An essential saving tool in the country right now, EPF is something that every salaried worker in the country should be aware of. It is a scheme managed by the EPFO under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952.
If you are not well-versed with the scheme, then you have come to the right place. Through this article, we aim to present all the details about EPF, from its eligibility to checking your EPF passbook online. So, read further if you are interested in these topics.
What is EPF?
EPF or Employee Provident Fund is a scheme that requires monetary contributions from employees and employers every month. When the employees retire from their jobs or if they leave the job due to a temporary or permanent disability, they are entitled to the money in their EPF.
This is a tax-free investment made towards your retirement. The investments made by the employees across India towards this fund are combined together and invested by a trust.
As mentioned above, it is created by the Employees Provident Fund Organization (EPFO) of India. It is a statutory body of the Indian Government, running under the Labour and Employment Ministry. According to this scheme, any organization with 20 or more permanent employees that are working in any of the 180+ industries should be registered with the EPFO.
The monthly contributions go into these three schemes under the EPF Act of 1952:
- Employees’ Provident Fund Scheme (EPF), 1952
- Employees’ Deposit Linked Insurance Scheme (EDLI), 1976
- Employees’ Pension Scheme (EPS), 1995
Who is eligible for EPF?
The eligibility criteria for EPF is discussed below:
- Salaried workers who have a Basic plus Dearness Allowance less than Rs. 15,000 in a month are eligible for the EPF scheme. Their employers are required by the law to open an EPF account for such employees.
- Firms that have 20 or more employees are eligible for the scheme and the law demands their registration for the EPF scheme. Organizations with less than 20 employees also have the option to register voluntarily.
- Employees with a monthly salary of more than Rs. 15,000 per month are non-eligible for the EPF. Although it is not compulsory for them to become members of the EPF, they can still register with the consent of their employer and approval from the Assistant PF Commissioner.
Benefits of PF
The Provident Fund Scheme comes with a number of benefits for the employees:
- High Interest – You will earn an interest rate of 8-9% on your EPF amount. This high interest rate will play a crucial role in your retirement plans.
- Not liable to tax – EPF falls under the category of EEE (Exempt Exempt Exempt). This refers to the money invested in EPF, the interest earned, and the money withdrawn–they are all exempted from tax.
- Less Risky – Investing in EPF comes with very low risks as compared to other investment options. It provides a safe way of investing your money that is supported by the government.
- Life Insurance – You also get the advantage of life insurance with EPF. Following the death of the employee, the EPF amount will be granted to the family.
- Convenience – Registering your EPF account and generating your UAN is a one-time process and is incredibly easy. If you change your jobs, it can be transferred to your new employer and you do not need to register all over again. You are also able to conveniently access your EPF account and EPF passbook.
Employee and employer contribution
The employee and the employer have to contribute differently to the EPF. The contribution of an employee goes directly to the EPF. On the other hand, the contribution of the employee goes into the EPF, the EPS, and the EDLIS. Let’s take a look at their contribution breakup:
- 12% of an employee’s salary goes to the EPF
- 3.67% goes to the EPF
- 8.33% goes to the EPS
- 0.5% goes to the EDLIS
- 0.01% for EDLIS Administrative Charges
- 0.85% for EPF Administrative Charges
Therefore, it is clear that an employee does not need to contribute to the life insurance premium charges as it is handled by the employer. An employee’s contribution goes straight and exclusively towards their EPF and pension. The administrative charges for both EPF and EDLIS also need to be borne by the employers.
Here is an example to make you understand this better:
Consider a situation where an employer earns a monthly salary of Rs 14,000, which falls under the eligibility criteria for EPF (below 15,000).
|EPF||Employee Contribution||12% of Rs 14,000||Rs 1680|
|EPS||Employer Contribution||8.33% of Rs 14,000||Rs 1166.2|
|EPF||Employer Contribution||3.67% of Rs 14,000||Rs 513.8|
What is the UAN?
UAN or Universal Account Number is a 12-digit number provided to all the employees enrolled in the EPF scheme. The number is unique and permanent for each employee and does not change even when someone changes their job.
How to generate and activate UAN?
In order to generate the UAN, the members need to log in to the EPFO website with their credentials. After they have logged in, they can register their UAN which can be easily linked to their PF account.
After the UAN has been generated, it can be activated at the UAN eSewa portal using the employee’s PAN card or Aadhar Card or Member ID.
Following the activation of UAN, the members can use it to avail the EPF passbook service and know the details of their EPF account.
How to transfer EPF account from one employer to another
In case, an employee changes their job due to any reason, they are required to transfer their EPF account from the previous employer to the new one. It is a simple process and can be done online on the EPF website – www.epfindia.gov.in.
When you visit the website, all you need to do is open the Online Transfer Claim Portal (OTCP) under the category “FOR EMPLOYEES” and then fill in the Online Transfer Claim application. This application contains many parts, so make sure to fill in all the parts carefully.
Before submitting the application, it needs to be verified by your employer, either previous or current one. It will take around 30-60 days for the completion of the transfer process.
Tax on EPF
According to the law, both the employer and the employee needed to contribute to the EPF. Employer contributions up to 12% of their wages up to 12% were exempted from tax and contributions exceeding 12% were liable to tax.
During Budget 2021, Finance Minister of India, Nirmala Sitharaman announced that interest earned on the EPF contributions above Rs 2.5 lakh will be taxable from 1 April, 2021. In her speech, Sitharaman said, “in order to rationalise tax exemption for the income earned by high-income employees, it is proposed to restrict tax exemption for the interest income earned on the employees’ contribution to various provident funds to the annual contribution of Rs 2.5 lakh”.
This new law is aimed at taxing high-value contributors in the EPF. For people earning more than Rs 20.83 lakh a year, their interest earned on EPF contribution will be taxed.
How to check EPF passbook online
An employee or employer can easily check their EPF passbook online and view their contribution as well as their latest balance. They can go to the website: http://members.epfoservices.in/ and complete the registration process.
Once registered, they can log in using their new login credentials received on their registered mobile number. Then, they can download their passbook by clicking on the Download E Passbook option. Before downloading the PDF version, they will be asked to select the state of the establishment where they work and also the EPFO office. They will also have to enter the Authorization PIN that will be sent to their mobile number as well as their email id.
Once downloaded, the PDF file of the EPF passbook can be opened to view the details of the contribution and the latest balance.
Checking EPF balance
The EPF balance can be checked on the PDF file of the EPF passbook downloaded through the above steps. However, there are other ways to check your EPF balance as well if you have a UAN number. Here are the two ways you can check your EPF balance using your mobile.
It is possible to obtain your EPF account balance by sending an SMS to 7738299899 from your registered mobile number. The format of the SMS should be like this:
EPFOHO UAN ENG
Missed Call Method
You can also check the account balance by giving a missed call to 011-22901406 from your registered mobile number.
How to withdraw EPF balance
For withdrawal of part of EPF before retirement, workers will have to fill a form online. This is only possible under certain conditions and occasions. They will have to fulfil these conditions and specify the occasion for which they need to withdraw from their EPF account.
The occasions for withdrawal of EPF include marriage, education, repayment of home loan, repairing the house, construction of a house or purchase of a house or a flat, and medical treatment. Under each of these occasions, certain conditions have been specified that have to be fulfilled before you can think about filling the withdrawal form online.
In case, all the required conditions have been met, the withdrawal can be processed by submitting the Composite Claim Form online. This form now includes the option of self-certification which means that you do not have to attach any additional documents with the form. The form just needs to be signed by the EPF subscriber which will confirm that they have fulfilled all the conditions.
How to change mobile number in EPF account
If you have changed your mobile number, it is important that you update your new mobile number in your EPF account. You can do so on the UAN portal online: https://unifiedportal-mem.epfindia.gov.in/memberinterface/
When you go to log in, you can click on the ‘Forgot Password’ option and then fill in the details along with the UAN number and Captcha Code. When you come across the prompt, ‘Do you wish to send OTP on the above mobile number?”, you need to select the ‘No’ option, verify your details, and then click on ‘Proceed’.
Can you opt out of PF?
Many people wonder about opting out of PF because opting out will result in bigger take-home pay and can lead to better investment opportunities. The short answer is yes, you can opt out of PF, but only under certain conditions. If you are an employee, you can opt out only if the following conditions are fulfilled:
- You are a first-time employee which means you are joining your first job.
- Your Basic + DA (PF Wages) is more than Rs 15,000 per month.
- While changing jobs, you do not have an existing PF account number.
So, if you meet the above-mentioned criteria, you can opt out of PF by filling out Form 11 when joining your first job. In addition to this, you are also requested to write a letter addressed to your employer telling them that you wish to opt out of the PF scheme. Keep in mind that once you make a single contribution to PF, the option to opt out of PF will no longer be available.
If you move out of India, you are not obliged to make a contribution to PF and you have the option to opt out. However, if an employee is working in a country with which India has a bilateral Social Security Agreement, they can get a CoC (Certificate of Coverage) from EPFO and get exempted from contributing towards the Social Security Scheme of the host country.
EPFO has launched a Whatsapp helpline service in 2020 to assist people with their grievances in a fast and convenient manner. This facility is now available among other means of grievance redressal facilities of EPFO including social media platforms (EPFO & Twitter), EPFiGMS portal, CPGRAMS, along with a 24×7 helpline. This decision has been taken under the light of COVID-19 pandemic in order to provide continued support to EPF subscribers.
Hence, we hope that this guide was helpful to you in providing all the necessary information you needed to understand about the EPF. The Employee Provident Fund Scheme was created by the government of India for the benefit of the employees. So, employees need to understand the EPF scheme and how it can help them in planning their retirement or in emergency situations when they need some financial assistance.