Employees Provident Fund: All You need to know
What is Employee’s Provident fund?
Employee provident fund scheme is an arrangement between the employer and employee to contribute a fixed portion of employee’s salary to a corpus fund on a monthly basis. An amount equal to the contribution made by the employee is contributed to the fund by the employer as well. The idea behind the scheme is to promote retirement savings for employees.
The Employee’s Provident Fund Scheme was enacted in the year 1952 in India by replacing the Employee Provident Fund Ordinance, 1952.
The Act that now governs the scheme is known as Employee’s Provident Fund and Miscellaneous Act, 1952.
A Central Board of Trustees comprising of representatives from the Government, Employers and Employees administer the functioning of the Act. The Board is assisted by Employee’s Provident Fund Organization (EPFO), which is a body governed by Ministry of Labour and Employment, Government of India.
The USP of the scheme is that the employees receive interest on the amount contributed. Further, the interest amount and the total contribution amount is tax-free when withdrawn at maturity, making it one of the most popular and sought after retirement benefit scheme for the employed population in the country.
There are over 5 crore members currently, who are registered and are serviced by EPFO. There are a total of three schemes under the Act which are operated by the EPFO, under which employees can enjoy provident fund, pension and insurance benefits:
- Employee’s Provident Fund Scheme, 1952
- Employee’s Deposit Linked Insurance Scheme, 1976
- Employee’s Pension Scheme, 1995
Thanks to advancement in technology, employees can now access relating to EPF online as well.
What are the various advantages/benefits of EFP scheme?
The EPF scheme, due to several benefits, is one of the most popular tax saving schemes. The key advantages are listed below:
- Financial security: Perhaps this is the biggest benefit. The habit of saving money will ensure long term financial security of the individual. The scheme is designed in a way that it gives maximum benefits when the money is kept for long. This discourages you from withdrawing the money unless absolutely necessary. The money saved in EPF will come handy in case of emergencies, post retirement or in case of temporary or permanent loss in ability to earn income due to resignation, disability or even death. In case of death, the money is given to your nominee.
- Tax-free earnings: Contributions made towards EPF are tax deductible under section 80C of the Income Tax Act, 1956. Also, the interest earned on the contribution is tax free unless prematurely withdrawn. This benefit of tax saving makes the scheme very attractive.
- Long-term savings: Since it is automatically deducted at the time of salary payment, you are saving money without putting in any extra effort. This is a perfect plan for those who are interested in long-term savings.
- A good source of funds: In case of exigencies such as child’s education fee, housing, marriage, or medical needs, EPF can provide much needed liquidity to the employee.
- Double the contribution, double the benefit: In addition to your contribution, even the employer is making an equal contribution to the fund, thus ensuring that a good amount of money is saved every month for you.
- Easy access: With EPFO introducing online services, it is easier than ever to manage your EPF account online. With the introduction of Universal Account Number, your account balance can easily be transferred when you change your job.
Who is eligible to be a part of the EPF scheme?
In order to be eligible for and avail the benefits of EPF scheme, the employees need to become the member of a provident fund.
Every establishment employing 20 or more persons has to join the EPF scheme and provide PF facility to its employees. This Act, however does not apply to Jammu & Kashmir.
- Employees can become members of the fund on the day of joining an establishment.
- In case the employee has been in any pr,evious employment, then the same needs to be disclosed in Form No. 11.
- The details about the family and nominees need to be filled and submitted in Form No. 2.
- The rate of contribution to the fund is 12% of the basic pay, DA, food allowance and retaining allowance (if any), up to a maximum of INR 15,000 per month by the employee and employer.
For employees who are already members of the scheme, any change in the status of the family, such as
- Change in the number of family members
- Marriage of any member
- Legal adoption of a child or
- Change of nominee has to be filed in Form No. 2 through the employer.
If any member is holding a scheme certificate under EPS, 95, the same needs to be surrendered to the EPFO office through the employer.
How is the contribution to the scheme computed?
The concept of EPF revolves around contributions made by the employee from their salary at a fixed percentage which is matched by the employer. While the normal rate of contribution is 12%, the following establishments are allowed to make contributions at 10% per month:
- Establishments which have less than 20 employees
- Industries identified as ‘sick’ by BIFR
- Establishments suffering from year end losses equivalent to or more than their net worth
- Brick, beedi, jute, coir and guar gum manufacturing establishments
- Establishments that have a set wage limit
Employer’s contribution to PF
The minimum contribution to be made by the employer is set at 12% of Rs. 15,000 (which comes to Rs. 1,800), from the previous minimum of Rs. 6,500.
The contribution made by the employer goes towards pension, insurance and also towards admin costs in addition to the provident fund. Employer’s contribution is distributed in the following proportion:
12% of basic salary + DA are divided into EPF (8.33%) and EPF (3.67%).
The employer is also liable to contribute and pay the following:
0.5 % towards EDLI, 0.01% towards EDLI admits costs and 1.1% towards EPF admin costs. So, in principle, the employer contributes a total of 13.61% whereas the employee contributes 12%.
Employee’s contribution to PF
Employee contributes 12% of basic salary + DA and retention allowance (if any) towards the provident fund scheme every month. Unlike employer’s contribution, the entire contribution from the employee goes towards EPF.
Steps to check you PF claim status
Managing your PF account has become a lot simpler, thanks to the EPFO website where all details related to PF account can be accessed easily by the member with the click of a button. The EPF claim status can also be checked by simply sending an SMS from your registered mobile number to the EPFO helpline number.
Following are the steps to check your EPF claim status online and offline.
Thanks to the introduction of EPFO portal online, it is now simple to check EPF claim status online. By following the below-mentioned steps, you can check the status of you PF claims real time. All you need to know is the PF account number to access this service. Following are the steps to access the information:
- Open the EPFO website, go-to ‘our-services’ section and click on ‘for employees’ section
- Click on ‘know your claim status’, a new page will open where you will have to select the state and city of PF office
- Next, you can select from the list of EPFO offices in the city where your claim is pending from the drop-down menu.
- Once this is selected, all other information related to the relevant office will be filled automatically
- Post this, enter the establishment code of your employer in the 3rd box. This code will be of 7 digits. In case there is any extension or sub-code for your establishment, then enter that in the 4th box, else leave it blank
- Next step, fill in your account number in the 5th column
- Click on submit button; you will now be able to see your claim status
If the message shows ‘no record found’, it means that the claim details are not yet updated in the system.
In case you are not able to check the claim status online, you will have to visit the relevant EPFO office in person where you can fill in the necessary form with all details and submit the same to know your claim status.
What are the steps to be followed for online PF withdrawal?
To make the process of provident fund withdrawal simpler for members, EPFO has added the facility to request for withdrawal of PF money online.
Currently, EPF claims for Full Withdrawal via PF Final Settlement, PF Partial Withdrawal via loan/advance and Pension Withdrawal Benefit through EPS withdrawal, can be made directly through employees UAN (Universal Account Number) portal by all members of EPF. For this, the UAN needs to be activated and linked to Aadhaar number.
List of provident fund withdrawal forms
Following are the various forms that need to be filled depending on the nature of the transaction that needs to be done.
Form 31: This is for withdrawal of amount/taking advance in case of circumstances like marriage or funding of education, housing loans, house repairs etc.
Form 14: This needs to be filled when the withdrawal is for funding an LIC policy.
For 10C: Required to be filled for pension fund settlement via monthly pension on completion of 58 years but where a minimum of 10 years of service have not been completed.
Form 10D: Required to be filled while applying for a monthly pension on completion of 58 years with at least 10 completed years of service.
What is the rate of interest on investment in EPF scheme?
What makes investing in the EPF scheme is the fact that the invested amount if eligible to a healthy rate of interest that is exempted from tax if withdrawn after the maturity period. As on today, the interest rate from investment in EPF is higher than what one might get by putting the money in a bank or even fixed deposit.
The interest rate is decided by the Government of India along with the Central Board of Trustees in association with the EPFO, and it stands effective from April 1 of the current year to March 31 of the following year.
Interest on deposits is contributed on a monthly basis on running balances and credited to the account on an annual basis.
Interest amount ceases to be credited if the EPF account becomes inoperative and it is not paid on withdrawn amounts or amount contributed to Employee Pension Scheme by the employer.
Here is the summary of interest rates in the past three years on contributions made to EPF:
Year Interest rate
What are the different PF forms and their use?
Right from registration to withdrawal and availing advances, you are required to fill a form with all necessary details to complete the request. Each form will need to be submitted with necessary supporting documents where ever required. Most establishments provide the PF registration form for an employee on the day of joining the organisation so that the provident fund form can be filled and submitted to the EPFO for necessary formalities.
Here is a list of forms along with their purpose:
Form 31 To be filled in case any withdrawals/advances need to be made for specific purposes such as to fund education, marriage or buying a house
Form 14 Money required to find an LIC policy
Form 10D To make an application for monthly pension. Applicable for individuals above 58 years of age who have completed at least 10 years in service
Form 10C To make application for withdrawal certificate under EPS for employees above the age of 58 years who have not completed 10 years of service
Form 13 For transfer of the balance from old EPF account to a new one
Form 19 To be filled when the employee wants to claim a final settlement of the balance in EPF account
Form 20 To be filled by the nominee/heir or beneficiary of the account in case of death of the account holder
Form 51F To be filled for the insurance claim (EDLI) when the employee dies while in service
Form 11 Form 11 has replaced Form 13 for application for transfer of the balance from the old account to the new account
What is the procedure for offline and online PF transfer?
The procedure to transfer PF from one account to another on change of employer was a tricky subject in the past and required a lot of formalities, form filling and endless waiting for the transfer to happen. However, things have become much simpler since the facility of online PF transfer has been introduced.
Steps for online transfer of PF
To transfer PF online, one has to log on to the EPFO website – www.epfindia.gov.in.
- To facilitate the online transfer of PF, the previous and the current employer need to have registered digital signatures with EPFO. If not, you will have to follow the offline procedures for transfer.
- On the EPFO home page, select the option ‘Online Transfer Claim Portal’ (OTCP) and then choose the option to check eligibility for filing a transfer claim online.
- To check OCT eligibility, provide details of the old and new EPF account numbers
- Login by using your ID and password or register if you do not have an online account with EPFO.
- Completing the registration will lead you to Online Transfer Claim Application option. Here, request for account transfer under the ‘claim’ option.
- Fill in Form No 13 that is displayed with all necessary information and select the option for attestation of the form by current/previous employer.
- Preview the form, get the pin and accept the declaration. The pin will be sent to your registered mobile number. Enter the pin on the portal and submit the claim form.
- Print the filled in form, sign, and submit it to the chosen employer for attestation. The employer will verify the form online, post which EPFO will proceed with the transfer of funds.
The portal also allows you to check online PF transfer status.
Steps for offline PF transfer
- Fill in Form 13 and get it attested by the past or existing employer.
- Submit the attested form to the relevant regional EPF office, the post which the PF amount from old account will be transferred to a trust.
- The old employer has to submit Annexure K that shows employee’s tenure of service and the PF account balances to the Regional Provident Fund Commissioner (RPFC) or Regional EPF office. Once the PF trust verifies the annexure, the funds will be credited to the new account by NEFT.
- If the Annexure K is not submitted, the transfer of money will not take place. In such cases, tracking PF transfer status can be difficult.
What is an EPF passbook?
Every member of the fund is given an EPF balance passbook which is used to record all transactions related to the PF account movements on a monthly basis. This includes details of contributions, interest credited and withdrawals made.
Previously, the employer would provide an annual statement showing details of all the transactions made during the year to the employee. However, since 2012, EPFO has introduced e-passbooks that can be accessed and downloaded from the EPFO portal.
To avail the EPF member passbook, it is mandatory for the employees to register on the EPF member’s portal. The facility is available only where the employer has uploaded Electronic Challan cum Receipt (ECR) for the employees and has remitted all the dues.
Post registration, members can download the e-passbook by providing all the necessary details in the portal. An authentication pin will be received on your registered mobile number which has to be entered at the bottom of the page after accepting the disclaimer. Once this is done, you can access the link to download the EPF e-passbook.
How to register on the EPFO member portal?
To avail facilities offered by EPFO website, members need to register themselves on the PF portal. Following are the steps to be taken to complete the registration on the portal:
- On the EPFO portal, choose the ‘member portal’ tab which is under the ‘for employees’ section. This will lead to a welcome page with the link to ‘register’ on the portal.
- On clicking the register button, you will be re-directed to an information request where you need to fill in all necessary details asked.
- Once complete, click on the ‘get pin’ button to generate an authentication pin. This will be sent to your registered mobile number and will have to be entered at the bottom of the web page.
- Login details to the member portal EPF will be sent to the registered mobile number. The subscriber will have to choose a document type (Aadhaar, PAN, Voter ID, NPR, Driving license, Bank account or passport) and enter the document number. This will act as the username of the subscriber, and the mobile number will be the password.
Universal Account Number (UAN)
This is a unique 12 digit single number that a subscriber can use to view all the accounts held by different establishments. UAN is provided to the employees by their employers. Once this is received, the same number needs to be quoted every time there is a change in the employer.
One can check whether they have been allotted a UAN by visiting the UAN members section on the EPFO website.
How to activate UAN?
Employees need to register their UAN on the UAN member’s site once they receive their employer. Following details are required to activate the UAN:
- UAN itself
- Members ID
- Mobile number
The users will also have to select a password at the time of registration. The UAN serves as the ID.
How to do a PF balance check?
Checking your EPF balance is now much easier than it was a few years ago. You can use one of the following mediums to perform an EPF balance check:
- Online: You can do a PF balance check online by logging into the EPFO website using your UAN and password. You can check your e-passbook to see all the PF related transactions for the desired period.
- SMS: You can check the PF balance via SMS if you have completed your KYC and linked your account with your mobile number. You need to type EPFOHO and send it to 7738299899 to receive your PF balance.
- Missed call: You can get to know your PF balance by giving a missed call to 011-22901406 from your registered mobile number only.
- Mobile App: EPFO also has its own mobile app which can be used to check the PF balance. All you need to do is download the App, enter your UAN and password and select the EPF passbook option.
How to make corrections to the EPF account?
To make any changes to details of the EPF account such as name, date of birth and spouse name, the employee needs to obtain the correction form from the employer, fill in the necessary details and submit it back to the employer along with supporting documents validating the changes.
Whether the changes have been made to the account can be checked by downloading the passbook online which contains all the details of an employee, after filing the correction request.
What is the process to resolve EPF related grievances?
The EPFO website has a grievance management system EPFiGMS.gov.in where the members can log in their grievances. The grievances form can be selected from the main page menu. The members will have to fill in their EPF details, personal details and the details of their grievances.
Members will have to first specify whether they are registering issues in the capacity of an employee, employer, pensioner or any other capacity. They will then have to specify the relevant EPFO office and the name of their company along with its address.
The status of registered grievances can be tracked on the view status link provided on the same page.
What are the EPF tax exemptions available?
Contributions made to EPF scheme can be taken as a tax deduction u/s 80C of the Income Tax Act.
As per the Budget notification of 2016-17, interest accruing on 60% of the employee contributions towards EPF will be taxable with effect from 2016. However, employees whose monthly income is below Rs.15,000 are exempted from tax.
What are the new services offered by the EPFO?
To make it easier for members to track details related to their PF contributions, EPFO has rolled out many new services for the convenience of the members. Some of the new services are as follows:
- EPFO e-seva portal: This was launched to make transactions paperless and bring in transparency and efficiency in the management of PF funds. Through this portal, electronic returns can be uploaded and approved online, and a challan for the same will be generated. Further, the PF payment can be made through net banking via this portal.
- One member-one account: You can access the ‘One Employee – One EPF Account link under the ‘Services’ tab on the EPFO portal. Clicking on the link will redirect you to a page where you have to enter your phone number and UAN, after which you can provide details about all your previous PF accounts. This facility will help you to consolidate all your PF accounts with the help of one unique 12-digit number called the UAN.
- UMANG App: The UMANG (Unified Mobile App for New Governance) App helps employees view their passbook and make withdrawal requests through the app. The passbook can be viewed even if Aadhaar details are not seeded. However, claim requests require EPFO members to seed their Aadhaar number with their UAN.