Employee’s provident fund
What is EPF?
The Employees 'Provident Fund (EPF) is a savings program introduced under the Employees' Provident Fund and Miscellaneous Act, 1952. It is administered by the Central Board of Trustees with representatives from all three parties, namely, government, government employers and employees. The Employees ’Provident Fund Organization (EPFO) assists the board in its activities. The EPFO operates under direct government authority and is managed by the Department of Labor and Employment.
The EPF program aims to promote savings for retirement by various employees across the country. The Employees ’Provident Fund or EPF is a collection of monthly contributions to the employer and his or her employer. Employer and employee contribute 12% of each employee's salary (basic + charity grant) to the EPF. These contributions receive a fixed interest rate set by EPFO. The amount of interest that will be earned on the deposit and the amount of money collected does not pay tax in full, i.e. the employee can withdraw the entire fund without worrying about paying any kind of tax on it.
the amount received may be withdrawn by the nominee or the legal successor of the employee after his or her death or may be revoked by the employee himself or herself after resignation.
Favorite Grant: This amount is added to the basic salary of the employee due to the increase. This grant is different for different districts. It is a discount offered to workers to deal with the negative effects of inflation.
Interest Rate EPF
The interest rate for the 2019 - 2020 financial year is 8.50%. A fund collected from a PF account attracts a certain interest rate which is 100% tax exempt.
The interest earned is transferred directly to the Employees ’Provident Fund account and is calculated at the rate determined by the GOI and the Central Board of Trustees (CBT). CBT governs the Act.
The year in which the new rates are announced remains in force for the next financial year which means that from the year 1 April of one year to the year ending 31 March of the following year. Let's understand this with the help of an example:
The interest rate of 8.50% is valid and will only apply to EPF deposits made between the financial year April 2020 to March 2021.
Interest, although calculated on a monthly basis, is transferred to the Employees ’Provident Fund account only annually by March 31 of the current financial year.
The transferred interest is summarized the following month which means the balance of April and then used to calculate interest.
If the donation is not made to the EPF account for thirty-six months continuously, the account becomes dormant or inactive.
Interest is paid on inactive accounts of employees who have not yet reached retirement age.
Interest is not charged on the amount deposited into the unemployed accounts of retired employees.
Interest earned on inactive accounts is taxable according to the member's slide rate.
With contributions made to the Employee Pension Scheme by the employer, the employee will not earn interest. However, the pension is payable with this amount after the age of 58 years.
Employees need to be an active member of the scheme in order to receive benefits under this scheme
Employees of the organization are directly entitled to receive a Provident Fund, insurance and pension benefits from the date of joining the organization.
Any organization that employs at least 20 employees is responsible for providing EPF benefits to employees.
This program does not provide for the needs of the people living in Jammu and Kashmir.
How to sign up for EPF?
Visit the government website Employee Provident Fund Organization (EPFO)
Go to the 'Establishment Registration' section which opens a new page with 'Tutorial Book'. It will specify the Employer Registration process, followed by the registration of the Employer's DSC [Digital Signature Certificate] which is required for a new application.
Receive the ‘I have read the textbook’ checkbox to continue and fill out details to sign up
An email is sent for a link to be used and a mobile PIN is sent. You need to upload some documents to register
Those who have already registered can sign in using their Universal Account Number (UAN)
How to login EPF?
You need to visit the EPF member's website which means EPF is in the SEWA / EPF Members Portal and to the right, you have the option to sign in using the UAN. However, the UAN must have been activated earlier.
EPF KYC Update
Visit the EPF Members Portal and sign in using the UAN and password
As a new page opens, under the 'Manage' section, click on KYC from the drop-down menu
Update details such as PAN name and number, Aadhar, Bank documents, etc.
Save it and it will display as Pending KYC as long as it is verified from the other end
Activation of EPF UAN
You need to visit the EPF member's website ie EPF at the SEWA / EPF Members Portal
In the lower right corner, you'll find the 'Activate UAN' option and click on it
When a new dashboard opens, enter UAN, PAN or Aadhar and other details such as name, date of birth, etc. depending on EPFO records
Enter ‘captcha’ code and get an authorized PIN on your mobile phone with EPFO
Use One Time Password (OTP) to verify and activate UAN online
Another message will be sent to confirm UAN operation
Once the UAN is in use, you can sign in to use it to monitor the status of the Provident Fund
The Employees ’Provident Fund is a fund where both the employer and the employee contribute a portion of the salary. These donations are made monthly. The fixed interest rate depends on the employee's basic remuneration and the loving contribution to his or her salary.
* 10% EPF allocation applies to organizations - where there are 20 employees or less than 20 organizations with losses incurred or equal in value (at the end of the financial year) / organizations declared sick by the Industrial Board and financial restructuring
* The Employer's 12% contribution includes 3.67% EPF and 8.33% EPS
If a person's monthly salary is Rs.30,000. The listed contributions are as follows-
12% of Rs.30,000 (Staff share) = Rs.3,600
3.67% (EPF) of Rs.30,000 (Employer's share) = Rs.1,101
8.33% (in EPS) of Rs.30,000 (Employer's share) = Rs.2,499
Total = Rs.7200 / -
A) Employee contribution in respect of EPF
Generally, the amount of work contribution is adjusted to 12%. However, the rate is limited to 10% of the organizations described below:
Organizations or firms employ 19 employees.
Industries have been declared as sick industries by BIFR
Organizations that experience annual losses are relatively small compared to their total value.
Coir industries, guar gum, beedi, bricks and jute.
Organizations operating below the salary limit of ₹ 6,500.
B) Employer contribution towards EPF
The minimum amount that an employer has to make is set at a rate of 12% of Rs 15,000 (although they may offer more voluntarily). This amount is equal to ₹ 1800 per month. It means that both the employer and the employee must contribute ₹ 1800 per month to the scheme. Initially, the amount was set at 12% of ₹ 6,500 which would be equivalent to ₹ 780 to be donated by both the employer and the employee.
Contributions from both sides are made to the EPFO (Employees Provident Fund Organization).
This is a long-term investment fund for donors that helps them continue their independent lives after retirement
EPF also provides its donors with a loan facility that needs help
Calculation Interest Rate EPF
The interest rate is announced annually, and interest is calculated on a monthly basis. The interest rate is calculated by dividing the annual value by 12 years. This is done to reach the interest rate that will be given to the employee in a particular month.
If the annual interest rate is set at 12% then the interest rate for any particular month in a given year will be calculated as 12/12 = 1% per month.
Suppose an employee starts his or her donations from November 2018.
The appropriate interest rate will stand at 8.50%.
In this case, the interest rate per month would be 8.50 / 12 = 0.7083%.
The employee directs 12% of ₹ 15,000 equivalent to ₹ 1,800 per month to his EPF account.
This amount is transferred to the employee’s EPF account at the end of each working month and is recognized as part of the gross salary.
The employer makes a contribution of ₹ 1,800 equal to the contribution made by the employee.
3.67% of the employer's contribution was made to the EPF account again
8.33% of the contribution was made to the employee's EPS account
The employer's contribution to the work account stands at 3.67% of ₹ 15,000 equivalent to ₹ 550.
Monthly contributions made by the employer and employee through this account amount to ₹ 1800+ ₹ 550, equivalent to ₹ 2350.
The calculation of the balance for the following month (December) will be done as provided:
Balance transferred from November 2019 = ₹ 2,350.
Interest earned in December 2019 = ₹ 16.75
Balance at the end of December 2019 = ₹ 2,350 + ₹ 2,350 = ₹ 4,700
The steps to follow to process payments are given below:
Sign in to EPFO Portal using Electronic Challan cum Returns (ECR) certificates
Click 'Payments' and go to 'ECR upload'
Select Pay Month, Payroll Date, Contribution Rate
Continue uploading ECR text file. You will see a pop-up 'File Verification Successful' in the event that the uploaded file is approved in the predefined conditions. However, if the file is not authorized, 'Error' appears on the screen
TRRN will be displayed on screen, Click on 'Verify'
Click on 'prepare Challan' to get an ECR summary sheet
Go to Manage / inspection Charges and select ‘Generate Challan’
Click on 'Finish' and continue paying
Select 'Online' as a payment mode and select any bank account
Once you have selected your bank account, you will be redirected to the online banking website of the same bank
Make payments using Net Banking
Note:-Once the payment has been successfully made, confirmation will be made via Transaction-id and e-Receipt. The transaction will also be uploaded to the EPFO Portal and verified with the appropriate TRRN number.
All donations made by the member and his or her employer are listed in the EPF passport. The pass letter also contains other important information such as the ID and name, the member and name ID, office name, job assignment, employer assignment, EPS contribution, etc.
A member can download EPF login online by visiting the EPF website.
Check EPF balance
A member can check the balance of the EPF collected in an online account by following these simple steps:
Visit the EPF website at www.epfindia.gov.in
Go to "Members" in the "Our Services" section
Click on the "Member Passbook" option
Now enter your "UAN", password and captcha code and sign in to your EPF account
Select “Member ID” to view your passcode
Your login will be displayed in full text.
A member can also check his EPF balance by sending an SMS to 7738299899 via EPFOHO <UAN> ENG.
EPF balance can also be checked by toll-free on 011-22901406.
How do you transfer EPF Online?
Login to EPFO members' site using the UAN and your password
Go to the 'Online Services' tab in the main menu of the home page and select 'Transfer Request' to make an online referral request.
A new dashboard showing all your details will be displayed. Verify all such as DOB, EPF and join date, etc. So suing the process
Once you have verified, go to Step 1, select the previous or current employer option and provide details of the previous employer you want to apply for.
Submit details, OTP will be sent to your registered mobile number. You need to verify your identity by installing OTP, only the application will be submitted and the completed form will be created online. You need to sign the form and send it to your current or previous employer
The employer will also receive notification online about the EPF transfer application. The EPFO office will only process the claim after the employer has forwarded the claim to the EPFO after verifying your employment details
For submission of an application, you can check the status of your EPF transfer claim under the ‘Track Claim Status’ menu, under the ‘Online Services’ menu.
How to activate Accounts?
Work or sleep accounts are those that have not seen a donation in more than 36 months. Often, it happens when a member does not transfer an old account to his or her new employer and often forgets about previous contributions. A person can transfer to the current EPF account according to the steps outlined above or withdraw it using the UAN number.
How to EPF complaint filing?
The EPFO also provides a grievance redressal system that enables members to register their grievances.
Members can lodge their grievances by clicking on the ‘Register Complaints’ tab at EPFiGMS.gov.in.
Members must complete all relevant details relating to their account and a description of the complaint they have been facing.
Appropriate files related to the complaint we are dealing with can be uploaded to the site.
The member can also follow the status of the appeal by clicking on the 'View Status' tab.
Benefits of EPF Scheme
The EPF program is among the largest and largest savings programs available to Indian workers. The key benefits of the scheme are outlined below:
Tax-Free Savings: The EPF scheme provides certain interest rates on deposits at a rate determined by the organization. Both the amount of interest earned on deposits and the amount of the deposit itself are considered tax-exempt by the Government of India. Any withdrawal made at maturity or after the completion of 5 years of access to the scheme is exempt from 100% tax. However, if the amount is issued prematurely (within 5 years) it is not tax-free. This feature helps the employee to get special benefits in the form of additional income from his savings in the form of interest.
Long-term Financial Security: Funds deposited in this account cannot be easily withdrawn and as a result, they help ensure savings.
Retirement: The fund collected under this scheme may be used at the time of retirement of an employee. This provides relief from retirement in the form of financial security.
Invisible situations: A fund can be used by an employee in the event of any emergency. An employee may choose to withdraw his or her wallet prematurely. The scheme provides for early withdrawal of certain special cases.
Unemployment / Loss of income: In the event, when an employee loses his or her current job for any reason, these funds may be used to meet expenses.
Resignation of job: An employee after retirement is free to withdraw 75% of the EPF fund after one month of resignation and 25% stay after two months of unemployment.
Death: In the event of the death of the employee, the proceeds and interest are given to the nominee thus helping the family wave in difficult times.
Employee disability: If an employee is no longer able to work he or she can use these funds to help him or her through a difficult time.
Lay-off: In the event of a sudden retrenchment or retrenchment, the fund may be used by the employee until he or she finds another suitable job.
Long-term savings: A secure and comprehensive savings program for people wishing to have a long-term investment.
Revenue: This system serves as a reasonable source of income for a person during an hour of financial crisis. Funds thus obtained can be used to meet unavoidable expenses such as medical or educational needs.
Pension scheme: The employer not only contributes to the PF Fund but also makes the necessary contributions to the employee's pension which can be used later by the employee after retirement.
Insurance Scheme: This law also provides for certain provisions where, the employer is required to make certain contributions in respect of the employee's life insurance in the absence of group insurance coverage. This plan ensures that employees have proper insurance.
All Accessibility: With the help of the International Account Number (UAN), employees can easily access their PF account via the EPF member portal. They can transfer their accounts whenever they make changes to their current activities.
EPF Customer Care Number
In the event of any doubt or inconsistency, please contact the EPFO customer care line:
Helpdesk- 1800118005 (free)
Bhavishya Nidhi Bhawan,
14, Bikaji Cama,
New Delhi- 110066