When a person works for a company then he has some rights or some benefits which he can acquire after retirement. It is the responsibility of the company that they give their employees beneficial schemes which can be proved helpful in the future. If there are no such kinds of schemes how an employee fully devotes their talent and there work to the organization. Employees provident fund is also one of the schemes which provide some benefits to the employees in both public and private organisation after retirement. This scheme is directed towards constructing a significant retirement canon. There are many other schemes which are regulated by the government to help employees and employers.
Employees Provident Fund, 1952 is introduced by EPFO and popular saving schemes for employees. It is authorized by three different Acts that are Employees Provident Fund Scheme Act 1952, The Employees Deposit Linked Insurance Scheme Act 1976 and The Employees Pension Scheme Act 1995. In this, all employees and employees contributed on a monthly basis. But employees whose salary is more than 15000 a month at the time of joining is not eligible and considered as a non-eligible employee. They contribute 12% each of the salary which includes basic and dearness fee. It is mandatory for all the companies to provide Employees Provident Fund to there employees and employers. They received a fixed amount of interest from EPFO. After completion of this collection of the fund, it can be withdrawn by the employee. It can be withdrawn partially or completely by the employee. It is tax-free and can be withdrawn by not paying any such amount. People can apply to satisfy themselves through several online assistance of EPF India by scrutinizing the official portal The EPF online portal is a user-friendly setting that assures to keep the flow of services transparent, profitable.
Employees Provident Fund, 1952 was promulgated by the parliament of India under institution on 3 March 1952. This scheme is framed by the central government on 4 April 1952. In exercise of the powers granted under Section 6A of Employees Provident Fund Act, 1952 they made another Act which is Employees Family Pension Scheme,1972. After this to exercise the powers granted under Section 6C of Employees Provident Fund Act they made Employees Deposit Linked Insurance Scheme, 1976.
Every employee can apply to Employee’s provident fund. It can be applied by both public as well as private-sector employees. Any institution which has at least 20 employees is considered responsible to increase the benefits of this scheme to those employees.
When an employee becomes an effective member of this scheme, they can avail of different advantages that are pension benefits, insurance benefits, Employees provident fund benefits etc.
Rate of Interest Offered by the Employees Provident Fund Scheme
In the financial year 2019-2020, the rate of interest offered is 8.55%. The accrued amount is tax-free. Such interest is paid only on the functional PF accounts of employees who are still to retire. But the interest thus accrued on such accounts is taxed as per an EPF employee member’s tax lump.
But the share contributed to the Employee’s Pension Scheme does not accrue interest. Regardless, members are permitted to receive a pension out of this collected sum after they turn to 58 years old.
How Interest on EPF is Evaluated
The interest which is added to the EPF account is calculated a on monthly basis and is calculated by dividing the rate per annum by 12. It helps in providing the actual amount of interest provided to the employee in one month.
Advantages of Employee Provident Fund Scheme
Corpus for Retirement
About 8.33% of the employer’s contribution is directed towards an employee pension scheme. Till retirement, it collects the extent of the amount which senses as financial security and freedom after retirement.
The PF online scheme gives a pre-fixed interest on the deposit held with the EPF India. Additionally, payments expanded at maturity further ensure growth in the employees’ funds and stimulate capital preference.
Under Section 80C of the Indian Income Tax Act, employees are given exemption from paying tax on EPF. Such an exception is given up to Rs. 1.5 lakh. Because of exemption in tax paging employees can earn more money.
No one knows anything can happen at any time. So Employees provident Fund provides some sense of security. An individual can withdraw it when he requires it at an emergency.
What is an EPF Form?
It is necessary for EPF employee member’s accounts. Be it registration, PF transfer, withdrawal or availing loans; an EPF form is mandatory for completing such activities.
Under What Circumstances EPF can be Withdrawn?
Employees can withdraw there EPF amount partially or completely in some circumstances.
Here are some conditions under which employees can withdraw EPF completely:-
- If the employee is unemployed for more than two months.
- On retirement.
- When an employee changes there profession to another profession.
Here are some conditions under which employees can withdraw EPF partially:-
- For education.
- When an individual plans for purchasing land.
- For a wedding.
- For paying the home loan.
- For renovating a housing property.
- Process for withdrawal EPF
EPF India members can withdraw EPF by submitting a withdrawal application either offline or through EPF online portal.
For offline submission –
- Employees need to fill up a ‘new composite claim form’ or a ‘composite claim form” and submit the same to the EPFO office under their jurisdiction.
- A composite claim form needs to be verified by their employer.
For online submission –
- Employees must have an active Universal Account Number (UAN).
- The mobile number used to generate the UAN should be active as well.
- UAN should be linked with there Aadhaar. They would also need the PAN and respective bank details with its IFSC code.
- After assuring all the requirements are in place, they need to login to the UAN online portal.
- Individuals need to analyse their KYC details and then continue according to instructions.
Being a retirement-oriented scheme, the primary aim of the Employee Provident Fund is to allow employees to become financially prepared for their retired life. This being said, employees should try to prevent premature withdrawal if it is not necessary.
EPF passbook contains all transactions incurred by the employees and employers. It contains other important details such as establishment ID and name, member ID and name, office name, employee’s share, employer’s share, EPS contribution, etc.
Any member can check there Employees Provident Fund account online, by sending an SMS or through a missed call on the provided number of EPF.
From the above content, my main motive is to clear the rights of the employees and employers working in an organization and to make them aware about there rights. I want them to take their possible steps to make there future secure. And if anyone violates there right so they can take appropriate steps to save there right. Employees Provident Fund Scheme gives a chance to the employees to make there future secure. Its main motive is to take care of there workers after there retirement and a sense of security of there family after his death. It provides insurance to employees and employers. It is acceptable to every organization which is immersed in any one or more organization defined in schedule 1 of the Act or any action instructed by the central government in the official Gazette and assigning 20 or more employees.
Q1. What is the minimum percentage of employee’s contributions from the basic salary?
Both employees and employers have to contribute 12% of the basic salary and dearness allowances per month. At last, the total contribution of PF is 24% per month.
Q2. What is the rule of the Employees Provident Fund Scheme?
Employees whose salary is more than 15000 a month at the time of joining is not eligible and considered as a non-eligible employee.
Q3. Who is exempted under the Employees Provident Fund Act?
Under Section 17 of the EPF Act, organisations are exempted from depositing provident find PC there employees and employers.
Q4. What is the minimum employee salary for EPF?
It is compulsory to open an account by the employer and the minimum salary should be 15000. It is compulsory for the organizations that have 20 or more employees should register for EPF and the organisations that have less than 20 can voluntarily register it.
Q5. Is EPF is mandatory for all companies?
yes, it is compulsory for all companies.
Q6. Why the provident Fund is deducted for salary?
Employees need to know that payment to there EPF accounts can be claimed as tax break in case their salary falls in the taxable bracket.
Q7. Can an employee contribute more than 12%?
If the employer’s contribution is the part of the CTC of the employee, then both employee and employer can continue to contribute 12%.