EPFO: All you want to know about EPF Scheme, interest rate, tax benefits, balance check, claim procedure

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Updated: April 19, 2019 5:02:26 PM

EPFO - What is EPFO, its tax benefits & withdrawal procedure: EPFO is one of the world's largest social security organisations – is a retirement fund body which on a mandatory basis provides Universal Social Security Coverage to all salaried employees in India.

EPFO, Employee Provident Fund, EPF Withdrawal, EPF Balance CheckEPF or Employees’ Provident Fund is a retirement benefits scheme, under which employees and employers make an equal contribution towards the scheme.

EPF Scheme, Tax Benefits, Tax Benefits & Withdrawal Process: The Employees’ Provident Fund Organisation (EPFO) – one of the world’s largest social security organisations – is a retirement fund body which on a mandatory basis provides Universal Social Security Coverage to all salaried employees in India. It operates three schemes — EPF Scheme 1952, Pension Scheme 1995 (EPS) and Insurance Scheme 1976 (EDLI). EPF or Employees’ Provident Fund is a retirement benefits scheme, under which employees and employers make an equal contribution towards the scheme. The contribution made by both the employer and the employee is 12 per cent of the employee’s basic salary. The employee gets a lump sum amount on retirement with interest.

What is EPFO?

EPFO is one of the world’s largest social security organisations in terms of the volume of financial transactions undertaken and clientele. According to the Annual Report 2015-16, EPFO currently maintains 17.14 crore accounts pertaining to its members. It provides Universal Social Security Coverage on a mandatory basis by way of Provident Fund, Pension and Life Insurance for all workers of the country.

What is EPF Scheme?

Employee’s Provident Fund (EPF) is a retirement benefit scheme, available for all salaried employees. It is looked after and maintained by the Employees Provident Fund Organisation of India (EPFO). As per law, any registered company which has more than 20 employees has to get registered with the EPFO.

What is EPF Eligibility?

All salaried employees are eligible for the Employee’s Provident Fund (EPF). However, for a salaried employee earning less than Rs 15,000 per month, it is mandatory for them to register for an EPF account. As per law, any registered company which has more than 20 employees has to get registered with the EPFO. If one is drawing a salary higher than Rs 15,000 per month, they are termed a non-eligible employee and it is not mandatory for them to become a member of the EPF, although they can still register. Companies with less than 20 employees can also register voluntarily. One needs to submit details of one’s company for EPF registration, along with details of the company’s owners. Registration for the EPF scheme can be done on the official website.

What is the EPF Contribution by Employees and Employers?

Under the EPF scheme, both the employee and the employer make an equal contribution towards the scheme. Once the employee retires, he/she gets a lump sum amount – which includes the contribution made by self and the employer – with interest. The contribution made by both the employer and the employee is 12 per cent of the employee’s basic salary. Though the entire 12 per cent of the contribution made by the employee goes into their EPF account, 8.33 per cent out of 12 per cent from the employer’s contribution is diverted to the employee’s EPS (Employee’s Pension Scheme) account. The balance of 3.67 per cent from the employer’s side goes into the employee’s EPF account.

What are the Interest Rates on EPFO?

According to the official EPF India website, the current annual interest rate on EPF is 8.55 per cent for the year 2017-18, whereas the interest rate for the financial year 2016-2017 was set at 8.65 per cent. The EPFO’s Central Board of Trustees after consultation with the Ministry of Finance reviews the interest rate of EPF every year, for a financial year. EPF interest rate was hiked to 8.65 per cent ahead of Elections 2019. However, it is yet to be approved by the CBT, after which the proposal requires the concurrence of the finance ministry.

How is the Interest on EPF calculated?

The government and the Central Board of Trustees determine the compound interest that is to be paid on the amount which is credited to the employee as on the 1st of April every year.

The interest on the contributions is calculated yearly, even though the contributions are made monthly. At the beginning of every year, the employees have an opening balance (the amount accumulated till that point).

What are EPF Claim Forms?

The Aadhaar-based new composite claim form or the non-Aadhaar composite claim form is needed for submission of the physical application to withdraw the PF money. The employee needs to fill the new composite claim form and submit the PF withdrawal application directly to the regional PF office without the attestation of an employer. In case of the non-Aadhaar composite claim form, employees need to fill it up and get it attested either by any bank manager, a Gazetted Officer or a Magistrate, and submit it in the respective jurisdictional EPFO office.

How to access EPF on the Umang App?

Unified Mobile Application for New-age Governance (Umang) app is a one-stop solution for many government services, including Employees Provident Fund (EPF).

One needs to download the Umang app from Play Store and login using one’s mobile number. To access EPF on the Umang App, select EPFO services and then click on the employee-centric services. One needs to enter one’s UAN (Universal Account Number) and click on ‘Get OTP’. After entering the OTP, one can view passbook, raise a claim and track a claim by selecting the member ID of the company whose EPF account one wants to access.

How does Provident Fund Deduction from Salary work?

The contribution made by both the employer and the employee is 12 per cent of the employee’s basic salary. Though the entire 12 per cent of the contribution made by the employee goes into their EPF account, 8.33 per cent out of 12 per cent from the employer’s contribution is diverted to the employee’s EPS (Employee’s Pension Scheme) account. The balance of 3.67 per cent ( of a maximum of Rs 15,000) from the employer’s side goes into the employee EPF account.

What if I don’t want to pay PF?

When in a company the number of employees, who draw wages (basic + dearness allowance) up to Rs 15,000 per month, reaches 20 or more, deduction of PF becomes mandatory and unavoidable. It is not a matter of choice of anyone to participate, it is a statutory compliance and is obligatory if the above conditions are met.

What are the tax benefits on EPFO?

The EPF money is sovereign-backed and the interest earned is tax-free. EPF enjoys the EEE (exempt-exempt-exempt) status. The employee’s contribution is tax-deductible under Section 80C of the Income Tax Act. Hence, the money invested, the interest earned and the money the employee eventually withdraws after the mandatory specified period (5 years) are exempt from Income Tax.

Money gets credited for me into an account. When can I withdraw it?

Normally, one is not allowed to withdraw amounts from one’s EPF account. However, exceptions are made if the employee wants to be self-employed or is no longer working. Other exceptions include education, marriage or medical expenses of the immediate family, and repaying housing loans. In case of unemployment, 75 per cent after 1st month and the remaining 25 per cent after the 2nd month of unemployment can be withdrawn. One needs to fill a declaration with a specified reason, along with Form 19, and have it attested from the former employer, for withdrawing the money. Along with a canceled cheque from the employee’s savings bank account, one needs to submit the form along with a letter stating that one is no longer employed by a company to the EPFO of one’s jurisdiction.

EPF Contribution Breakup with Example

The contribution made by both the employer and the employee is 12 per cent of the employee’s basic salary. Though the entire 12 per cent of the contribution made by the employee goes into their EPF account, 8.33 per cent out of 12 per cent from the employer’s contribution is diverted to the employee’s EPS (Employee’s Pension Scheme) account. The balance of 3.67 per cent from the employer’s side goes into the employee EPF account.

For instance, you start working with a basic salary of Rs 20,000, and get 5 per cent increment every year in salary. You work for 35 years (from age 20, up to age 60 yearsa) and diligently contributed 12 per cent of your basic salary, which was equally matched by your employer – 3.67 per cent to EPF and 8.67 per cent to EPS. After 35 working years, your total contribution will be Rs 26.01 lakh whereas the company has contributed Rs 7.95 lakh, a total of up to Rs 33.96 lakh. With 8.5 per cent interest rate (based on the assumption that the rate of interest stays constant at 8.5 per cent), the money will grow to almost Rs 1.38 crore at the time of your retirement.

How to check EPF balance?

One can login to the EPF India website to know all about one’s EPF details. You can enter your UAN (Universal Account Number), and access all EPFO facilities online. EPF details can also be checked with your EPF account number. Alternatively, you can also give a missed call to this number – 01122901406 or send an SMS (“EPFOHO UAN”) to this number – 7738299899 from a registered mobile number, to know your latest PF contribution and balance available with EPFO.

What are the benefits of linking your Aadhaar card to your UAN?

Linking UAN to Aadhaar can make the claims settlement process simpler, although it is still not mandatory for one to link one’s UAN to Aadhaar. UAN, however, has been made mandatory for all employees. UAN helps in managing the EPF account, and has made transferring and withdrawing PF money easier.

How to link EPF account with Aadhaar Card

# One needs to login to the Unified Portal of Employees’ Provident Fund – https://unifiedportal.epfindia.gov.in/ and select the ‘For employees’ option.

# Then click on ‘UAN Member e-Sewa’ and enter the UAN and password to log on to the portal.

# Then click on ‘manage’ at the top panel and on ‘KYC’, after which you will be directed to another page.

# On the next page, give your bank, PAN and Aadhaar details, under ‘Add KYC’, and submit.

# On submission, one can find their details under ‘Pending KYC’.

Once approved, it will be shown under ‘Approved KYC’, which takes around 15 days.

How to fill PF Withdrawal Form and get claim online?

Withdrawal claims can be filed either through the submission of a physical form or online.

# You need to log in to the portal of EPFO, using the UAN and password, for filing an online claim for PF withdrawal.

# By clicking on the ‘Manage’ tab verify KYC details.

# Then visit the ‘Our Services’ tab and from the drop-down list click on the ‘Claim’ option.

# Under the section ‘I Want to Apply For’, choose the type of withdrawal claim you wish to file (full withdrawal, partial withdrawal or pension withdrawal).

# Once approved, by the employer, the PF amount will be credited to the employee’s account within 10 days.

What is the EPF Withdrawal Online Procedure?

# You need to log in to the portal of EPFO, using the UAN and password, for filing an online claim for PF withdrawal.

# By clicking on the ‘Manage’ tab verify KYC details.

# Then visit the ‘Our Services’ tab and from the drop-down list click on the ‘Claim’ option.

# Under the section ‘I Want to Apply For’, choose the type of withdrawal claim you wish to file (full withdrawal, partial withdrawal or pension withdrawal).

# On the form, one needs to enter their name (as stated on their UAN, Aadhaar card, and bank account), along with the registered mobile number, address, PAN card number, reason for leaving and date of joining, and submit it.

# Once approved, the PF amount will be credited to the employee’s account within 10 days.

What are the 3 types of EPF Withdrawal Forms?

There are three withdrawal forms available – Form 19 (For Final PF Settlement), Form 10C (For Pension Withdrawal) and Form 31 (For Part-withdrawal of PF amount). This facility is available to all those subscribers whose UAN is activated and seeded with the KYC details like bank account and Aadhaar number.

What is EPF Advance/Partial Withdrawal – Form 31?

Form 31 is needed to make advance or partial withdrawal of the PF amount. To make a PF withdrawal without the employer’s signature, firstly employees need to activate their UAN. On the EPFO web portal, download the EPF Form 31 to make a partial withdrawal.

On the form, one needs to enter one’s name (as stated on their UAN, Aadhaar card, and bank account), along with the registered mobile number, address, PAN card number, reason for leaving and date of joining, and submit it. Once approved, the PF amount will be credited to the employee’s account within 10-15 days.

What is EPF Complete Withdrawal/Final Settlement – Form 19?

To withdraw the entire accumulated PF amount at the time of retirement, one needs to fill this form. Also known as ‘Final Settlement form’, one needs to fill one’s personal details and employment details such as one’s date of leaving, the reason of leaving services, date of joining services, PAN, UAN and Aadhaar Number, bank account details, and full postal address.

What is Pension Withdrawal – Form 10C?

The PF amount is regulated by the Employees’ Provident Fund Scheme, 1952, whereas the pension amount is regulated by the Employees’ Pension Scheme, 1950. You are required to fill the 2 forms separately in case you wish to withdraw both the PF and pension amounts. Form 10C is needed to make withdrawals from one’s pension scheme. If employees want to withdraw the pension amount, Form – 10C should be filled. The filing of the form is similar to that in Form 19. Also, if you are withdrawing your PF on the ground of unemployment, you have to fill Form 31 and Form 10 C.

What is the EPF withdrawal limit?

EPF withdrawal limit depends on the purpose for which the withdrawal is being made. If EPF withdrawal is made for medical purpose, six times the monthly salary or lower of the total corpus can be claimed. For wedding, 50 per cent of the PF contribution can be claimed. For home loan repayment, up to 90 per cent of the EPF corpus can be claimed, and 12 times the monthly salary can be claimed for home renovation. In case of unemployment, 75 per cent after 1st month and the remaining 25 per cent after 2nd month of unemployment can be claimed, and for retirement, the total EPF balance can be claimed.

What are the requirements for EPF withdrawal for home loan repayment?

For home loan repayment, employees can withdraw up to 90 per cent of the EPF corpus. For a PF member who wants to withdraw one’s PF money to buy a real estate property, an essential requirement is that they have to be a member of any registered housing society which has minimum 10 members. One can also claim 12 times the monthly salary for home renovation.

How much tax will I have to pay during withdrawal if I have not completed 5 years of service?

Withdrawing the PF balance without completing five continuous years of service comes with tax implications. The employer’s total contribution amount and the interest earned will get taxable in the year of withdrawal. Also, the amount of deduction claimed under Section 80C on the employee’s own contribution will be added to their income in the year of withdrawal. In addition, the interest earned on their own contribution will also be subject to tax. The Tax Deducted at Source (TDS) by the government on PF withdrawals was introduced in order to discourage premature withdrawals and promote long-term savings.

Is PAN mandatory for EPF withdrawal?

If any member wants to partially withdraw EPF or take advance, then his PAN card is not required. However, the PAN card is needed during the full EPF withdrawal, or else excess tax will get deducted from the member’s EPF account. If the employee fails to submit their PAN, the tax deducted at source (TDS) can be as high as 34.6 per cent. Also, the employee does not need to submit PAN in case their service is more than 5 years as there is no TDS charged for such employees or it the withdrawn amount is less than Rs 50,000.

How many times can I withdraw the PF money in advance online?

Employees can make advance withdrawals from their EPF accounts under certain specific reasons. For instance, when making a PF withdrawal to fund a marriage, only 3 times one can make withdrawals. Similar is the case of withdraws made to pursue post-matriculation education. If employees want to use the amount to purchase a plot or house or wish to construct a house, one can only make a one-time PF advance claim online. To fund any medical emergency or for treatment of a critical illness, if the PF is being withdrawn in advance before retirement, there is no absolute limit on the number of withdrawals.

For more information EPF account holders can check the following websites:

https://www.epfindia.gov.in/site_en/For_Employees.php

https://passbook.epfindia.gov.in/MemberPassBook/Login.jsp

https://unifiedportal-mem.epfindia.gov.in/memberinterface/

https://epfigms.gov.in/

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