EPF or Employees’ Provident Fund is a social security scheme which is managed by the Employees Provident Fund Organisation (EPFO) for the employees who are employed in the service sector. Under this scheme, both the employee and the employer has to pay a certain amount of contributions every month. As an employee, you will get this invested amount when you retire. Besides employee, employers also make an equal contribution to the scheme to earn an attractive rate of interest over time.
1.EPF Applicability
The EPF is applicable where the number of employees in a particular organisation is 20 or more than 20. It is compulsory for all the employees whose basic salary plus dearness allowance is less than 15,000 per month.
2.EPF Schemes
There are 3 schemes under EPF:
- Employee Provident Fund, 1952: EPF provides financial security to the employees employed in the service sector. The provisions of EPF Scheme is applicable to an establishment where 20 or more than 20 individuals are employed.
- Employee Pension Scheme, 1995: This scheme provides support to the old-age individuals which helps them as well as their family to meet their financial requirement when they retire.
- Employee Deposit Linked Insurance Scheme, 1976: This scheme provides support to the family members of the employees in order to provide to them in case of sudden death.
3.EPF Interest Rate
Every year, the interest rates on EPF accounts are revised by the central government depending upon the revenues made by the EPFO during the previous year on its deposits. For FY2018-19, the interest rate on EPF is 8.65%.
4.UAN
It is a 12 digit unique number allotted by EPFO to the employee for their EPF account. Your UAN number remains the same throughout your life even when you switch your job, it gets transferred from an old employer to the new one. UAN makes the process of transferring your EPF balance in a hassle-free way.
5.EPF Contribution
Under the EPF scheme, both the employee as well as employer contributes 12% of the basic salary to the EPF account, making a total contribution of 24% of the salary. The 12% of the contribution made by an employee is added towards EPF, while 8.33% out of the total 12% of the employer’s contribution is transferred to the pension scheme or EPS.
6.EPFO portal
Using an EPFO portal, an employee can check his EPFO status, balance, EPF claim status, withdrawal, fund/account transfer, view EPF passbook etc.
7.EPF withdrawal
The employee can also withdraw balance from EPF at the time of some urgency. Members can withdraw up to 75% of the balance from their EPF accounts if they have been unemployed for one month and the remaining 25% can be withdrawn after the second month of unemployment.
8.UMANG app
This app helps both employers as well as employee to avail various EPF services through an app. Member also gets the option to link their Aadhaar to EPF account with their UAN through the app.
9.Voluntary Provident Fund
An employee can contribute higher than 12% of his basic pay towards EPF by applying for the VPFs. An employee can contribute 88% of the salary to VPF although it’s not mandatory it’s totally optional.
10.EPF Tax Exemption
The contribution made into EPF is absolutely tax-free. If a person withdraws EPF amount after 5 years or after it gets matured, he is exempted from the income tax payment.
