What is EPF? | Check Online EPF Status
EPF or Employees’ Provident Funds is an important tool for retirement planning. It is solely for salaried individuals who are employed in the service sector. The EPF scheme is controlled and managed b the regulatory body, Employees’ Provident Fund Organisation (EPFO).
Under Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, there are two components namely, EPF and EPS (Employee Pension Scheme). Under both the schemes, salaried individuals are covered if he/she is earning more than Rs. 6,500 per month as their basic salary.
Provident Fund Deduction from Salary
You and your employer both contribute 12% of your basic salary plus dearness allowance into employees’ account. The 12% of your basic salary contribution goes into your EPF account along with 3.67% contributed by your employer, while the balance 8.33% from your employer’s end is transferred to your EPS (Employee’s Pension Scheme) account. It is very important to note that if your basic salary is above Rs. 6,500 p.m., then your employer can contribute only 8.33% of Rs. 6,500 (i.e. Rs. 541) to your EPS and the balance goes directly into your EPF account.
EPF Interest Rate
The interest rate on EPF is 8.65% currently which is calculated at the end of each fiscal year. Interest is applicable to only EPF component and the pension scheme or the EPS generates no interest.
Tax Benefits on EPF
Whatever your employer contributes in your EPF account is not taxable under the Income Tax Act., but the contribution made by you is tax-deductible under Section 80C of the Income Tax Act. The money that you invested in EPF, the interest earned and the money withdrawn by you after 5 years of service are exempt from any tax deductions on your EPF account.
Is Facility of Nomination Available on EPF?
Yes, EPF provides you with the nomination facility wherein you can choose either your mother, father or your spouse as your nominee to receive the proceeds at the time of your death of an employee.
Withdrawal Policy under EPF
The EPF Subscriber is allowed to withdraw the invested amount in the scheme after some time. You are allowed to withdraw the accumulated amount from your EPF account in the case if you have not been working for more than two months. In February, the EPF body has changed the rules to allow withdrawal of only the employee’s contribution, not the employer’s.
Can You Get a Top-up on Your EPF?
Yes, you can always invest more than 12% of your regular contribution. However, any amount contributed over and above normal contribution is termed as ‘Voluntary Provident Fund’ or the VPF. In this case, the excess amount is invested in EPF and is eligible for interest benefit.
The EPF Subscriber is entitled to a pension amount under EPS only after the completion of a minimum of 10 years of service and attaining the age of 50 or 58 years. The pension amount is available;e to the employee till he is alive and in the event of his demise, this pension amount is given to the nominee selected by them.
Some Benefits of Linking UAN With Aadhaar
There are some benefits which you can get under EPF by linking UAN with Aadhaar like:
- Submit your PF claims directly to EPFO without your employer’s interference
- Receive monthly updates on your registered mobile number
- Download e-passbook anytime when you want
- You can link multiple EPF accounts
- Edit and update your personal details anytime