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EPF Benefits and Steps for Payment Withdrawal from EPF

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Benefits from EPF and Steps for Payment Withdrawal from EPF
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EPF : Whenever most of us want to invest money, we primarily think to achieve three financial goals – create more money, have a regular income through pension when we retire, and secure our family’s future.

And while we buy different financial products to meet each of these goals, there is one more product that helps to achieve all three goals. 

The majority of us not only know about it but also invest in it because it is a part of our salary. The product is Employee Provident Fund or EPF.

When you are working in a corporate sector in which 20 or more employees are involved then it is a liability of the employer to provide benefits through it. 

It is the right of every employee who is working in corporate sectors 

In this article,I will try to define the simple meaning of EPF for you .I also look at how it works, the interest rate you can earn through it, and withdrawal rules of its.

What is EPF? 

EPF

Employees’ Provident Fund (EPF) is a retirement benefit scheme maintained by the Employees’ Provident Fund Organization (EPFO). 

The employee and the employer contribute to the EPF scheme on a monthly basis in equal proportions of 12% of the basic salary and dearness allowance. 

Out of the employer’s contribution, 8.33% is directed towards the Employee Pension Scheme.

EPF: The Basic Construct

The EPF is not only one scheme. It actually consists of three different schemes with three different objectives. 

  • The first part is where your retirement benefits are collected. This is basically the wealth generation part of the scheme.
  • The second part is the employee pension scheme (EPS). The purpose of EPS is to generate pension for employees after the age of 58 years. 
  • The third and final part is the Employee Deposit Linked Insurance Scheme or EDLI, which is a life insurance cover. 

The good thing is that you don’t need to register separately for all these benefits. When you register for EPF, you are automatically registered for EPS and EDLI as well.

EPF is the main scheme under the Employees’ Provident Funds and Miscellaneous Act, 1952. The employee and employer each contribute 12% of the employee’s basic salary and dearness allowance towards it. 

Currently, the rate of interest on EPF deposits is 8.50% p.a. (2021 – 2022)

Eligibility Criteria 

  • According to the rule of Employees Provident Fund, any employee whose salary is more than 15k per month at the joining period, who is not eligible  and called a non – eligible employee. 
  • Only those who are earning less than 15k salary per month are eligible to become members of EPF. 
  • The whole of India (except the states of Jammu and Kashmir) can benefit from the provisions in the EPF scheme. 
  • As per law, it is mandatory for organisations to register for the Employees Provident Fund scheme if they have more than 20 employees working for them.

Point to be noted (Did You Know) 

  • With the permission of the Assistant PF Commissioner, an employee earning 15k above the salary will become a member of EPF, if both he and his employee agree. 
  • With effect from June 1st, 2021, it is mandatory to link your Aadhaar with your EPF Account. If not, the employer’s contribution will not get credited to your account. Click here to know how to link Aadhaar with your EPF account.

Key Points about EPF Contribution:

  • 12% Employer’s contribution includes 3.67% EPF and 8.33% EPS
  • 10% EPF share is valid for the organizations where there are 20 or less than 20 employees /organizations with losses incurred more than or equal to the net worth (at the end of financial year) /organizations declared sick by the Board for Industrial and Financial Reconstruction
  • Total contribution made by the employer is distributed as 8.33% towards Employees’ Pension Scheme and 3.67% towards Employees’ Provident Fund.
  • The contribution made by the employee goes totally towards the provident fund of the employee.
  • Apart from the above-made contributions, an additional 0.5% towards EDLI has to be paid by the employer.
  • Certain administration costs towards EDLI and EPF standing at the rate of 1.1% and 0.01% respectively also have to be incurred by the employer.
  • This means that the employer has to contribute a total of 13.61% of the salary towards this scheme. 

Employees Provident Funds Benefits

Benefits of EPF

EPF scheme is among one of the largest and biggest saving schemes available to Indian employees. The key benefits of the scheme are mentioned below:

  • It helps in saving money for the long term. 
  • There is no requirement to make a single, lump-sum investment. Deductions are made on a monthly basis from the employee’s salary and it helps in saving a huge amount of money over a long period.
  • It can help an employee financially during an emergency.
  • It helps in saving money at the time of retirement and helps an individual maintain a good lifestyle.
  • With the help of the Universal Account Number (UAN), employees can easily get access to their PF account via the EPF member portal. They can transfer their accounts whenever they make a shift in their current jobs.
  • In case of death of the employee, the collected amount along with the interest is given to the employee’s nominee thus helping the family tide through difficult times.

Steps to EPF withdrawal and claim online 

Withdraw from EPF
  • Sign in to the UAN Member Portal with your UAN id and Password.
  • From the top menu bar, click on the ‘Online Services’ tab and select ‘Claim (Form-31, 19 & 10C)’ from the drop-down menu.
  • Member Details will be displayed on the screen. Enter the last 4 digits of your bank account and click on ‘Verify‘
  • Click on ‘Yes’ to sign the certificate of undertaking and proceed further
  • Now click on the ‘Proceed for Online Claim’ option
  • Select ‘PF Advance (Form 31)’ to withdraw your funds online
  • A new section of the form will open, wherein you have to select the ‘Purpose for which advance is required’, the amount required and the employee’s address
  • It is worth noting that all options for which the employee is not eligible for withdrawal will be mentioned in red.
  • Tick on the certification and submit your application
  • You may have to submit scanned documents depending on the purpose for which you have filled the form
  • Your employer has to approve your withdrawal request after which the money will be withdrawn from your EPF account and deposited in the bank account mentioned at the time of filling the withdrawal form.
  • SMS notification will be sent to your mobile number registered with EPFO. Once the claim is processed, the amount will be transferred to your bank account.
  • Although no formal time limit has been provided by the EPFO, the money usually gets credited within 15-20 days. 

FAQs on EPF

EPF
EPF
  1. Can I contribute a higher amount to my EPF account? 

Yes, you can contribute a higher amount to your EPF account by the help of the Voluntary   Provident Fund (VPF)

  1. After one stops working, can they still contribute to EPF?

    No, According to the rules of EPFO,  when a person stops working then he/she cannot

contribute to it. 

           

  1. Can an employer reduce the employer’s share of EPF contribution?

No, the employers cannot reduce their share of EPF contribution. Such a reduction is considered a criminal offence.

  1. How is EPF contribution calculated if the employee is paid on a daily or partly basis?

The contribution amount is calculated by the salary that is paid in a calendar month.

  1. Can an employee join EPF directly?

No, an employee cannot join EPF directly. Under EPF & MF Act ,1952 .He/she must work for an organisation.

  1. Can an apprentice become a member of the EPF?

No, an apprentice cannot become a member of the EPF, but he/she must enroll for it as soon as he/she becomes an  employee. 

  1. Is there any age restriction for an employee to become a member of EPF?

No, there is no age restriction for an employee to become a member of the Provident Fund. 

However, if the employee has already crossed the age of 58 years, he/she cannot become a member of the Pension Fund. 

  1. Is PAN mandatory for EPF withdrawal?

Yes, PAN is mandatory for EPF withdrawal/settlement in order to keep away from tax deductions. If you fail to submit a PAN, the tax deducted at source (TDS) can be as high as 30%.

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