Comprehensive Guide to the Employees' Provident Fund (EPF)

On February 16, 2025 By newsroom Topic: India Money Advice

The Employees' Provident Fund (EPF) is a social security scheme for salaried employees in India, managed by the Employees' Provident Fund Organisation (EPFO). It helps individuals save for retirement by ensuring financial stability.

Why EPF is Important

Retirement Planning: Provides a financial cushion for post-retirement life.
Social Security: Covers contingencies like sickness, injury, and unemployment.
Tax Benefits: Contributions and earned interest are exempt under Section 80C.

Key Components of EPFO Schemes

Employees' Provident Fund (EPF):
Savings account with contributions from both employer and employee (12% of basic salary).
Employees' Pension Scheme (EPS):
Provides a monthly pension after retirement.
Employees' Deposit Linked Insurance Scheme (EDLI):
Offers life insurance coverage.

How EPF Works

Contributions:
Employee: 12% of basic salary + Dearness Allowance (DA).
Employer: 12%, split into EPF (3.67%), EPS (8.33%), and EDLI (0.5%).
Interest Rate:
Current rate: 8.1% (FY 2021-22), compounded annually.
Tax Benefits:
Contributions, interest, and withdrawals after 5 years are tax-exempt.

Benefits of EPF

Guaranteed Returns: Backed by the government.
Emergency Savings: Partial withdrawals allowed for specific needs like medical emergencies, marriage, or education.
Portability: Unified Account Number (UAN) links multiple PF accounts, making transfers easy.
Retirement Corpus: Helps employees build a substantial fund over their working years.

Starting an EPF Account

Eligibility:
Mandatory for employees in establishments with 20+ employees.
Basic salary + DA <15,000/month is automatically eligible.
Employees earning above15,000 can voluntarily opt in.
Registration:
Employer registers with EPFO and provides employees with a UAN (Universal Account Number).
UAN remains constant across employers.

Accessing EPF Services Online

UAN Member Portal:
Log in at EPFO Portal.
Services include checking balance, downloading passbooks, and submitting claims.
Documents Required:
Identity Proof: PAN, Aadhaar, Voter ID, Passport.
Address Proof: Utility bills, rental agreement.
Bank Details: Account number and IFSC code.

EPF Withdrawal

Full Withdrawal:
Allowed after retirement or unemployment for more than 2 months.
Tax-free if service exceeds 5 years.
Partial Withdrawal:
For specific purposes like medical treatment, education, or home purchase.
Procedure:
Online: Log in to the UAN portal, select Claim (Form-19, 31, 10C & 10D), and submit.
Offline: Fill and submit the Composite Claim Form to the jurisdictional EPFO office.

EPF Transfer

When changing jobs, you can transfer your EPF balance to a new account.

Eligibility:
Active UAN linked with Aadhaar and bank account.
Steps:
Log in to the UAN portal.
Select One Member – One EPF Account under Online Services.
Verify details and submit the request.

How to Check EPF Balance

SMS Service:
Send “EPFOHO UAN” to 7738299899 from your registered number.
Missed Call:
Give a missed call to 011-22901406 from your registered number.
EPFO Portal:
Log in with UAN to view the passbook.
Umang App:
Access EPF passbook, raise claims, and track claim status.

Opting Out of EPF

Eligibility:
Employees earning more than15,000/month can opt out during the initial employment stage.
Procedure:
Fill out Form 11 and submit it to the employer.
Why Avoid Opting Out:
Lose employer contribution.
Miss tax benefits and higher interest rates.

EPS (Employees' Pension Scheme)

Purpose: Provides a monthly pension post-retirement.
Contribution: 8.33% of the employer's share goes to EPS.
Pension Eligibility:
Minimum 10 years of service.
Pension starts at age 58 or can be availed early at 50 with reduced benefits.

EPF and Taxes

Tax Exemptions:
Contributions, interest earned, and withdrawals after 5 years are tax-free.
TDS on Early Withdrawal:
10% TDS if PAN is submitted.
34.608% if PAN is not submitted.

How to Claim EPF in Case of Death

Nominee Claim:
Submit the death certificate, nominee details, and claim form via the EPFO portal.
EDLI Benefits:
Provides a lump sum amount to the nominee, up to7 lakh.

Common FAQs

How to find the nearest EPFO office?
Visit the EPFO website and use the "Locate an EPFO Office" tool.
When can I withdraw my EPF?
After retirement, unemployment, or specific purposes like medical treatment or home purchase.
Is it mandatory for all employers to register with EPFO?
Yes, for establishments with 20+ employees.
How is interest calculated on EPF?
Compounded annually on the monthly closing balance.
How to track EPF claim status?
Log in to the UAN portal or use the Umang app to track claim progress.