Urban Money

Employee Provident Fund - EPF

The Employee Provident Fund, also known as the EPF, is a retirement savings scheme available for all salaried employees in the country. This scheme is backed by the government on a fixed rate of interest. The fund is managed and regulated by the Employees Provident Fund Organisation (EPFO), a statutory body functioning under the governance of the Ministry of Labour and Employment. Further, the EPFO also regulates the contribution to the EPF for both the employer and employee.

Benefits of Employee Provident Fund Scheme

Given below are some of the benefits of investing in the employee provident fund scheme:

  • Capital Appreciation: The online PF scheme offers a predetermined interest rate on deposits held within the scheme. Further, EPF offers extended rewards at maturity that ensure the funds' growth for greater capital appreciation.
  • Retirement Corpus: Nearly 8.5% of the employee's salary is directed towards investing in the EPF scheme. The regular deposits of funds in the EPF portfolio ensure a healthy corpus for retirement. Such a retirement corpus would inculcate a sense of financial security and independence post-retirement.
  • Contingency for Emergencies: The only constant in life is uncertainty. Therefore the best an individual can do is prepare themselves financially for such situations. An EPF scheme can act as a contingency for any emergency.
  • Tax Benefit: According to Section 80C of the Income Tax Act, the contributions that you make towards your EPF account are eligible for tax deductions. Further, even the revenue generated from EPF schemes is exempt from income tax. Such tax exemptions can be claimed up to a limit of Rs. 1.5 lakhs.
  • Premature Withdrawal: Subscribers to the EPF scheme are eligible to avail of benefits of premature withdrawal. The subscriber can withdraw their funds from the EPF scheme to meet specific financial requirements like higher education, constructing a house, wedding expenses or medical emergency.

EPF Eligibility Criteria

Given below are the eligibility criteria for an employee to subscribe to the employee provident fund scheme:

  • If you are drawing a salary less than Rs. 15,000 in a month, it is mandatory for you to be enrolled in the EPF scheme.
  • You can enrol with the scheme even if your salary is higher than Rs. 15,000, but you will require approval from your employer and Assistant PF Commissioner.
  • Organisations with more than 20 employees are obligated by law to enrol on the EPFO and become EPF contributors.
  • Even organisations with fewer than 20 employees can voluntarily enrol in the scheme to become contributors.

EPF Interest Rates

Given below are the EPF interest rates for an investment for the last 65 years:

Time Period EPF Interest Rates
2021 – 2022 8.10%
2020 – 2021 8.50%
2019 – 2020 8.50%
2018 – 2019 8.65%
2017 – 2018 8.55%
2016 – 2017 8.65%
2015 – 2016 8.80%
2013 – 2015 8.75%
2012 – 2013 8.50%
2011 – 2012 8.25%
2010 – 2011 9.50%
2005 – 2010 8.50%
2004 – 2005 9.50% (9% Interest + 0.5% Golden Jubilee bonus interest)
2001 – 2004 9.50%
2000 – 2001 12% (April-June, 2001) and 11% (July 2001 onwards) on the monthly running balance
1989 – 2000 12.00%
1988 – 1989 11.80%
1987 – 1988 11.50%
1986 – 1987 11.00%
1985 – 1986 10.15%
1984 – 1985 9.90%
1983 – 1984 9.15%
1982 – 1983 8.75%
1981 – 1982 8.50%
1979 – 1981 8.25%
1978 – 1979 8.25% + 0.5% bonus (for members who did not withdraw any amount from their PF during 1976-1977 & 1977-1978)
1977 – 1978 8.00%
1976 – 1977 7.50%
1975 – 1976 7.00%
1974 – 1975 6.50%
1972 – 1974 6.00%
1971 – 1972 5.80%
1970 – 1971 5.70%
1969 – 1970 5.50%
1968 – 1969 5.25%
1967 – 1968 5.00%
1966 – 1967 4.75%
1965 – 1966 4.50%
1963 – 1964 4.25%
1957 – 1963 4.00%
1955 – 1957 3.50%
1952 – 1955 3.00%

Types of EPF Forms Available

Given below are the different types of EPF form available for use: 

Name of the EPF Form Application
Form 31 EPF Withdrawal
Form 14 Buying LIC Policy
Form 10D To claim monthly pension
Form 10C To claim withdrawal benefits/scheme certificate of EPS
Form 13 Used for EPF Account Transfer
Form 19 To get Final PF Settlement of employees
Form 20 Final EPF settlements in case of an employee’s demise
Form 2 It is a EPF and EPS declaration and nomination form 
Form 5(IF) To claim in accordance with the EDLI scheme
Form 15G For saving TDS on an EPF’s interest income 
Form 5 Exclusively for new employee registration in EPF and EPS
Form 11 To enable auto transfer of EPF funds

Overview of EPF Contribution

The EPF contribution aspect from the employer's salary initially proved to be quite the issue for people falling into lower salary slabs, as their take-home salary is not enough to meet their monthly salary.

The Annual Budget Speech of 2015 provided some relief to the citizens, bringing down the monthly contribution to 12%, while the employer also has to make the same contribution on a monthly basis. 

Apart from the EPF, the employer is also required to make a contribution of 8.33% for the pension contribution of every employee.

Employee's Contribution

Given below are the various aspects related to the employee's contribution to the EPF account:

  • Contributions to the EPF account are mandatory if the maximum salary ceiling is Rs. 15,000 per month.
  • If the employee is contributing a higher amount to EPF, the employer is not obligated to do the same.
  • If the employee wishes to contribute a higher amount, they will require joint permission from the employer. Administrative charges are applicable for any higher contribution made from the employer's end.
  • The maximum salary cap of Rs. 15,000 is not applicable for Non-Resident employees.

Employer's Contribution

Given below are the organisations that have to contribute 10% of the salary towards the EPF account:

  • An organisation that has been covered prior to 22 September 1997, where there are less than 20 employees.
  • A company in accordance with the definition Clause (0) of Sub-Section (1) of Section 3 of the Sick Industrial Companies Act of 1985. They are required to be declared the same by the Board for Industrial and Financial Reconstruction.
  • An organisation whose losses at the end of the financial year are equal to or exceeding the total net worth of the company.
  • Any organisation which is involved in the production of bricks, jute, beedi, coir, etc.

Employee Provident Fund Calculation with Example

The EPF amount is calculated on the basis of the employee and employer's contribution amount. The contribution made by the employee is equivalent to 12% of their basic pay along with dearness allowance, where the basic pay is less than or equal to Rs. 15,000. The employer pays 3.67% of the Basic Pay as an EPF contribution. 

Note: The employer's contribution of 12% is also divided into two parts. 8.33% goes towards the employees' pension fund, and the remaining 3.67% goes to the EPF account.

Serial Number Employee’s Contribution Employer’s Contribution
1 12% of Basic Pay + Dearness Allowance   12% of Basic pay - 8.33% of Rs. 15000    
2 12% of Basic Pay  + Dearness Allowance   3.67% of Rs. 15000    
3 12% of Rs. 15000   3.67% of Rs. 15000

 Usually, the employer's 12% contribution is divided as described below:

  • 3.67% goes to the EPF.
  • 8.33% is deposited in the employees' pension scheme.
  • 0.5% is deposited with the Employees Deposit Linked Insurance Scheme (EDLIS).
  • 0.01% is spent on the administrative charges for EDLIS.

If the employee's income is equal to or more than Rs. 15,000, the employee's contribution will be 12% of Rs. 15,000 i.e Rs. 1,800.

What is UAN?

The Universal Account Number (UAN) is a unique 12-digit number assigned to every contributor to the Employee Provident Fund. This number is generated and assigned to the EPF subscriber by the Employee Provident Fund Organisation. The number remains the same throughout the employee's professional career, regardless of the number of times the employee has switched organisations. 

Given below are some of the reasons the UAN is important:

  • The UAN is mandatory to check the credit and debit in the EPF account.
  • The UAN can be used to withdraw or transfer funds without depending on the employer.
  • The employee can use the UAN number to access their EPF account effortlessly online.
  • If the employee is registered on the EPFO portal, they can use the UAN to track their monthly deposits.

What is EPF E-Nomination?

EPF E-nomination can basically be described as the process of electing your nominee details on the UAN portal without having to visit the EPFO office. Using this process, the employee can add their family member as a nominee in the UAN EPFO portal. In case of the unfortunate event of the subscriber's demise, the money in the EPF account can be claimed by the nominee mentioned in the portal.

Tax Benefits of EPF Investment

Given below are some of the tax rules and benefits of the employee's EPF investment:

Interest

As long as the subscriber is employed, the interest earned on the EPF account is exempt from income tax. However, once the subscriber reaches retirement age, the interest earned is completely taxable and has to be mentioned under 'income from other sources while filing income tax returns for a particular financial year.

Withdrawal

Unless you withdraw your balance before a minimum service duration of 5 years, the entire EPF balance is exempt from income tax. A partial withdrawal facility is available after five years of active service for purposes stated by the EPFO. Due to the Covid-19 pandemic, the Indian Government has allowed tax-free partial withdrawal of the EPF account up to a limit of 3 months of basic pay + DA, or 75% of the account balance, whichever is lower.

How to Lodge EPF Grievances?

In case you have any doubts or complaints regarding your EPF account and related transactions, you can lodge a complaint on the EPFiGMS portal by following the below-given steps: 

Step 1: Visit the official EPFiGMS page. On the top left corner of the homepage, click on the 'Register Grievance' option. 

Step 2: This will redirect you to another page where you will be asked to enter your status. You have to choose between PF member, employer, EPS pensioner, or other. Any member who does not have a UAN or establishment number has to select the 'others' option. 

Step 3: Select the appropriate option on the 'Do you have a claim-ID'. Click on 'no'. Then, enter your UAN and verify the captcha before clicking on the 'Get Details' option. 

Step 4: Some of your details like your name, mobile number and email ID will be displayed on the screen. Click on the 'Get OTP' button to advance. This will trigger an OTP being sent to your registered phone number. Enter and verify the OTP. 

Step 5: On the resulting page, you will need to enter more information like address, gender, alternate contact number, etc. 

Step 6: Select the applicable PF number under the 'Grievance Details' section. 

Step 7: On the resulting page, you will have to enter some details about the grievance, grievance category and description. You can also upload documentary evidence to support your grievance. 

Step 8: The EPF grievance will then be registered. The complaint number will be sent to your registered phone number and email address.

EPF Helpline Number

In case you have any queries regarding your EPF account, you can get in touch with the authorities in the below-mentioned ways:

  • Email: [email protected] (If the grievance has been registered and you haven't received a response for more than 15 days, or if you are not satisfied with the resolution).
  • Toll-Free Number: 1800 1188 005

FAQs

Is EPF better than PPF?

Based on the above-mentioned details, we can safely deduce that the EPF scheme is slightly more beneficial than the PF scheme, as it is composed of investment of both the employee and employer. Further, you can withdraw your investment whenever you want to meet any specific financial requirements. But the same is not true for a PPF account.

What is the EPF interest rate?

The EPF interest rate for a particular financial year is announced in that year’s Annual Budget Speech. The EPF interest rate currently stands at 8.10% per annum.

Can an employee make higher EPF contributions?

Yes, you can increase the EPF contribution amount via the YPF method. However, you will have to submit a request with your employer for the same.

Can I open both EPF and PPF?

Yes, you can open both EPF and PPF accounts.

On what basis is the EPF contribution paid?

The EPF contribution is paid at a rate of 12% of the basic salary + dearness allowance, provided that the employee is earning a minimum salary of Rs. 15,000 per month.