024-25. The interest earned on investments in a PF online account is tax-free. The interest is credited only to the operative PF accounts of employees who are yet to retire. However, the interest accrued on such accounts is taxable based on the employee member's EPF tax slab.

It's important to note that the share contributed towards the Employees' Pension Scheme does not earn interest. However, members are entitled to receive a pension from the accumulated sum after they reach the age of 58.

EPF Calculation

The EPF calculator helps you estimate the amount available in your EPF account at retirement. It calculates the lump-sum amount, including your contributions, your employer’s contributions, and the accrued interest on investments.

The calculator requires inputs such as your current age, basic monthly pay, dearness allowance, EPF contribution, retirement age (up to 58 years), and, optionally, the current EPF balance. Based on the information, it will then provide an estimate of the EPF funds available at retirement.

Calculation of EPF Interest

The interest on EPF schemes is calculated monthly by dividing the annual interest rate by 12.

For example: If the annual interest rate is 8.25%, the monthly interest rate would be (8.25/12)%, which is 0.69%. Assuming an individual's salary is Rs. 15,000 per month, with a 12% contribution directed towards the EPF account:

The contribution towards the EPF account would be 12% of Rs. 15,000, which is Rs. 1,800 per month.

Employers contribute 3.67% towards the EPF account, while 8.5% is contributed towards the EPS account.

The total contribution towards the EPF account would be Rs. 1,800 + Rs. 550 = Rs. 2,350.

The interest accrued in one month would be Rs. 2,350 x 0.69% = Rs. 16.2.

It's important to note that the interest accrued in a given month is credited to the account at the end of the current financial year.

How to Transfer EPF Money

Step 1: When changing jobs, EPF money can be transferred using the same Universal Account Number (UAN).

Step 2: Visit the official EPF member portal and complete the registration form.

Step 3: Once you have received your login credentials, log in to the portal.

Step 4: Access the Online Transfer Claim Portal and initiate an EPF transfer using the same login details.

Step 5: If you meet the eligibility criteria for an online transfer claim, you can proceed without submitting Form 13.

Step 6: Choose the option 'Request for Transfer of Funds' and provide the required details of your previous employment as instructed.

Step 7: Ensure that your previous or current employer authenticates the transfer request.

Step 8: Upon submission, a PIN will be sent to your registered mobile number for verification.

Step 9: Keep track of your application using the provided tracking ID.

EPF Withdrawal Rules

EPF allows individuals to make partial or complete withdrawals, but such withdrawals are subject to specific circumstances.

Complete Withdrawal ofEmployee’s Provident Fund

1. Retirement: Individuals can withdraw EPF completely upon retirement.
2. Extended Unemployment: If the period of unemployment exceeds two months, complete withdrawal is allowed.
3. Job Switching: Complete withdrawal is permitted when transitioning between professions or jobs, provided the duration without a job is more than two months.

Partial Withdrawal of Employee’s Provident Fund

1. Wedding Expenses: Partial withdrawal is allowed for wedding-related expenses.
2. Higher Education: EPF can be partially withdrawn for funding higher education.
3. Land Purchase or House Construction: Partial withdrawal is permitted for purchasing land or constructing a house.
4. Home Loan Repayment: EPF can be partially withdrawn for the repayment of a home loan.
5. Housing Property Renovation: Partial withdrawal is allowed for renovating a housing property.

EPF Taxation

1. EPF Withdrawals: If EPF is withdrawn before the completion of five years of employment, it is subject to taxation. However, PPF withdrawals are not taxed.
2. Tax Deduction: EPF contributions made by both the employer and the employee are eligible for tax deduction up to Rs. 1.5 lakh per year under Section 80C of the Income Tax Act. The interest earned on EPF is also tax-free unless the individual becomes unemployed.
3. Tax-Free Withdrawals: EPF withdrawals made within five years of opening the account are tax-free. However, if the withdrawal amount exceeds Rs. 50,000 within five years, TDS is deducted.
4. PPF Tax Benefits: PPF account investments up to Rs. 1.5 lakh per year qualify for a tax credit under Section 80C of the Income Tax Act. The interest earned on PPF is tax-free, but it must be reported in the annual income tax return. The maturity amount from PPF is also tax-free. In other words, PPF follows a tax-exempt, exempt, exempt (EEE) status.

EPFO Grievance Information:

Employees who wish to register a grievance with EPFO can do so through the EPFO's member site by filling out a grievance registration form. Employees often file complaints regarding withdrawals, PF settlements, account transfers, pension settlements, and other related issues.

If you are new to the EPF member website, follow these steps to register an EPF grievance: 

• Visit https://epfigms.gov.in/ to access the EPFO grievance site. 
• Click the 'Register Grievance' button on the top bar. 
• The grievance registration form will appear on the screen. 
• Fill out the registration form with the following details: 

1. Select your current situation (employer, employee, EPS pensioner). 
2. Enter your PF account number.
3. Provide the address of your regional EPF office. 

1. Enter your employer's name, address, and other relevant details. 
2. Provide your personal information, including your name, address, zip code, country, email address, and phone number. 

• Choose the nature of your grievance from the drop-down menu, whether it's related to a transfer, withdrawal, pension settlement, or any other issue. 
• Upload your grievance letter, complete the captcha, and finalize the grievance registration process.