What Is Employees Provident Fund & Its Eligibility Criteria?

The full form of RPF is Employees’ Provident Fund. Over the last decade, there has been a significant increase in the number of financial instruments available to investors. These include hybrid and complex financial investment products. Investors are spoilt for choice. Some investors believe the older the fiddle, the sweeter the tune, and prefer to go with traditional, age-old investment avenues.

Employees' Provident Fund is one such popular investment alternative.

The Employees' Provident Fund is a savings scheme introduced by the Employees' Provident Fund Organisation and supervised by the Ministry of Labour and Employment, Government of India. The fund aims to facilitate a habit of savings among salaried employees and build a substantial retirement fund.

The EPF scheme, launched in 1951, caters to more than fifty million individuals. It is a welfare scheme governed by The Employees' Provident Scheme Act 1952, the Employees' Direct Linked Insurance Scheme Act 1976 and the Employees' Pension Scheme Act 1995.

Under the scheme, the employer and employee contribute towards the fund. Interest periodically accrues on the investment amount. The corpus is available to the employee on retirement or exit from employment, subject to certain conditions. The schemes offered to extend to Indian workers. Additionally, workers from countries with signed bilateral agreements are eligible. In the case of a deceased employee, the dependents enjoy the scheme's benefits.

What is EPF - Employees' Provident Fund

EPF Employees’ Provident Fund is a savings scheme introduced by the Employees' Provident Fund Organisation and supervised by the Ministry of Labour and Employment, Government of India. The fund aims to facilitate a habit of savings among salaried employees and build a substantial retirement fund.

EPFO (Employee Provident Fund Organisation)

The EPFO is a non-constitutional body that regulates and monitors provident funds in India. It is the world's largest social security organisation for the number of financial transactions and clientele.

With offices at 138 locations across the country, the organisation has a training set up where its officers and employees and representatives of the employers and employees attend sessions, training, and seminars.

Schemes Offered Under EPFO

Here are the schemes offered under EPFO:

● Employees' Provident Funds Scheme 1952 (EPF)
● Employees' Pension Scheme 1995 (EPS)
● Employees' Deposit Linked Insurance Scheme 1976 (EDLI)
● Universal Account Number (UAN)

Objectives of EPFO

The primary objectives of EPFO are as below:

● Make certain each organisation adheres to the rules and regulations laid out by the EPFO.
● Digitise services provided by provident funds and improve the overall user experience.
● Enhance the ease of compliance and encourage voluntary compliance.
● Safeguard investors' rights and reduce the claim settlement period to three days.
● Ensure every employee holds only one EPF account and online access for each account.

UAN and EPFO Portal

You can visit the official website of EPFO and follow the given steps:

● Enter the UAN number on the Member e-Sewa page for the EPFO member login.
● Now give the password and write the displayed Captcha Code
● Tap on 'Sign in' and view EPF account

Universal Account Number (UAN)

On 1st October 2014, Prime Minister Narendra Modi introduced the UAN mandate for convenient access to provident fund accounts. The UAN is a unique 12-digit number allotted to each member (employer and employee) by the EPFO. Using the UAN, each member can log in to the online EPFO member portal.

The UAN of an employee remains constant irrespective of any change in employment. In case of a switch in employment, the member ID changes and the EPFO links the latest member ID to the member's existing UAN.

However, employees must activate their UAN to avail of online services. You can also get your UAN from your employer.

UAN allows you to withdraw or transfer funds from provident fund schemes at any time. Your employer can easily contribute to your provident fund account and authorise withdrawal requests. Also, you and your employer can manage a record of your provident fund account through an online portal. UAN provides easy accessibility online and brings all KYC and provident fund details in one place.

PF Contribution

the employee's basic salary, dearness allowance and retaining allowance for the employer and the employee.

Employee's Contribution: The employer deducts the employee's contribution from the provident fund monthly and deposits it in the EPF account. The employee can contribute more to his EPF account based on his discretion.

Employer's Contribution: The maximum salary limit on which the employer's contribution is mandatory is Rs. 15,000. Employer's contribution is towards the below categories.

1.   Employee Provident Fund – 3.67%
2.   Employees' Pension Scheme – 8.33%
3.   Employees' Deposit Linked Insurance Scheme – 0.50%
4.   EPF Admin Charges – 1.10%
5.   EDLIS Admin Charges – 0.01%

Eligibility to be a member of EPF

EPF scheme is subject to certain eligibility criteria as below:

● All states in India except Jammu and Kashmir can benefit from the provisions of the EPF scheme.
● EPF account registration is mandatory for salaried employees with an income of up to Rs. 15,000.
● Employees with a salary of more than Rs. 15,000 may register for an EPF account subject to approval from the Assistant PF Commissioner.
● Organisations with more than twenty employees must register for the EPF scheme.
● Organisations with less than twenty employees may join the EPF scheme voluntarily.

EPFO Services

EPFO constantly strives to digitise the service offered to attain operational efficiency and excellence. It offers a wide range of services that include the following:

1.   Online Registration – The EPFO portal allows online registrations of establishments (OLRE). The PF code allotment letter for an establishment is available online. Overall, it improves the employee experience as well.

2.   PF Contribution – Organisations must contribute online. Select public and private sector banks currently have agreements with EPFO to collect dues.

3.   PF Withdrawal – Online PF withdrawal is equally convenient with UAN. However, it is imperative to link an employee's Aadhaar and bank details to the UAN. Employees unemployed for more than two months are eligible to withdraw from the EEPF account.

4.   Claim Status – Employees may check the status of claims on the portal and use the UAN to download the EPF passbook.

5.   EPF Transfer – The process to transfer any amount from the employee's previous member ID to the current one is online using the UAN. The Process is hassle-free and seamless.

6.   Exempted Organisations - Exempted establishments can file their monthly returns online using an IT tool launched by the EPFO.

7.   International Employees - EPF members employed in countries with Social Security Agreements with India may generate a Certificate of Coverage (CoC) using an online centralized software launched by the EPFO.

8.   Inoperative Accounts - In February 2015, the EPFO set up an online helpdesk for inoperative accounts. It helps employees track dormant and old inoperative accounts with basic details from employees about previous employment. These inoperative accounts do not accumulate any interest. Consequently, employees can track these accounts and either withdraw the funds or transfer them to the current Member ID.

9.   UMANG App – UMANG refers to Unified Mobile Application for New-age Governance. It is a mobile app launched by EPFO. Employees can use UAN and a password to avail services such as EPF passbook, update profile details, etc.

10.   SME Service - Members with activated UAN may access PF balance, previous contribution, KYC status, etc., through an SMS or missed call. Employers will also receive an SMS for non-payment of EPF.

11.   Grievances – Grievance redressal is a top priority for the EPFO. Members may raise an online complaint for any issues for settlement of pension, transfer, or withdrawal of PF, etc. The turnaround time to resolve grievances is considerably low. The redressal period for eighty percent of grievances is seven days or less. Due to constant monitoring of the EPF grievances, there is a significant reduction in the number of complaints received daily.

EPF Calculation

EPF calculator is an online simulation that indicates the value of your EPF investment on retirement. The lump-sum investment includes your contribution, your employer's contribution, and accrued interest on the investment.
The EPF calculator requires inputs such as your current age, monthly remuneration, dearness allowance, EPF contribution and retirement age. You may also enter the current EPF balance if it is available. Using a preset formula, the calculator returns a future value of the EPF investment.
The calculator's purpose is to aid the employee's financial and retirement planning. It also allows you to try various permutations and combinations to arrive at the desired retirement EPF fund.

EPF Interest

The interest accrued on an investment in the PF account happens to be tax-free. This type of interest is paid on operative PF accounts of the employees who are about to retire. However, the interest accrued on the accounts will be taxed as per the tax slab of the EPF employee member.
Note that the amount contributed toward the pension scheme doesn’t accrue the interest rate. But members are eligible for the pension as soon as they become 58 years of age.

How Is Interest on EPF Calculated?

The interest on EPF is calculated each month. But it is credited to the account only on the financial year’s last day. One can calculate the EPF interest by multiplying the closing balance per month with the PF interest rate & then divide it by 2.

EPF Money withdrawal protocol and Process

You may opt for a partial or complete withdrawal from the EPF account. However, withdrawal is subject to certain conditions and allowed in specific circumstances. Partial withdrawal is subject to a lock-in period and the period varies based on the withdrawal purpose.

For instance, you may completely withdraw funds at your retirement age, be unemployed for more than two months, resign due to permanent total mental or bodily incapacity, permanent relocation to other countries, death of the member, etc. Similarly, you may opt for partial withdrawals to purchase a house, repay a home loan, higher education, wedding expenses, or medical expenses.

You can withdraw from the EPF through an online or offline withdrawal application. For an offline withdrawal, you need to submit a 'new composite claim form' or a 'composite claim form' and submit it to the EPFO office under your jurisdiction.

Alternatively, you use the EPF portal for an online withdrawal application. For an online application, the following are the prerequisites.

1.   You must have an active UAN.
2.   The mobile number linked to the UAN must be operational.
3.   Link your Aadhar to the UAN. EPFO will also require your PAN number and bank details with the IFSC code.

Next, log in to the online portal using the UAN assigned to you and verify your KYC details. Follow the instructions mentioned on the portal and submit the withdrawal request.

Typically, you must avoid EPF withdrawals before five years of service due to the following reasons.

● Section 80C - For individuals who claim deductions under Section 80C of the Income Tax Act and withdraw the PF amount completely, the interest earned on the employee's contribution is subject to tax.

● Tax Liability - PF withdrawal done within five years of service is subject to tax. You must add the withdrawal amount to the taxable income in such a case. If the withdrawal amount is more than Rs.50,000 and made within five years, then the withdrawal amount is subject to a TDS of ten per cent. You may be exempt from TDS if you submit Form 15G and 15H to the Income Tax Department.

Therefore, the PF withdrawal protocol allows adequate flexibility to individuals to cater to emergency requirements using savings from the EPF account. Moreover, the online withdrawal process is easy and simplifies the claim procedure. You can bypass attestation requirements from the employer through the online withdrawal process.

EPF Form

EPF form needs to be filled by the employee who holds a PF account. The fund is used for withdrawing the EPF amount at the retirement time or the employee quits the job. If the employee exits the job, they need to be unemployed for a minimum of two months to withdraw the form.

How To transfer EPF money

You may transfer EPF money online using the UAN. Visit the online transfer claim portal and request an EPF transfer with the same login credentials as the EPF member portal. Check your eligibility to initiate an online transfer claim.

If you are eligible, submit the claim online and provide details of your previous employment. These details include the EPF account number of your previous and current employer, the date of joining and leaving the previous employer and the date of joining the current employer.

Select either your current or previous employer for attestation. Authentication by the previous employer results in faster settlement. On submission of the relevant details, you will receive an OTP on your registered mobile number. Track the application using the tracking ID issued to you. Additionally, take a printout of the form and submit it to the employer you choose for attestation.

EPF authorities are in the loop from the transfer initiation with the online transfer procedure. In the manual process, you must complete Form 13 and submit it to the employer. The employer may take considerable time to submit the form to the EPF authorities. The EPFO is unaware of delays (if any) during the process. With online transfers, EPFO acts as a mediator and puts greater accountability on employers to sign off on time.

How to Link an EPF Account with Aadhar Online?

You need to follow the given steps to link the EPF account with Aadhar online:

●  First, log into the UMANG app with the MPIN or OTP
●  Navigate to the tap mentioning “All Services” and choose EPFO
●  Now, you need to choose the e-KYC services
●  After this, under the e-KYC services, you must choose the Aadhar Seeding option

EPF Benefits

EPF is a welfare scheme that inculcates a habit of financial planning and savings among employees. Some of the benefits of EPF are as below:

1.   EPF allows employees to take advances or make withdrawals in case of emergencies.
2.   In case of the death of a member, the PF amount is payable to the nominees or legal heirs.
3.   EPF encourages the employer to contribute towards the PF. It also promotes contributions towards the employee's pension. Therefore, it helps secure the employee's post-retirement finances.
4.   Most importantly, any contribution to the provident fund is a deduction under income tax for the employer and employee. Further, interest on provident fund investment is exempt from tax.
5.   Employees earn an attractive rate of interest on PF investment. Investment in PF is virtually risk-free.
6.   Under the EDLI scheme, employees are eligible for life insurance in case of death while in service.
7.   Lastly, EPFO allows for transfer in case of any change in employment without any exit load or impact on the total investment value.

EPF TAX Rules

EPF interests and deposits were exempt from the tax until 2020. But after Budget 2021, the new rules were announced by the government that started FY22 when the deposits in VPF and EPF exceeded Rs 2.5 lakhs in one financial year. The interest earned above 2.5 lakhs is taxable. If there are no contributions made to the account, the interest component gets exempted up to Rs. 5 lakh deposit in the financial year. So, the Central Board of Direct Taxes or CBDT has already stated that the two separate PF accounts need to be maintained.

Withdrawal Process of EPF

Process of Withdrawal Online

● To withdraw EPF online, follow these steps:
● Login to UAN Member e-Sewa portal
● Choose the tab mentioning 'Online Services' & tap on the 'Claim (Form-31, 19 & 10C)'
● Get the member details displayed on screen
● Enter the bank account number registered with the EPF account & choose 'Verify'

Process of Withdrawal Offline

● Do you wish to withdraw the PF offline? You must visit the respective EPFO office. Submit the duly filled ● Composite Claim Form. Note that there are two types of Composite Claim Form Non-Aadhaar and Aadhaar.

EPFO Information for Grievance

Employees who wish to register the grievance need to use the member site of the EPFO, where they may fill out the grievance registration form & make the complaint. Note that the employees file complaints frequently about their withdrawals, account transfers, PF settlements, and pension settlements. To get EPF grievance registration, one needs to follow the points below:

● Visit https://epfigms.gov.in/ and access EPFO grievance website
● On its top bar, one needs to tap on 'Register grievance.'
● After this, the registration form gets displayed
● One needs to fill out the form
● Now, enter the current situation (i.e., Employer, employee, or EPS pensioner.)
● After this, one has to fill up the PF account number.
● Now, it is time to input the regional EPF office address
● Enter the business name and address
● Enter your name, zip code, address, phone number, country, email address and other details.
● Now, you can file the grievance,
● Upload the letter, enter the given captcha, and then complete the registration