Provident Fund is one of those terms which we come across often and it even feels scary for few of us to think of it as it reminds us that we are getting older. But it’s the best choices among many of the available investments an individual has for their retirement years.
So as the saying goes “All days are not the same. Save for a rainy day and those savings will work for us when we don’t work.”
Provident Fund (PF) is the preferred option among the salaried class that has been introduced by the Central Government of India. This guide will help us get a fair idea on this traditional concept of creating savings for our retirement years.
The Employee Provident Fund (EPF) is a retirement benefit given to all salaried employees and the fund is maintained by the Employees Provident Fund Organisation (EPFO) of India. So, any company with over 20 employees is expected as per the law to register with the EPFO.
The Employees Provident Fund Organization (EPFO) is under direct jurisdiction of government and is managed through the Ministry of Labor and Employment.
The best benefit of EPF is that it helps an individual to fabricate the savings and utilize them post retirement for life situations, like home improvements, medical treatments, Travel, and other life occasions. Though the contribution is made by the both Employer and Employee, payment is made only by the Employer who is registered as per the Provident Fund Act, 1952.
As per EPF scheme, withdrawals are not allowed until the employee is retired or has stopped working independently. In case an employee wants to withdraw the PF amount, a written declaration should be submitted for the same. Also, in case an employee switches jobs, the PF amount can be easily transferred by filling out the necessary form. The Employees Provident Fund Organization (EPFO) has made the process of transferring PF balance completely seamless. New joinee, has to merely furnish certain information to the new employer (in Form 11), who will then upload it on to the EPFO portal which automatically triggers the transfer process. This means after switching a job, an employee need not even initiate a transfer request online.
For employers contributing their portion to an employee’s EPF account, the monthly payments can be easily made by following the below mentioned steps:
Step 1 : On the Unified web portal of EPFO (use your ECR portal credentials), login and check to ensure the details mentioned, such as PF code, address, status etc. are correct.
Step 2. To upload ECR, select “Payment”
Step 3. From here, select the option “Wage month” and “Salary Disbursal Date”.
Step 4. The format of your ECR file can be viewed from the “ECR Help File” option shown on the screen.
Step 5. For the relevant “Wage Month”, select the ECR file that will be uploaded.
Step 6. Ensure you select the Rate of Contribution, which will be either 12% or 10% and upload the file.
Step 7. As per the pre-set conditions, if the uploaded file is validated successfully, you will receive the message, “File Validation Successful” and a TRRN will be generated. Else an error message will be displayed.
Step 8. Next, to generate the ECR summary sheet, select “Prepare Challan” and enter Admin/Inspection charges for a/c no. 2 & 22. Note: EDLI Contribution can be edited also selecting to generate the challan
Step 9. After editing, verify the amount on the challan and select “Finalize”. Make sure to keep a record of the acknowledgement number and receipt file of the challan in process.
Step 10. Now that your challan is ready, click on the “Pay” option.
Step 11. Select the online payment option and select “Continue” after selecting your Bank from the list of banks mentioned. You will be redirected to the payment gateway to complete the payment process.
There are two options for EPF withdrawal available to the employee – Physical application submission and Online application submission.
Physical application can be filled and submitted to the respective jurisdictional EPFO office.
The new claim form where PF is linked with Aadhaar doesn’t need the employer’s attestation whereas if Aadhaar is not linked, the form needs to be attested by the Employer.
All registered employees/members can use the online services for pension and PF withdrawals after they satisfy the below requirements.
In case of any concerns with reference to the above requirements you can contact H&R Block, India and our experts will be able to assist you.
To withdraw your funds from your EPF account, simply follow the mentioned steps:
EPFO deducts TDS in cases where withdrawal amount is more than Rs. 50,000/- or the Employee has not completed the total 5 years of continuous service.
The 5 years of service should be continuous employment with same or multiple organizations without any gap and with no withdrawals made by the employee between switching the companies.
However, there are some exceptions to the EPF withdrawal rule as below:
Employee’s Provident Fund enjoys many tax benefits. The investment in EPF depending on the tax slab can provide tax benefit up to 30%. An employee’s contribution to EPF is eligible for tax deduction under section 80C. Respectively, the employer’s contribution to EPF subject to 12% of employee’s basic salary + DA along with Interest is tax exempt. In case any member makes withdrawal of EPF balance before 5 years, all the tax savings would become Null and Void and he/she must return the exemptions claimed u/s 80C.
It can happen that an employee will switch jobs several times over the course of his/her career lifespan. The procedure to transfer your EPF account to the present employer can now be easily down by following these simple steps:
Kindly click on the relevant banks to know the bank specific procedure of making EPF payment.
Note: Recently ‘Umang’ app was introduced by the IT and Electronics Ministry that has different services in it like Gas booking, Aadhar, NPS along with checking your EPF details.
Anyone who is part of any covered establishment (where 20 or more persons are employed) on or after 16/11/1995 where the income is less than Rs. 6500/- per month as per appointment date.
Salary in this context would be BASIC + DEARNESS ALLOWANCE(DA).
All companies or organizations that deduct the contribution towards PF from their employees must deposit the amount with their Trust or EPFO. This would be continued as long as the employee is employed at the organization.
All members are supposed to nominate an individual for their EPF. Nominees can be family members (spouse or children). There can also be multiple nominees where the percentage share has to be mentioned by the member. In case the member doesn’t have any family members then they can nominate as per his/her choice. Also, where there is no nomination made, the benefit will be paid to dependant parents.
The amount would be credited to the members bank account directly.
As the famous saying goes, “The BODY achieves what the MIND believes”. So, design your tax savings and let them work for you when/if you need them during the different phases of life. To ensure you avail of the best tax saving options suited to meet your needs perfectly, take the aid of the tax experts at H&R Block India.