The EPF Scheme, administered by the Employees’ Provident Fund Organisation (EPFO), is a crucial retirement savings program designed for employees in India. Under the purview of the Ministry of Labour and Employment, this scheme offers a secure and systematic approach to building a financial cushion for the future. By contributing a portion of their salary, employees not only secure their retirement but also gain access to a range of associated benefits.
Key Components of the EPF Scheme:
The EPF Scheme comprises two essential components: the Employees’ Provident Fund (EPF) and the Employees’ Pension Scheme (EPS). The EPF functions as a provident fund that accumulates savings from both the employee and the employer. The employee contributes 12% of their basic salary and dearness allowance, while the employer matches this amount. Out of the employer’s contribution, 8.33% is allocated to the EPS, with the remainder deposited into the EPF.
On the other hand, the EPS serves as a pension fund that guarantees a monthly pension to employees upon retirement, or to their families in the event of death or disability. The pension amount is calculated based on the employee’s pensionable service and salary, ensuring a secure future for individuals and their loved ones. The EPS guarantees a minimum pension of Rs. 1000 per month.
Scope and Applicability:
The EPF Scheme is applicable to all employees in India who work in establishments covered by the EPF and MP Act, 1952. These establishments generally employ 20 or more persons, and certain specified categories such as cinemas, newspapers, and banks. Furthermore, the Central Government reserves the right to include any other establishments under the Act by issuing notifications.
While the EPF Scheme is mandatory for eligible employees, those who are not members of any other statutory social security scheme and earn a basic salary exceeding Rs. 15,000 per month can choose to opt out of the scheme. However, once an individual joins the EPF Scheme, they cannot subsequently opt out.
Essential Features of the EPF Scheme for a Secure Retirement
Understanding these features is crucial for employees seeking to secure their future and avail the benefits provided under this scheme.
Retirement Benefits and Accumulation
Retirement remains the primary focus of the EPF Scheme, ensuring that employees accumulate a substantial corpus along with interest by the time they retire, resign, or in the unfortunate event of their demise. The scheme acts as a reliable avenue for individuals to build a retirement fund, providing them with a safety net for the post-employment phase.
Contributory Nature of the Scheme
The EPF Scheme operates on a contributory basis, with both the employer and the employee contributing 12% of the basic salary and dearness allowance every month. This shared responsibility helps in building a substantial fund for retirement. The employer’s contribution is further divided into three components: EPF (3.67%), EPS (8.33%), and EDLI (0.5%), each serving specific purposes within the scheme.
Social Security and Additional Benefits
Beyond retirement benefits, the EPF Scheme serves as a comprehensive social security program. Under the Employees’ Pension Scheme (EPS), members and their dependents are entitled to pension benefits. Additionally, the Employees’ Deposit Linked Insurance (EDLI) Scheme provides insurance benefits to members and their families, ensuring financial protection in case of unfortunate events.
Tax Savings and Exemptions
The EPF Scheme offers attractive tax benefits, making it an appealing option for employees. Contributions made by individuals to their EPF account are eligible for deduction up to Under Section 80C of the Income Tax Act, individuals can avail a tax deduction of up to Rs. 1.5 lakh per year.. Moreover, withdrawals from the EPF balance are exempt from taxation if specific conditions are met, providing further tax advantages to members.
Flexibility for Individual Needs
Recognizing the evolving financial needs of its members, the EPF Scheme offers flexibility through partial withdrawals and fund transfers for various specific purposes. Members can access their EPF balance to meet financial requirements such as house construction, higher education, marriage, and medical expenses, among others. This feature allows individuals to utilize their savings judiciously based on their unique circumstances.
Embracing Digital Solutions
To enhance convenience and accessibility, the EPF Scheme has embraced digital platforms. Through the Member Portal or the UMANG app, members can access a host of online services, including the member passbook, e-nomination, claim status, transfer requests, and grievance redressal. The integration of Aadhaar and UAN streamlines the verification and updating of personal details, ensuring a hassle-free experience for members.
Understanding Eligibility and Documentation for the EPF Scheme
EPF Eligibility Criteria for Employees
For employees to be eligible for the EPF scheme, the following criteria apply:
- Basic Salary and Allowance Limit: If an employee’s basic salary and dearness allowance are below Rs. 15,000 per month, it becomes mandatory for their employer to open an EPF account on their behalf.
- Higher Salary Bracket: Employees with a monthly salary exceeding Rs. 15,000 can still opt for the EPF scheme with the consent of their employer and approval from the Assistant PF Commissioner.
- Contribution Percentage: Both the employee and the employer are required to contribute either 12% or 10% (depending on the organization’s size) of the employee’s basic salary and dearness allowance to the EPF account each month.
- Employees’ Pension Scheme (EPS): Out of the employer’s contribution, 8.33% is allocated to the Employees’ Pension Scheme (EPS), which guarantees a monthly pension after retirement or in the event of death.
EPF Eligibility Criteria for Employers
Employers are subject to the following eligibility criteria under the EPF scheme:
- Employee Count: If an organization employs more than 20 individuals, it is mandatory for the employer to register for the EPF scheme and enroll all eligible employees.
- Voluntary Registration: Organizations employing less than 20 individuals can voluntarily register for the EPF scheme and enroll their employees.
- Exemption Application: Employers can apply for exemption from the EPF scheme if they provide provident fund benefits that meet or exceed statutory provisions for their employees, subject to specific conditions and formalities.
Documents Required for EPF Registration
To successfully register for the EPF scheme, the following documents are required:
For Employees:
- PAN Card: Permanent Account Number (PAN) card for identification and taxation purposes.
- Aadhaar Card: Aadhaar card as a proof of identity and address.
- Bank Account Details: Bank account information for seamless fund transfers and transactions.
- UAN: Universal Account Number generated by the employer, facilitating easy access to the EPF account.
- KYC Documents: Additional KYC documents such as driving license, passport, voter ID, etc., for verification purposes.
For Employers:
- PAN Card: Permanent Account Number (PAN) card for identification and taxation purposes.
- GST Registration Certificate: Goods and Services Tax (GST) registration certificate for organizations registered under GST.
- Business Registration Certificate: Certificate verifying the legal registration of the organization.
- Bank Account Details: Bank account information for smooth financial transactions.
- Digital Signature Certificate: Digital signature certificate for secure online authentication and verification.
- Specimen Signature of Authorized Signatory: A specimen signature of the authorized signatory for authentication purposes.
By meeting the eligibility criteria and providing the necessary documents, both employees and employers can successfully register and participate in the EPF scheme
The Interest Rate for the Financial Year 2022-23
The EPF Scheme offers an attractive interest rate to employees for the financial year 2022-23. Set at 8.15%, it shows a slight increase from the previous year’s rate of 8.10%. This interest rate is fixed by the Central Board of Trustees (CBT) of the Employees’ Provident Fund Organisation (EPFO) and subsequently notified by the Ministry of Finance.
It is applicable to both the Employees’ Provident Fund (EPF) and the Voluntary Provident Fund (VPF) accounts. The interest rate is calculated based on the monthly running balance of the EPF account and is credited at the end of the financial year. Additionally, the interest rate is also relevant to the Employees’ Pension Scheme (EPS) account, contributing to the calculation of the pension amount at the time of retirement or withdrawal.
Managing Your EPF Account: Opening, Transferring, Withdrawing, and Closing
The EPF scheme provides salaried employees with a comprehensive range of options for managing their EPF account. From opening an account to transferring funds, making withdrawals, and eventually closing the account, the EPF scheme ensures flexibility and accessibility. Here is a step-by-step guide on how to navigate each process:
Opening an EPF Account
To open an EPF account, follow these steps:
- Eligibility: You must be a salaried employee working in an establishment covered by the EPF Act, 1952.
- Employer Registration: Your employer will register you with the Employees’ Provident Fund Organisation (EPFO) and provide you with a unique Universal Account Number (UAN), a 12-digit identifier for your EPF account.
- UAN Activation: Visit the Member Home portal and enter your UAN, mobile number, and Aadhaar or PAN to activate your UAN. You can also update your personal details and KYC information on the portal.
- Contributions: Your employer will deduct 12% of your basic salary and dearness allowance each month and deposit it into your EPF account, matching the contribution with an equal amount.
Transferring an EPF Account
If you change your job, you can transfer your EPF account by following these steps:
- Login: Access the Member Home portal and select the “One Member – One EPF Account (Transfer Request)” option under the “Online Services” tab.
- UAN and Password: Enter your UAN and password and verify your personal details and PF account details.
- Employer Selection: Choose your previous and current employers from the drop-down list. Click on “Get OTP” to receive a one-time password on your registered mobile number.
- Initiate Transfer: Enter the OTP and click on “Submit” to initiate the transfer request. The transfer request requires approval from both employers or the EPFO field office.
- Track Status: Track the status of your transfer request by selecting the “Track Claim Status” option under the “Online Services” tab.
Withdrawing an EPF Account
For partial or full withdrawal of your EPF balance, adhere to the following steps:
- Login: Visit the Member Home portal and select the “Claim (Form-31, 19 & 10C)” option under the “Online Services” tab.
- Bank Account Verification: Enter your bank account number linked to your UAN and verify it.
- Select Withdrawal Claim: Choose the type of withdrawal claim you wish to make, such as PF Advance (Form 31), PF Withdrawal (Form 19), or Pension Withdrawal (Form 10C).
- Provide Details: Fill in the required details, including purpose, amount, address, and upload any supporting documents if necessary.
- Complete Process: Click on “Get Aadhaar OTP” to receive a one-time password on your registered mobile number linked to your Aadhaar. Enter the OTP and click on “Submit” to finalize the withdrawal claim process.
- Track Status: Track the status of your withdrawal claim through the “Track Claim Status” option under the “Online Services” tab.
Closing an EPF Account
To close your EPF account after retirement or resignation, follow these steps:
- Retirement or Resignation: Ensure that you have retired or resigned from your job and do not join another establishment within two months.
- Follow Withdrawal Process: Follow the same steps as withdrawing an EPF account but select “PF Final Settlement (Form 19)” as the type of withdrawal claim.
- Receive Final Balance: After submitting the claim, your final PF balance along with interest will be credited to your bank account within a few days.
- Pension Amount: If you have completed at least 10 years of service and are above 50 years of age, you will also receive a pension amount. Submit Form 10D along with Form 19 to initiate the pension process.
By understanding and following these step-by-step procedures, you can effectively manage your EPF account, ensuring a smooth experience throughout your employment journey.
FAQs – EPF Scheme
The EPF Scheme is a pension plan designed to provide retirement benefits, wherein both the employee and employer make equal monthly contributions. It provides accumulation plus interest upon retirement, resignation, or death. It also allows partial withdrawals for specific expenses like house construction, higher education, marriage, illness, and more.
Any company with more than 20 employees must compulsorily register with the Employees’ Provident Fund Organisation of India. Even companies with less than 20 employees can voluntarily register. EPF eligibility extends to all salaried employees, encompassing individuals across various income brackets.
To register on the Member Portal, you need to visit the link available on the homepage of the EPFO website (www.epfindia.gov.in). Enter your mobile number, date of birth, email ID, and one of the following documents: PAN, Aadhaar, NPR, Bank Account Number, Voter ID Card, Passport, or Driving License. After entering these details, you will receive a PIN on your mobile number, which you need to enter to complete the registration process.
You can withdraw money from your EPF account by submitting a claim form online or offline. For online claims, you can use the Member Portal or UMANG app after logging in with your UAN and password. If you prefer offline claims, you can download the claim form from the EPFO website or obtain it from the nearest EPFO office. Submit the form through your employer or directly to the EPFO office.
The claim for withdrawal of money from the EPF account is typically settled within 20 days from the date of receipt of the claim form by the EPFO office. In case of any delay or discrepancy, you can check the status of your claim online through the Member Portal or UMANG app. Alternatively, you can contact the concerned EPFO office for further assistance.
There are several methods to check the balance in your EPF account. You can:
· Send an SMS to 7738299899 from your registered mobile number using the format “EPFOHO UAN <LAN>”. For example, for English, you would send “EPFOHO UAN ENG”.
· Give a missed call to 011-22901406 from your registered mobile number.
· Log in to the Member Portal using your UAN and password, and download your e-passbook.
· Utilize the UMANG app on your smartphone and select EPFO services.
The withdrawal of money from the EPF account is exempt from tax under certain conditions. If the withdrawal is made after completing five years of continuous service, due to termination of service because of ill health, closure of business, or reasons beyond the member’s control, or transferred to another EPF account or a recognized provident fund, it is exempt from tax. However, if these conditions are not met, the withdrawal becomes taxable based on the member’s income tax slab rates. The employer deducts tax at source (TDS) at 10% if PAN is provided and at 34.608% if PAN is not provided.
Yes, you can withdraw up to 90% of your EPF balance after attaining 55 years of age or within one year before retirement, whichever is later.
If you remain unemployed for more than two months after leaving your job, you can withdraw your entire EPF balance. To do so, you need to submit a declaration form along with the claim form, stating your unemployment status.
In the event of the death of an EPF account holder, the nominee or legal heir can withdraw the entire EPF balance, including interest and insurance benefits. To initiate the withdrawal, they must submit a composite claim form, along with the death certificate and other relevant documents.
Yes, you can make a partial withdrawal from your EPF account for specific purposes such as house construction, higher education, marriage, illness, etc. The amount and frequency of withdrawal depend on factors like years of service, the purpose of withdrawal, and the cost of the project. To make a partial withdrawal, you need to submit a composite claim form along with the necessary supporting documents.
The benefits of transferring the EPF account from one employer to another are as follows:
· It helps maintain continuity of service and avoids tax liability on withdrawal of EPF balance before completing five years of service.
· It allows for accumulation of a larger retirement corpus by earning interest on the entire balance.
· It enables availing benefits of pension and insurance schemes linked to the EPF account.
· It eliminates the hassle of managing multiple EPF accounts and updating personal details.
You can transfer your EPF account from one employer to another by submitting a transfer request online or offline. For online transfer, use the Member Portal or UMANG app after logging in with your UAN and password. For offline transfer, submit Form 13 through your previous or current employer, including a copy of your UAN card. Provide details of your previous and current EPF accounts, such as member ID, establishment code, and PF office.
The transfer of an EPF account from one employer to another is typically completed within 20 days from the receipt of the transfer request by the EPFO office. In case of any delay or discrepancy, you can check the status of your transfer request online through the Member Portal or UMANG app, or contact the relevant EPFO office.
UAN stands for Universal Account Number, a 12-digit number that serves as an umbrella for multiple member IDs allotted by different establishments. You can obtain your UAN from your employer or generate it online through the Member Portal or UMANG app. To activate the UAN online, enter the UAN, mobile number, date of birth, email ID, and any one of the following documents: PAN, Aadhaar, NPR, bank account number, voter ID card, passport, or driving license. You will receive a PIN on your mobile number, which you need to enter to complete the activation process.
You can update KYC details such as PAN, Aadhaar, bank account number, etc., in the EPF account by logging in to the Member Portal or UMANG app using your UAN and password. Upload scanned copies of relevant documents and submit them for verification by the employer or EPFO office. Once verified, the KYC status will change from pending to approved.
The benefits of updating KYC details in the EPF account are as follows:
· It expedites the processing and settlement of claims and transfers.
· It helps avoid TDS deduction on withdrawal of EPF balance before completing five years of service.
· It allows for hassle-free access to various online services such as e-nomination, claim status, and transfer requests.
· It ensures accuracy and security of personal information.
You can nominate a beneficiary for your EPF account by filling out Form 2 and submitting it to your employer or directly to the EPFO office. Provide details such as the name, relationship, date of birth, and address of the nominee(s). You can also update or change your nomination online through the Member Portal or UMANG app using your UAN and password.
Nominating a beneficiary for the EPF account offers several benefits. Firstly, it ensures that the EPF balance and insurance benefits are paid to the rightful person in the event of the member’s death. Secondly, it helps in avoiding any legal disputes or delays in the settlement of claims. Lastly, it allows for easy online updating of the nominee’s personal details without any hassle.
You can check the status of your EPF claim or transfer request through various methods. Firstly, you can log in to the Member Portal or UMANG app using your UAN and password, and select the “Track Claim Status” option. Alternatively, you can visit the EPFO website www.epfindia.gov.in and click on the “Know Your Claim Status” link under Online Services. Another option is to send an SMS to 7738299899 from your registered mobile number in the format EPFOHO UAN LAN, where LAN represents the first three characters of your preferred language. Finally, you can give a missed call to 011-22901406 from your registered mobile number.
To update or change the mobile number or email ID registered with UAN, you need to log in to the Member Portal or UMANG app using your UAN and password. Then, select the “Manage” option under Profile. Enter the new mobile number or email ID and verify it through OTP (One-Time Password).
You can reset or change the password for UAN using different methods. Firstly, you can log in to the Member Portal or UMANG app using your UAN and password, and select the “Change Password” option under Profile. Alternatively, you can visit the EPFO website www.epfindia.gov.in and click on the “Forgot Password” link under UAN Login. Another option is to send an SMS to 7738299899 from your registered mobile number in the format EPFOHO UAN CPWD, where CPWD represents the new password.
To merge multiple UANs allotted by different employers, you need to log in to the Member Portal or UMANG app using your UAN and password. Next, navigate to the Online Services section and select the “One Employee One EPF Account” option to proceed. Enter your previous UANs and verify them through OTP. The previous UANs will be deactivated, and their EPF accounts will be transferred to the current UAN.
You can correct or update personal details such as name, date of birth, gender, etc., in the EPF account by logging in to the Member Portal or UMANG app using your UAN and password. Then, select the “Modify Basic Details” option under Profile. To initiate the process, enter your Aadhaar number and verify it using a one-time password (OTP). Provide your correct details as per Aadhaar and submit them for approval by the employer or EPFO office.
To download the EPF passbook or statement, you can log in to the Member Portal or UMANG app using your UAN and password. Then, select the “View Passbook” option under Online Services. Alternatively, you can visit the EPFO website www.epfindia.gov.in and click on the “Download Passbook/Statement” link under Online Services. You will be able to view and download your EPF passbook or statement, which contains details of your contributions, withdrawals, and interest earned.
You can withdraw money from your EPF account under certain circumstances. The most common scenarios for withdrawal are retirement, resignation, and unemployment. To withdraw funds, you need to fill out the EPF withdrawal form relevant to your situation, such as Form 19 (for final settlement), Form 10C (for pension withdrawal), or Form 31 (for partial withdrawal). These forms are available on the EPFO website or can be obtained from your employer. Submit the filled form to your employer for verification and onward submission to the EPFO office. Alternatively, you can also initiate an online withdrawal request through the Member Portal or UMANG app. The withdrawal process may vary depending on the specific circumstances and rules applicable at the time.
Transferring your EPF account from one employer to another is a straightforward process. When joining a new job, provide your UAN to your new employer. They will link your new EPF account to your existing UAN. Once the linkage is established, your EPF balance and service details from the previous employer will be automatically transferred to the new account. It is important to ensure that both your old and new employers have updated your correct UAN and other details to facilitate a smooth transfer.
Yes, you can check the balance of your EPF account online through the Member Portal, UMANG app, or by using the missed call service. To check online, log in to the Member Portal or UMANG app using your UAN and password. On the dashboard, you will find your EPF balance details. Alternatively, you can give a missed call to 011-22901406 from your registered mobile number. You will receive an SMS with your EPF balance details. Additionally, EPFO periodically sends SMS updates with your EPF balance to registered mobile numbers.
Yes, it is mandatory to link your Aadhaar with the EPF account. The linking of Aadhaar with UAN helps in verifying and authenticating the identity of EPF members. It also facilitates seamless and hassle-free services such as online withdrawals, updating personal details, and more. To link your Aadhaar, log in to the Member Portal or UMANG app using your UAN and password. Go to the “Profile” section and select the “Link Aadhaar” option. Enter your Aadhaar number and verify it through OTP for successful linking.
The EPFO (Employees’ Provident Fund Organization) is a statutory body under the Ministry of Labour and Employment, Government of India. It is responsible for administering and managing the EPF scheme, along with other social security schemes like the Employee Pension Scheme (EPS) and Employee Deposit Linked Insurance Scheme (EDLI). The EPFO ensures the proper collection, accounting, and disbursement of EPF contributions from employees and employers. It also maintains member records, facilitates withdrawals, transfers, and settlements, and provides various online services to EPF members through its portal and mobile app.