What is the Employees’ Provident Fund (EPF)?
The Employees’ Provident Fund or EPF is a popular savings scheme that has been introduced by the Employees’ Provident Fund Organisation (EPFO) under the supervision of the Government of India.
In this scheme, the employer deducts a fixed sum from your salary every month and puts it along with their contribution into your EPF account. The employee can use the EPF savings to avail loan or withdraw it post-retirement to fund your expenses.
The employee and employer each contribute 12% of the employees’ basic salary and Dearness Allowance towards EPF. The accrued interest on the EPF is tax-free and can be withdrawn without paying for the same. Employees avail of a lump-sum amount on their retirement, which is inclusive of the accrued interest.
Employee Provident Fund Organisation (EPFO)
EPFO or Employee Provident Fund Organisation is a statutory body that promotes employees to save funds for retirement.
The EPFO came into being with the Employee Provident Fund Ordinance that was passed in 1951 and is governed by the Ministry of Labour and Employment. It later became a part of the modified Employees Provident Fund Act in 1952 and is currently a part of the Employees Provident Funds and Miscellaneous Provisions Act 1952.
Schemes Offered Under EPFO
Three schemes that are offered under EPFO:
- Employees’ Provident Funds Scheme 1952 (EPF)
- Employees’ Pension Scheme 1995 (EPS)
- Employees’ Deposit Linked Insurance Scheme 1976 (EDLI)
Objectives of EPFO
Some of the primary goals of EPFO are as follows:
- Ensuring each employee maintains a single EPF account.
- The process of compliance is simplified.
- Ensure that organisations must follow all of the EPFO’s rules and regulations regularly.
- Enhancement in the dependability of online services and introducing changes to their provisions.
- Convenience in online access for all member accounts.
- Reduction in claim settlement time from 20 days to 3 days.
- Encouragement and promotion of voluntary compliance.
What is a Universal Account Number (UAN)?
Universal Account Number (UAN) is a 12-digit number that is provided to each member of the Employees’ Provident Fund Organisation (EPFO) through which he/she can manage his/her EPF accounts. It helps the person to get all Provident Fund (PF) information in one place irrespective of the organisation he/she works for. With the help of UAN, the employee can easily withdraw and transfer funds through the EPF UAN login portal.
How to Activate UAN Number Online?
To activate UAN, you must have your Universal Account Number or PF number ID with you given below are the steps to activate UAN on the EPFO portal:
Step 1: Visit the member website of UAN Portal
Step 2: Click on the “Activate UAN” option present in the right corner of the page.
Step 3: As the EPF member home dashboard opens up, enter your UAN/member ID along with your Aadhaar number, name, date of birth and mobile number according to EPFO records.
Step 4: Enter the captcha code and get an authorisation PIN on your mobile number registered with EPFO.
Step 5: Use the OTP to validate and activate the UAN online
Step 6: Another message will be sent to confirm the activation of the UAN
Step 7: Once UAN is activated, you can log in using it to check the status of the Provident Fund.
How to Apply for an EPF account?
While applying for a new EPF account, you will need to do so through your employer. You will have to provide all previous employment details, if there is any requirement, through Form 11 and all family particulars or nomination details in Form 2.
For an employer, with an organisation that employs 20 people or more, it is mandatory for you to register under the EPF scheme. If your organisation employs less than 20 people, you can still opt to register under the scheme. EPF registration requires you to submit details of your company, as well as details of each of the company’s owners. You can register for the EPF scheme on the official EPFO website.
UAN and EPFO Portal
EPF subscribers can access their accounts online for operations like withdrawals and balance checks. EPFO assigns each member a 12-digit number known as the UAN. Even if an employee changes employers, his/her UAN remains the same.
It also provides services like passbook downloads, KYC updates and claim filings. To use these services, activate your UAN online when switching jobs.
EPF Eligibility
Here are the following eligibility requirements that must be met to join an EPF scheme:
- Employees need to become active members of the scheme in order to avail of benefits under this scheme.
- The Employee Provident Fund is open for employees of both the Public and Private sectors.
- Any organisation employing a minimum of 20 workers is liable to give EPF benefits to the workers.
- After becoming an active member of the EPF scheme, the employees are eligible to avail of several Employees Provident Fund Benefits, including insurance benefits and pension benefits.
EPF Interest Rate
The EPF Interest Rate for 2024 is fixed at 8.25%. This rate is valid for all EPF contributions made from 1st April 2023 to 31st March 2024.
The interest amount accrued on the investments in a PF online account is tax-free. Such interest is paid only on the operative PF accounts of employees who are yet to retire. But the interest thus accrued on such accounts is taxed as per an EPF employee member’s tax slab.
Moreover, the share contributed towards the Employees Pension Scheme does not accrue interest. However, members are entitled to receive a pension out of this accumulated sum after they turn 58 years old.
How is Interest on EPF Calculated?
The EPFO decides the rate of interest for the EPF scheme on a yearly basis. The rate of interest is dependent on the market conditions and is vetted by the finance ministry. The interest rate can be calculated in two methods: Step method or Formula Method. Here are the examples to explain the same.
Example:
Assumed Basic Salary and Dearness Allowance: Rs 40,000
Rate of Interest: 8.25%
Employees’s contribution towards EPF (12% of Rs 40,000): Rs 4,800
Employer’s contribution towards EPF (3.67% of Rs 40,000): Rs 1,468
Employer’s contribution towards EPS (8.33% of Rs 40,000): Rs 3,332
Employer’s contribution towards EPS under the Rs 15,000 wage ceiling (8.33% of Rs 15,000): Rs 1,249 which is rounded to Rs 1,250.
The contribution made by the employer towards EPS that is more than the wage ceiling (Rs 3,332 – Rs 1,249): Rs 2,082
The excess contribution made by the employer is added to the EPF contribution (Rs 2,082 + Rs 1,468): Rs 3,550
Therefore, the total contribution made by the employer and employee towards EPF (Rs 4,800 + Rs 3,550) is Rs 8,350.
Formula Method: By using the given formula, the interest rate will be:
(8.25%/12) x Rs 8,350= Rs 57.40, which is rounded off to Rs 57
Step Method: Mentioned below is the calculation of interest using the step method:
8.25%/12= 0.6875% rounded to 0.69%
0.69% x Rs 8,350= Rs 57.62, which is rounded off to Rs 58
PF Contribution
The employer’s contribution is categorised in the following terms:
| Category | Contribution (%) |
| Employees Provident Fund | 3.67 |
| Employees’ Pension Scheme (EPS) | 8.33 |
| Employees’ Deposit Link Insurance Scheme (EDLIS) | 0.50 |
| EPF Admin Charges | 1.10 |
| EDLIS Admin Charges | 0.01 |
It is mandatory for the employee and the employer to make an EPF contribution. Each makes a 12% contribution of the employees’ dearness allowance and basic salary towards EPF. Mentioned below are the details of the employees’ and employers’ contribution towards EPF:
- Employees’ contribution towards EPF: 12% of the employees’ salary is deducted by the employer on a monthly basis for contribution towards EPF. The entire contribution goes towards the EPF account.
- Employer’s contribution towards EPF: The employer also contributes 12% of the employees’ salary towards EPF.
Types of EPF Form
Different types of EPF form are as follows:
- Form 2: Nomination for the EPF and Employees’ Pension Scheme (EPS)
- Form 5: Registration form for new employees for EPS and EPF
- Form 5 (IF): Employees’ Deposit Linked Insurance (EDLI) scheme claim form
- Form 10C: EPS Withdrawal
- Form 10D: To apply for a pension after retirement
- Form 11: Automatic Transfer of EPF
- Form 14: LIC Policy
- Form 15G: To save Tax Deducted at Source (TDS) for any interest that is generated from EPF
- Form 19: Settlement of EPF
- Form 20: EPF settlement in case of employee’s death
- Form 31: Withdrawal of EPF
How to Check EPF Balance?
There are four ways in which you can check your EPF balance:
- Through EPFO portal: The process of checking your EPF balance through EPFO member portal is easy. You should do EPF login using your UAN and password. After logging in, you will be able to find the EPF balance under the member ID.
- Through the UMANG app: You can download the Unified Mobile Application for New-age Governance (UMANG) app and perform EPF balance check on mobile phone. You can also raise and track claims through this app.
- Through a missed call service: It is possible to check your EPF balance by giving a missed call to the number, 011-22901406, from your registered phone number.
- Through SMS Service: If your UAN is activated, you can send an SMS to 7738299899 for EPS balance check.
How to Transfer EPF Money
Step 1: When there is a change in job, EPF can be transferred using the same Universal Account Number (UAN).
Step 2: Go to the official EPF member portal and fill out the registration form.
Step 3: Once you have obtained the login credentials, log in
Step 4: Go to the Online Transfer Claim Portal and request an EPF transfer with the same login information as before.
Step 5: If you are eligible to make a transfer claim online, you may do so without submitting Form 13.
Step 6: Select ‘Request for Transfer of Funds’ and input your previous employment information as directed.
Step 7: Have your old or new employer authenticate it.
Step 8: After submitting your information, you will receive a PIN on your mobile phone.
Step 9: Track your application using the tracking ID that was issued for you.
EPF Claim Status
To check EPF claim status, follow these steps:
- Visit the EPFO portal and then click on ‘Our Services’ and then select the ‘For employees’ tab.
- After that, click on ‘Know your Claim Status’
- On the next page, you will have to enter your state, select the EPF office from the drop-down menu, enter your establishment code and enter your account number.
- Once this is done, click on the ‘Submit’ button to check the status of your claim. Your claim status will be sent in SMS format on your registered mobile number.
EPF Benefits
- Long- Term Financial Security: Funds deposited in this account cannot be withdrawn easily and hence, helps in ensuring savings.
- Tax Advantages: Your contributions to the EPF are tax-deductible under Section 80C of the Income Tax Act. Additionally, interest earned and withdrawals (at maturity) are also tax-exempt.
- Unseen Circumstances: The accumulated fund can be used by the employee in case of any kind of emergency. The employee may choose to withdraw his/her fund prematurely. The scheme provides for such pre-term withdrawals in certain special cases.
- Financial Safety: The EPF is a government-backed scheme, providing security and guaranteed returns on your investment.
- Accessible All Over: With the help of the Universal Account Number (UAN), employees can easily get access to their PF account via the EPF member portal. They can transfer their accounts whenever they make a shift in their current jobs.
EPF Withdrawal Rules
Withdrawal can be done in two cases, either partially or completely. Here are some circumstances under which withdrawals can be done:
In complete circumstances:
- On retirement
- If their unemployment period extends more than two months
- While switching from one profession to another or in between jobs. But the duration without a job should be more than two months.
In Partial Circumstances:
- For a wedding
- For higher education
- For purchasing or constructing a house
- Repayment of home loan
- Renovating a housing property
Withdrawal process of EPF
Process of EPF Withdrawal Offline:
Step 1: Individuals must fill up a ‘new composite claim form’ and submit it to the EPFO office under their jurisdiction.
Step 2: A composite claim form needs to be attested by their employer
Process of EPF Withdrawal Online:
Step 1: Individuals must have an active UAN
Step 2: The mobile number used to activate the UAN should be active as well.
Step 3: UAN should be linked with Aadhaar. They would also need the PAN and respective bank details with their IFSC code
Step 4: After ensuring all the prerequisites are in place, they must log into the UAN portal
Step 5: Individuals need to verify their KYC details and then proceed as per instructions.
EPF Taxation
Withdrawing from EPF after completing 5 years of service is tax-free. If you withdraw more than more than Rs 50,000 before completing 5 years, TDS (Tax Deducted at Source) will be applied. You can claim tax deductions under Section 80C of the Income Tax Act for annual EPF contributions up to 1.5 lakh.
How to avoid tax on EPF Withdrawal?
Some of the ways are:
- When you change jobs, try not to withdraw the EPF amount and transfer it to the new account at your new company.
- Try to defer withdrawal from your account for five years, as it will not attract any TDS.
- If the withdrawal amount is less than Rs 50,000, no TDS is deducted.
EPF Passbook
The EPFO passbook facility is to check your EPF account statements and print/download the statements. All members who have registered their UAN on the EPFO portal can use the EPF passbook. The EPFO passbook has details such as the name of the employee, establishment ID, EPF scheme details, name of the EPF office, etc.
EPFO Digital Signature
To make the process of transfer claims easier and transparent, the EPFO has introduced the digital signature of employers. Through this accessibility, employers can approve claims by using their digital signatures.
When an employer shifts organisation, his transfer claim has to be attested by either his previous employer or the present one and this is when the digital signature of the employer comes into play. Previously, employers had to fill Form 13 and get it signed by their employers and then submit it to the regional EPF office. Now, the process has been simplified and can be done on the EPFO’s member portal.
To have a digital signature, employers have to apply for a digital certificate, which contains their personal details such as name, Email ID, APNIC account name, public key and the country of the employer. The digital certificate is issued by the Certifying Authority and contains this identification key containing the required details that will be embedded in the EPFO’s member portal.
Also Read Pension Schemes:-
- Difference Between Old Pension Scheme (OPS) And New Pension Scheme (NPS)
- Unified Pension Scheme (UPS)
- National Pension Scheme (NPS)
- NPS Vatsalya Scheme
EPFO Grievance
For employees who want to register a grievance, the EPFO has a dedicated part of their member portal for employees to fill in a grievance registration form and file a complaint.
Steps to register EPF Grievance
- Visit the EPFO grievance portal – epfigms.gov.in
- Click on ‘Register grievance’ on the top bar.
- After that, the grievance registration form will be displayed.
- Fill out the registration form now:
- Enter your current status (Employer, employee, EPS pensioner)
- Fill up your PF account number
- Then, enter where your regional EPF office is located
- Next, enter the name of your establishment and the address of your establishment
- After that, enter your name, address, pincode, country, phone number and Email ID
- The final step is to file a grievance, whether it is a transfer or withdrawal issue, a pension settlement issue or anything else. Choose your complaint from the drop-down menu.
- Upload your grievance letter, enter the captcha and complete the grievance registration process.
Steps to Check your EPF Grievance Status
Step 1: Visit the official website of EPFIGMS
Step 2: Click on the ‘View Status’ option
Step 3: You need to enter the registration number sent to you at the time of registering the complaint.
Step 4: You can enter the grievance password or mobile number/email in case the complaint was registered on the previous version.
Step 5: Once done, enter the security code displayed on the screen.
Step 6: Click on the ‘Submit’ button
Step 7: Your complaint status will appear on the screen.
FAQs
What is an Employee Provident Fund?
The Employees’ Provident Fund or EPF is a popular savings scheme that has been introduced by the Employees’ Provident Fund Organisation (EPFO) under the supervision of the Government of India.
In this scheme, the employer deducts a fixed sum from your salary every month and puts it along with their contribution into your EPF account. The employee can use the EPF savings to avail loan or withdraw it post-retirement to fund your expenses.
Can I check my PF balance?
Once you have activated your UAN, you can check/download your PF passbook online via the EPF passbook portal.
Is there an age criteria for employees who want to join EPF?
No. There are no age restrictions for employees to join the Provident Fund. However, if the employee has already reached the age of 58, he/she cannot join the Pension Fund.
How to get a loan from a PF account online?
Go to the EPFO website and login with your UAN and password. Fill all the details and click to proceed for online claim and select PF Advance (Form 31). Enter the amount you want to withdraw, the purpose of the advance and your employees address. After the successful submission of application, the amount will be credited to your bank account within 15 to 20 days.
How can I know my EPF pension amount?
This calculation is determined by using the formula: (Pensionable Salary X Pensionable Service)/70.
How do I calculate my EPF pension?
You can calculate your amount by applying the formula: Pension= (Pensionable Salary average of last 60 months) X Pensionable Service)/70.
