All you need to know about Employees’ Provident Fund
The Employees’ Provident Fund (EPF) is a well-established retirement benefits scheme introduced by the Employees Provident Fund Organisation (EPFO) under the guidance of the Government of India. The scheme was introduced to help salaried individuals boost their savings habits and in turn create a sizeable retirement fund for a secure future. The EPFO has an active subscriber base of more than 6.7 crore salaried individuals and 6.9 lakh contributing companies.
If you have an EPF account, you can check out your balance and all past EPF transactions on NiyoX by clicking here.
How does EPF work?
EPFO is the world’s largest social security organisation. The EPFO manages three schemes:
- EPF Scheme 1952
- Insurance Scheme 1976 (EDLI)
- Pension Scheme 1995 (EPS)
EPFO is run by the Central Board of Trustees, comprising representatives of Government (both central and state), Employers, and Employees.
The EPF is built with matching contributions from employers and employees each month. The employee contributes 12% of their basic salary and dearness allowance every month. The employer also contributes an equivalent amount — 8.33% towards EPS and 3.67% towards EPF — to the employee’s account.
The fund that builds continuously every month earns a pre-fixed interest set by the EPFO. The interest amount is tax-free and can be withdrawn without paying any taxes. Employees can get a lump sum amount, including the interest earned over the years, at the time of their retirement.
What is UAN?
The Universal Account Number (UAN) makes it easy for EPFO to manage the accounts of its members. EPFO allocates a unique 12-digit UAN to each of its members. An employee can access their PF account on the EPMO member portal using UAN.
How does UAN help, you wonder? Even when you change your job, your UAN remains the same. Only your member ID changes with a change in job and the new ID gets linked to your UAN. This way all your PFs are under one umbrella irrespective of multiple employers. You can either raise a request for the member ID directly with the EPFO or your employer can use your UAN to request EPFO for a new member ID for you.
Is it your first employment and you’re looking for your UAN? Usually, your employer will inform you of your UAN or you can also find it in your salary slip.
Purpose of EPFO
The main goals of EPFO are to ensure:
- Universal coverage of social security for all salaried employees
- All members have seamless access to PF accounts online
- Each salaried individual has only one UAN and all their member IDs are linked
- Ease of business for employers to leverage the Government’s platforms
- Compliance is made as simple as possible
- Employers follow EPFO rules and regulations
- Time taken to resolve claims is reduced from 20 days to 3 days
- Voluntary compliance of contributions
Who is eligible to apply for EPF?
All salaried employees of the public and private sector organisations are eligible for EPF. Moreover, any company that employs 20 or more employees is mandatorily required to extend the EPF benefit to their employees.
All active members of the EPF scheme are eligible for EPF benefits, insurance benefits, and pension benefits.
The pre-fixed EPF interest rate for the financial year (FY) 2022-23 is 8.1%. The interest generated on PF accounts is tax-free. EPF interest is given only to active accounts of employees who are yet to retire.
How is EPF Interest Calculated?
Although the interest amount is calculated every month, the entire interest amount is only credited once per year toward the end of the financial year on 31st March.
Here’s an example to help you understand how interest is calculated for EPF balance in a financial year:
Assuming, Basic Salary + Dearness Allowance (DA) = ₹15,000/month
- Employee’s EPF contribution = 12% of ₹15,000 = ₹1,800
- Employer’s EPF contribution = 3.67% of ₹ 15,000 = ₹550
- Total EPF contribution/ month = ₹1,800 + ₹550 = ₹2,350
The EPF interest rate for FY 2022-23 is 8.10%
The interest per month = 8.10/12 = 0.675%
Assuming you started working on 1st April 2022, contributions for the FY 2022- 23 start from April.
|Total EPF contribution for April = ₹2,350|
|Interest on the EPF contribution for April = Zero (No interest for the first month)|
|EPF account balance at the end of April = ₹2,350|
|Total EPF contribution for May = ₹2,350|
|Total EPF balance for May = ₹4,700|
Interest on the EPF balance for May = ₹4,700 * 0.675% = ₹31.725… so on and so forth
The balance builds month over month and interest keeps adding as long as you actively contribute to the EPF scheme.
The interest calculation can become tedious over time as your balance builds.
EPF Balance Tracking Made Easy
|“Dear XXXXX, your passbook balance against PYKRP147892700000XXXXX is Rs. XXXXX/-. Contribution of Rs. 1,800/- for due month 012022 has been received.”|
Have you noticed similar SMSes but never paid much heed to them? It’s basically about your EPF balance.
EPF is a good low-risk investment instrument with returns much higher than bank deposits. If you are a long time salaried employee, who contributes to EPF regularly, chances are your EPF balance has grown to be a substantially big retirement corpus. But then, why are you not actively tracking our EPF balance?
We spoke to our users out there to understand this and most of the responses were of the opinion:
“It is so tough to keep track of your EPF balance. You have to go to the EPFO website and log in by entering your UAN and password, which I mostly forget. It is a tedious process. Also, the SMSes from EPFO don’t provide much information and they mostly get lost in the SMS archives of my mobile phone.”
This is a fundamental problem. EPFO websites are sometimes very slow and it is a hassle to remember the UAN and password. Because of this, most people don’t keep a track of the money that is technically theirs. EPF is part of our investments and we should be able to track it along with our other investments such as Mutual Funds etc., in a single place, without much hassle.
To make it easy for all salaried individuals to check EPF balance, NiyoX has introduced an in-app tracking feature. All you need is your mobile number and OTP to check your EPF. You can now track your EPF records on NiyoX in just 2 simple steps:
- Tap on Menu > Utilities > Track your EPF balance > Track
- Enter your Mobile Number and OTP received on it
You can check your EPF balance, interest earned and the transaction history. EPF balance tracking is as easy as that!
Hopping between different apps, web portals, and bank accounts to manage your finances can be time-consuming.
With the lifetime zero balance NiyoX Equitas Salary Account, you can now manage your salary, savings account, mutual fund investments, and check your EPF balance all in one place. What’s more, it’s high interest-earning digital savings account with up to 7% interest* p.a. that can give your monthly salary a boost with assured Salary Rewards and much more!
Types of EPF Forms
Use of the form
|Form 31||Also known as the PF Advance Form. Used for withdrawals, loans, and advances.|
|Form 10D||Availing a monthly pension|
|Form 10C||To withdraw the funds that the employer contributes towards EPS|
|Form 13||To transfer your PF amount from the previous job to your current one|
|Form 19||To claim the final settlement of EPF account|
|Form 20||Family members can use this form to withdraw the PF amount in case the account holder passes away|
|Form 51F||A nominee can use it to claim the benefits of the Employees’ Deposit Linked Insurance|
How to Transfer EPF Money
In case you change your job, EPFO makes it easy for you to transfer your EPF using your UAN.
To transfer your EPF from an old account to a new one, you need to fulfil the following requirements:
- The employee should have activated his UAN on the EPF portal and the mobile number used for activation should also be active
- The employee should have entered their bank details such as the account number and IFSC code which should have been verified by the employer at the time of making a transfer request
- Aadhaar should also be entered in the UAN account
- The Date of Joining (DoJ) and Date of Exit (DoE) should be mentioned on the portal along with the reason for the exit
- Only one transfer request against one member ID is accepted by EPFO
Documents Required for EPF Transfer
Keep these documents handy before you begin with the process-
- Revised Form 13
- Valid Identity Proof (PAN, Aadhar or Driving License)
- Current employer’s details
- Establishment Number
- Account Number
- Bank account details of the salary account
- Old and current PF account details
How to Transfer EPF Online
Here are the steps to set up a transfer request online:
- Log in to your EPF account using your UAN and password
- Click on the ‘One Member – One EPF Account (Transfer Request)’ option in the ‘Online Services’ section
- Verify personal information and the present PF account details
- Click on ‘Get Details’ to view PF account details of the previous employment
- Choose either your previous employer or present employer for verifying the claim form depending on the availability of an authorised signatory holding DSC. Choose one of the employers and provide your Member ID or UAN in the required fields.
- Click on the ‘Get OTP’ button to receive the OTP to your registered mobile number. Enter the OTP in the space provided and click on the ‘Submit’ button to verify your identity.
- A filled-in PF transfer request form will be generated online that needs to be self-attested and submitted in PDF format to your selected employer. The employer will also receive an online notification about the EPF transfer request.
- The employer then approves the PF transfer request digitally. Once the approval is made, the PF is transferred to the new account with the current employer. A tracking ID is also generated that can be used to track the application online.
Note: The employee has to download the Transfer Claim Form (Form 13). In some cases, the employee has to submit this form to the employer to complete the process of EPF transfer.
EPF was created to help salaried individuals easily build a retirement fund. It comes with benefits like:
- Building a sizeable amount in savings for retirement.
- There is no need to make a lump-sum investment. Since the deductions are made monthly from the employee’s salary, it helps in saving a huge amount of money over a long period.
- It can help an employee financially during an emergency.
- The EPF balance is tax-free
When can EPF be Withdrawn?
You can withdraw your full EPF balance under circumstances such as:
- On retirement
- If you’re unemployed for more than two months
- While switching jobs if the gap is more than two months
You can withdraw partial EPF balance under circumstances such as:
- For a wedding
- For higher education
- For medical expenses
- For purchasing land or for building a house
- Renovation of house
- Repayment of home loan
Process to Withdraw EPF
The EPFO has come up with an online withdrawal facility, which has made the entire process more comfortable and less time-consuming.
- The UAN is activated, and the mobile number used for activating the UAN is in working condition.
- The UAN is linked with your KYC, i.e. Aadhaar, PAN, bank details, and the IFSC code.
Steps to Apply For EPF Withdrawal Online on UAN Portal
- Log in to the UAN member portal with your UAN and password. Enter the captcha.
- Click on the ‘Manage’ tab and select ‘KYC’ to check whether your KYC details such as Aadhaar, PAN and bank details are verified or not.
- Once the KYC details are verified, go to the ‘Online Services’ tab and select the option ‘Claim (Form-31, 19 & 10C)’ from the drop-down menu.
- The screen will display the member details, KYC details and other service details. Enter your bank account number and click on ‘Verify’.
- Click on ‘Yes’ to sign the certificate of the undertaking and then proceed.
- Click on ‘Proceed for Online Claim’.
- In the claim form, select the claim you require, i.e. full EPF settlement, EPF part withdrawal (loan/advance) or pension withdrawal, under the tab ‘I Want To Apply For’. If the member is not eligible for any of the services like PF withdrawal or pension withdrawal due to the service criteria, that option will not be shown in the drop-down menu.
- Select ‘PF Advance (Form 31)’ to withdraw your fund. Further, provide the purpose of such advance, the amount required and the employee’s address.
- Click on the certificate and submit your application. You may be asked to submit scanned documents for the purpose you have filled the form. The employer will have to approve the withdrawal request, and then only you will receive money in your bank account. It usually takes 15-20 days to get the money credited to the bank account.
Download the new Composite Claim Form (Aadhaar)/Composite Claim Form (non-Aadhaar) to withdraw the EPF balance.
Composite Claim Form (Aadhaar)
- Use the Composite Claim Form (Aadhaar) if you have added your Aadhaar number and bank account details on the UAN portal and if your UAN is activated.
- Fill and submit the form to the respective jurisdictional EPFO office without the attestation of the employer.
Composite Claim Form (Non-Aadhaar)
- You can use the Composite Claim Form (Non-Aadhaar) if the Aadhaar number is not seeded on the UAN portal.
- Fill and submit the form with the employer’s attestation to the respective jurisdictional EPFO office.
Q. Can an employer reduce or lower their EPF contribution?
A. No, an employer is not allowed to reduce or lower their share of EPF contribution. It’s mandatory for all employers with at least 20 employees to contribute 12% of their employees’ basic salary as their EPF contribution.
Q. Can an employee contribute to EPF after leaving a job?
A.No, an employee who has left their job cannot contribute to EPF. Both employee and employer contributions have to match.
Q. Is there an age limit for an employee to join the EPF?
A. No, there’s no age restriction for an employee to join EPF. However, if an employee has already reached the retirement age of 58 years, they cannot join EPF.
Q. Can an employee directly join EPF?
A. No, an employee cannot join EPF directly. They must work for a company that is covered by the EPF Act, 1952.
Q. Can an employee opt out of EPF?
A. No, a qualified employee cannot avoid participating or contributing to EPF.
Q. Is EPF interest taxable?
A. The EPF balance is exempted from tax payments until retirement. But, interest credited after retirement is taxable as an “Income from other sources”. However, as per Budget 2021, if the deposits in EPF and VPF are more than ₹2.5 lakhs in a financial year, then the interest earned on the contributions exceeding ₹2.5 lakhs will be taxable.