- Date : 18/06/2020
- Read: 6 mins
- Read in हिंदी: कर्मचारी भविष्य निधि के बारे में अक्सर पूछे जाने वाले प्रश्न
Let's take a look at all questions on Employees’ Provident Fund; covering its rules, eligibility, withdrawal, tax benefits, etc.
For decades, the Employees’ Provident Fund (EPF) has provided an important financial ‘cushion’ for the salaried in India. This precious investment for salaried individuals is maintained by the Employees’ Provident Fund Organisation (EPFO).
A company with a minimum of 20 employees has to register with the EPFO and offer Provident Fund to employees. The EPF helps employees accumulate a corpus after their retirement, along with an accumulation of interest for the fund. A specific amount is deducted from their monthly salary and transferred into the EPF account. An equal amount is contributed by the employer.
Here are some FAQs about the EPF that every employee should know:
1. How much does an employee have to contribute to EPF?
An employee contributes 12% of their salary (basic salary plus dearness allowance) to the EPF. An additional 12% is contributed by the employer, which is broken up thus:
a. 3.67% towards EPF and
b. 8.33% towards Employees’ Pension Scheme
Employer also pays the following fees and charges:
- 1.1% as EPF administration charges
- 0.5% towards Employees’ Deposit Linked Insurance (EDLI)
- 0.01% towards EDLI administration charges
Related: How does a lower EPF contribution impact your retirement savings?
2. Is it compulsory for an employee to contribute to EPF?
Employees with monthly salaries up to Rs 15,000 have to compulsorily contribute towards EPF. Employees with salaries greater than Rs 15,000 per month are non-eligible employees and it is not mandatory for them to become a member of the EPF. If they are still interested, they have to register with the employer’s consent and get approval from the Assistant PF Commissioner.
Related: What every employee should know about Employees Deposit Linked Insurance?
3. Who is eligible for EPF?
To be eligible for EPF scheme, one has to be an Indian resident and be at least 18 years of age. A minor can have an open an EPF account opened by a guardian, subject to a maximum deposit of Rs 1.5 lakh per annum.
4. How can an employee withdraw from EPF?
One has to retire from a job after turning 55 to claim the final PF settlement. There is a window to withdraw a partial amount for those nearing retirement. Anyone over 54 can withdraw up to 90% of the accumulated balance with interest. But what is an employee quits before reaching 55? If under 55, an employee can apply for EPF withdrawal only if they have been unemployed for at least 2 months – 75% if unemployed for one month and balance 25% after second month of unemployment.
There are other instances where a subscriber is permitted to make partial withdrawals:
- For medical purpose – up to employee’s share with interest or six times the monthly salary (whichever is lower)
- Repaying a home loan - up to 90% of the corpus (held individually or jointly)
- Purchase/ construction of a new house - up to 90% of the corpus (minimum 5 years of service must be completed)
- For wedding of a family member – up to 50% of the employee’s contribution with interest (minimum 7 years of service must be completed)
One can make a complete withdrawal after 60 years of age. Before making withdrawal, ensure you have a UAN (Universal Account Number) and the bank account details match with those of the EPF account.
Related: 6 Things you must do with your EPF to secure your future
5. What are the tax implications of EPF withdrawal?
EPF withdrawal has the following four components:
a) Employee’s contribution – Not taxable
b) Interest earned on employee’s contribution – Taxable
c) Employer’s contribution – Taxable
d) Interest earned on employer’s contribution – Taxable
If a withdrawal is made before completing 5 years of service, an additional TDS will also be levied. The TDS is deducted at a rate of 10% if he PAN is furnished and 34.608% if PAN is not furnished. If the total amount withdrawn is below Rs 50,000 it will not attract any TDS.
6. What happens when an employee changes jobs?
If an employee changes jobs, their EPF contribution and interest thereon will also get automatically transferred – provided the new employer includes the employee’s Universal Account Number (UAN) in their monthly EPF return. The UAN is a unique number issued by the EPFO and it remains with the employee for life. It helps while doing online PF transfer, viewing updated PF statement, downloading UAN card, updating KYC information, etc.
7. What can one do with the PF balance?
Employees have two options. One can either withdraw the PF balance plus interest or transfer the amount to the next employer. It is advisable to transfer the contribution for retirement reasons. Also, if one wants to withdraw the amount, one needs to remain unemployed for 60 days.
Related: How to check your EPF Balance
8. What is the transfer procedure?
It is a very simple process. The employee just needs to log on to the portal https://epfindia.gov.in/ with their UAN and password. They have to select ‘One EPF Account (Transfer Request)’, select either previous or current employer to attest the transfer claim form, validate an OTP, and hit ‘submit’. Then they have to make a physical submission of Form 13 and an online claim form.
9. Can an employee check their PF balance online?
An employee can log on to the portal https://epfindia.gov.in/ with their UAN and password and check their Provident Fund balance online. You can also get updates of your EPF account from their regional office via WhatsApp. Different WhatsApp numbers are listed for each of the 138 regional EPFO offices, which are available via the homepage of EPFO’s official website or click here for direct access to the helpline page.
10. What is the current interest rate for EPF accounts?
The EPFO is currently paying an interest rate of 8.5% for the financial year 2020-21.
Related: Employees are now allowed to withdraw 75% of EPF balance after 1 month of unemployment
11. Is there a mobile app for EPF?
Yes, the app is ‘i-akaun’. It is available on Android through Play store and on iOS through the App store. It allows employees to check the PF balance, log in to EPFO website, activate their UAN, check PF claim status etc.
12. Can an employee contribute more than 12% of their salary?
Yes, an employee can make a ‘voluntary contribution’. But an equal contribution will not be made by their employer.
Take a look at some of the key changes proposed by the government with respect to Employees' Provident Fund (EPF).
For decades, the Employees’ Provident Fund (EPF) has provided an important financial ‘cushion’ for the salaried in India. This precious investment for salaried individuals is maintained by the Employees’ Provident Fund Organisation (EPFO).
A company with a minimum of 20 employees has to register with the EPFO and offer Provident Fund to employees. The EPF helps employees accumulate a corpus after their retirement, along with an accumulation of interest for the fund. A specific amount is deducted from their monthly salary and transferred into the EPF account. An equal amount is contributed by the employer.
Here are some FAQs about the EPF that every employee should know:
1. How much does an employee have to contribute to EPF?
An employee contributes 12% of their salary (basic salary plus dearness allowance) to the EPF. An additional 12% is contributed by the employer, which is broken up thus:
a. 3.67% towards EPF and
b. 8.33% towards Employees’ Pension Scheme
Employer also pays the following fees and charges:
- 1.1% as EPF administration charges
- 0.5% towards Employees’ Deposit Linked Insurance (EDLI)
- 0.01% towards EDLI administration charges
Related: How does a lower EPF contribution impact your retirement savings?
2. Is it compulsory for an employee to contribute to EPF?
Employees with monthly salaries up to Rs 15,000 have to compulsorily contribute towards EPF. Employees with salaries greater than Rs 15,000 per month are non-eligible employees and it is not mandatory for them to become a member of the EPF. If they are still interested, they have to register with the employer’s consent and get approval from the Assistant PF Commissioner.
Related: What every employee should know about Employees Deposit Linked Insurance?
3. Who is eligible for EPF?
To be eligible for EPF scheme, one has to be an Indian resident and be at least 18 years of age. A minor can have an open an EPF account opened by a guardian, subject to a maximum deposit of Rs 1.5 lakh per annum.
4. How can an employee withdraw from EPF?
One has to retire from a job after turning 55 to claim the final PF settlement. There is a window to withdraw a partial amount for those nearing retirement. Anyone over 54 can withdraw up to 90% of the accumulated balance with interest. But what is an employee quits before reaching 55? If under 55, an employee can apply for EPF withdrawal only if they have been unemployed for at least 2 months – 75% if unemployed for one month and balance 25% after second month of unemployment.
There are other instances where a subscriber is permitted to make partial withdrawals:
- For medical purpose – up to employee’s share with interest or six times the monthly salary (whichever is lower)
- Repaying a home loan - up to 90% of the corpus (held individually or jointly)
- Purchase/ construction of a new house - up to 90% of the corpus (minimum 5 years of service must be completed)
- For wedding of a family member – up to 50% of the employee’s contribution with interest (minimum 7 years of service must be completed)
One can make a complete withdrawal after 60 years of age. Before making withdrawal, ensure you have a UAN (Universal Account Number) and the bank account details match with those of the EPF account.
Related: 6 Things you must do with your EPF to secure your future
5. What are the tax implications of EPF withdrawal?
EPF withdrawal has the following four components:
a) Employee’s contribution – Not taxable
b) Interest earned on employee’s contribution – Taxable
c) Employer’s contribution – Taxable
d) Interest earned on employer’s contribution – Taxable
If a withdrawal is made before completing 5 years of service, an additional TDS will also be levied. The TDS is deducted at a rate of 10% if he PAN is furnished and 34.608% if PAN is not furnished. If the total amount withdrawn is below Rs 50,000 it will not attract any TDS.
6. What happens when an employee changes jobs?
If an employee changes jobs, their EPF contribution and interest thereon will also get automatically transferred – provided the new employer includes the employee’s Universal Account Number (UAN) in their monthly EPF return. The UAN is a unique number issued by the EPFO and it remains with the employee for life. It helps while doing online PF transfer, viewing updated PF statement, downloading UAN card, updating KYC information, etc.
7. What can one do with the PF balance?
Employees have two options. One can either withdraw the PF balance plus interest or transfer the amount to the next employer. It is advisable to transfer the contribution for retirement reasons. Also, if one wants to withdraw the amount, one needs to remain unemployed for 60 days.
Related: How to check your EPF Balance
8. What is the transfer procedure?
It is a very simple process. The employee just needs to log on to the portal https://epfindia.gov.in/ with their UAN and password. They have to select ‘One EPF Account (Transfer Request)’, select either previous or current employer to attest the transfer claim form, validate an OTP, and hit ‘submit’. Then they have to make a physical submission of Form 13 and an online claim form.
9. Can an employee check their PF balance online?
An employee can log on to the portal https://epfindia.gov.in/ with their UAN and password and check their Provident Fund balance online. You can also get updates of your EPF account from their regional office via WhatsApp. Different WhatsApp numbers are listed for each of the 138 regional EPFO offices, which are available via the homepage of EPFO’s official website or click here for direct access to the helpline page.
10. What is the current interest rate for EPF accounts?
The EPFO is currently paying an interest rate of 8.5% for the financial year 2020-21.
Related: Employees are now allowed to withdraw 75% of EPF balance after 1 month of unemployment
11. Is there a mobile app for EPF?
Yes, the app is ‘i-akaun’. It is available on Android through Play store and on iOS through the App store. It allows employees to check the PF balance, log in to EPFO website, activate their UAN, check PF claim status etc.
12. Can an employee contribute more than 12% of their salary?
Yes, an employee can make a ‘voluntary contribution’. But an equal contribution will not be made by their employer.
Take a look at some of the key changes proposed by the government with respect to Employees' Provident Fund (EPF).
