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Employee Provident Fund (EPF) – Contribution, Benefits & How to Withdraw PF Online?

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What is an employee provident fund?

The EPF refers to the Employee Provident Fund. It is a standard savings scheme developed by the Employees’ Provident Fund Organisation (EPFO) and overseen by the Government of India. The savings scheme aims to encourage the salaried community to save money to create a substantial retirement corpus. The fund thus earns a predetermined rate of interest set by the Employees Provident Fund Organisation.

A provident fund is a pension plan in which 12% of an employee’s basic wage is withheld annually to contribute to the individual’s potential savings. This deduction is funded in part by the contractor and the employee.

Advantages of EPF India scheme

The programme provides a variety of incentives to employee members. It instils in them a sense of financial stability and comfort. Some of the EPF benefits include:

1. Capital Appreciation

The PF online scheme pays a predetermined interest rate on deposits kept with EPF India. Furthermore, extending compensation at maturity ensures that workers’ funds accumulate and accelerate capital appreciation.

2. Corpus for Retirement

The Employee Pension Scheme receives about 8.33% of an employer’s contribution. In the long term, such a corpus would provide employees with a sense of financial stability and freedom when they retire.

3. Emergency Corpus

Uncertainty is an everyday fact of life. As a result, being financially prepared to tackle such unanticipated situations is the best thing a person can do to deal with adversity. When a person needs emergency funding, an EPF fund serves as an emergency corpus.

4. Tax Benefits

The Employee Provident Fund programme provides tax benefits to members, allowing them to raise more money. In the long run, it increases savings and an individual’s buying power.

5. Simple Premature Withdrawal Process

EPF India members are eligible for partial withdrawal benefits. Individuals can remove funds from their PF account to fulfil personal needs such as further education, building a home, wedding costs, or medical care.

It aids in long-term financial savings. Thus, there is no need to make a single, significant investment for the after-retirement period. Deductions are made from the employee’s payroll every month, saving a significant sum of money over time. It will provide financial assistance to an employee in the event of an emergency. It aids in the savings of money for retirement and the maintenance of a comfortable lifestyle.

Eligibility to Become an EPF India Member

Employees from both the public and private sectors are eligible to join the Employee Provident Fund, which ensures that every working individual may apply to become a member of EPF India. When an employee becomes a participating member of the program, they become eligible for various benefits such as Employees Provident Fund benefits, health benefits, and pension benefits.

Types of EPF Forms

Employees’ Provident Fund Organisation offers its members rewards through EPF, EPS, and EDLI. A member must interact with EPFO using various forms for specific purposes. The following is a list of EPF forms and their applications:

  1. Type 31 - EPF withdrawal
  2. Form 14 - Buying LIC policy
  3. Form 10D - For claiming monthly pension
  4. Form 10C - For claiming withdrawal benefits/scheme certificate of EPS
  5. Form 13 - EPF account transfer
  6. Form 19 - Final employee provident fund settlement
  7. Form 20 - EPF final settlement in case of employee death
  8. Form 2 - Declaration and nominating form for EPF and EPS
  9. Form 5(IF) - Claim as per the EDLI scheme
  10. Form 15G - To avoid paying TDS on EPF interest profits
  11. Form 5 - New employee registration for EPF and EPS
  12. Form 11 - EPF auto switch

Types of PF

There are four types of employee provident funds:

1. Statutory Provident Fund:

It was established under the Provident Funds Act of 1925 and is managed by government and semi-government organisations, local governments, railways, universities, and educational institutions. Tax is not levied on the employer’s donation to the provident fund, but it is levied on the employee’s contribution. The interest credited to the provident fund as well as the retirement contribution is tax-free.

2. Recognised Provident Fund

A registered provident fund is any establishment that the Commissioner has approved of Income Tax. An organisation with 20 or more members must contribute funds to be recognised. When an employer’s contribution to a provident fund reaches 12%, it is taxable. The employee’s donation to the provident fund is taxed.

3. Unrecognised Provident Fund

The Commissioner does not approve of an unrecognised provident fund of Income Tax.

4. Public Provident Fund

The Central government has created a public provident fund in which any participant, whether salaried or self-employed, can participate by opening a PF account at the State Bank of India or other nationalised banks.

How to Withdraw from PF?

One can withdraw from PF through both online and offline modes. For the offline mode, to get your EPF number, submit the EPF withdrawal form along with your Aadhaar and PAN details. You need to meet specific requirements to withdraw from EPF.

What is EPF Contribution?

Employee Provident Fund, or EPF, is a pool of assets contributed monthly by both the contractor and the employee. The employee and the employer each pay 12% of the employee's salary (basic + dearness allowance) to the EPF. The EPFO establishes a fixed rate of interest for these donations. It is known as PF contribution or EPF contribution.

E.g., if the basic monthly wage is Rs. 15,000, the employee contribution is 12% of 15000 or Rs. 1800. This figure represents the employee's contribution.

How to Withdraw PF Online with UAN?

The EPFO has recently introduced an online withdrawal service, which has made the whole procedure more convenient and less time-consuming. You need to fulfil some conditions before applying for withdrawal. To know how to withdraw PF amount, you must ensure the following things are done:

  • The UAN (Universal Account Code) has been activated, and the telephone number used to access the UAN is operational.
  • The UAN is connected to your KYC, which includes Aadhaar, PAN, and bank data, as well as the IFSC code.

After the conditions are met, you can proceed with the withdrawal with the following steps:

  • Navigate to the UAN portal.
  • Log in with your UAN and password, and then complete the CAPTCHA.
  • Then, select the ‘Manage' tab and select KYC to see if your KYC data, such as Aadhaar, PAN, and bank details, are accurate and checked.
  • After you have checked your KYC details, navigate to the tab ‘Online Services' and select the option ‘Claim (Form-31, 19 & 10C)’ from the drop-down menu.
  • The ‘Claim’ screen will show the member’s information, KYC information, and other service information. Enter the last four digits of your bank account and press the ‘Verify’ button.
  • Click ‘Yes’ to sign the undertaking certificate and then continue.
  • Click on the ‘Proceed for Online Claim’ button.
  • Under the tab ‘I Want To Apply For’ on the application form, pick the claim you need, i.e., complete EPF settlement, EPF portion withdrawal (loan/advance), or pension withdrawal.
  • Then, to remove your funds, click ‘PF Advance (Form 31)’. Include the intent of accessing the advance, the amount needed, and the employee’s address.
  • Send your application by clicking on the certificate. You will be required to upload scanned documents for the reason for which you filled out the form.

Conclusion

The Employees' Provident Fund Organisation (EPFO) manages the Employees' Provident Fund (EPF) retirement benefit system (EPFO). Every month, both the employee and the employer contribute to the EPF plan in equal quantities of 12% of the base pay and dearness allowance. The Employee Pension Scheme receives 8.33% of the employer's contribution.

The PF account is one of the essential financial security tools available to working people. As a result, it is critical to monitor the PF account through monthly balance checks. It will also tell you whether or not your company deposits money into your PF account regularly.

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FAQs

Q. Can I withdraw my PF without resigning from my current employment?

Ans. There might be various situations that compel you to withdraw your EPF funds immediately from the Employee Provident Fund Office. Yes, you can withdraw your PF without resigning.

Q. How do I check my EPF balance?

Ans. You can check EPF balance both through online and offline modes. Visit the official website of EPFO. There, proceed through Our services > For employees > Member passbook > Enter UAN, password, and CAPTCHA details.

Q. Is it good to invest in an EPF?

Ans. An advantage of investing in EPF is the low risk associated with the scheme. The sum in the EPF account receives an excellent rate of return, which is significantly greater than that of a conventional savings bank account.