What is Employees Provident Fund?
The Employees’ Provident Fund (EPF) is a scheme governed by the Employees’ Provident Fund Organization. EPF basically aims to provide social security and offers retirement benefits.
The current article covers the basics of EPF; eligibility criteria of EPF; EPF contribution and distribution thereof; EPF registration procedure for employer and relevant FAQs.
Basics of Employees’ Provident Fund (EPF)-
Broadly speaking, EPF comprises of the following three different schemes-
1. EPF Scheme, 1952 (EPF)- This is an ‘Employees’ Provident Fund Scheme’ which is a retirement benefit scheme.
2. Pension Scheme, 1995 (EPS)- This is an ‘Employee Pension Scheme’ which aims to generate pension after the specific age.
3. Insurance Scheme, 1976 (EDLI)- This is an ‘Employee Deposit Linked Insurance Scheme’ which deals with life insurance cover.
Who is the Eligibility criteria for Employee provident Fund (EPF)?
The eligibility criteria for joining the EPF scheme are-
1. An organization having 20 or more workers/ employees are mandatorily required to register for EPF Scheme and give EPF benefit to the employees.
2. However, an organization with less than 20 workers/ employees can voluntarily obtain EPF registration.
3. A salaried employee earning less than INR 15,000 is also mandatorily required to obtain EPF registration.
EPF Contribution and its distribution thereof-
In general, the employer’s contribution is 12% of basic salary, dearness allowance and retaining allowance. Accordingly, an equal contribution (i.e., 12%) is paid by the employee.
However, the EPF contribution rate will be 10% for both employee and employer for the following organizations-
- An organization employing less than 20 employees; or
- Organization incurring loss more than or equal to its net worth; or
- The organization who is declared sick by the Board for Industrial and Financial Reconstruction; or
- Guar, coir, gum, beedi, brick and jute industries; or
- Organization working under the wage limit of INR 6,500.
Notably, a total contribution made by the employer will be distributed in the following manner-
1. 33% towards Employees’ Pension Scheme (EPS); and
2. 67% toward EPF.
Following additional contribution and administration cost is to be incurred by the employer, other than above 12%/ 10% contribution-
- 50% towards Employee Deposit Linked Insurance Scheme (EDLI),
- 10% towards administration cost of EDLI, and
- 01% toward administration cost of EPF.
EPF registration procedure for employer-
For obtaining EPF registration, an employer needs to follow the below simple steps-
STEP 1 – Visit site https://www.epfindia.gov.in/site_en/index.php,
STEP 2 – Click the ‘Establishment Registration’ icon available on the homepage,
STEP 3 – Shram Suvidha login page will appear. Click ‘Sign Up’ if the User id and Password is not available or if available provide the same.
STEP 4 – Navigate the path Registration > Registration Under EPF-ESI,
STEP 5 – Fill up the details accurately and submit the application form.
Employee Provident Fund Organization (EPFO)-
EPFO is a statutory body formed by the Government of India. EPFO manages and operates all three schemes i.e., EPF; EPS and EDLI. Sample list of services offered by EPFO is-
1. Online registration,
2. Pay for EPF subscription online,
3. Generate the EPF challan online,
4. Transfer claims online,
5. Address your grievances etc.
FAQs-
Q.1 What is EPF Scheme?
EPF is a retirement benefit scheme, wherein, employee and employer contribute in equal proportion on monthly basis.
Q.2 Who is eligible to join the EPF scheme?
A salaried employee earning less than INR 15,000 and an organization having 20 or more employee is mandatorily required to obtain registration under the EPF scheme. However, others can also register under the EPF scheme on a voluntary basis.
Q.3 What do you mean by EPFO?
EPFO is an abbreviation of Employees’ Provident Fund Organization. It is a statutory body that promotes employees to save funds for the retirement.
Q.4 Is EPF taxable?
From the Financial Year 2021-2022, EPF is taxable in the following manner-
- Amount of interest to the extent it relates to Provident Fund contribution exceeding INR 2.50 Lakhs when there is both employee and employer contribution.
- Amount of interest to the extent it relates to Provident Fund contribution exceeding INR 5 Lakhs when there is only employee’s contribution.
Q.5 What is the age limit for EPF contribution?
Contribution towards EPF can be done till the age of 58 years. However, the upper age limit for pension is 60 years.
Q.6 What is the difference between EPF 1952 and 1995?
Employees’ Provident Fund Scheme 1952 and Employees’ Pension Scheme 1995 are two different types of retirement savings scheme. The first one is a retirement scheme and the second one is a pension scheme.
Q.7 What is the maximum pension in EPS?
Average salary * Pensionable service/ 70 is the formula for calculating pension amount. Accordingly, the maximum average salary (i.e., Basic + DA) for EPS is considered as INR 15,000 and Maximum pensionable service is considered as 35 years.
Thus, maximum pension one can earn under EPS is = (15,000 * 35)/70 = INR 7,500 per month.
Q.8 What is minimum pension of EPS?
The minimum pension amount receivable under EPS is INR 3,000, earlier the amount was INR 1,000.
Q.9 How can I get EPF passbook?
For viewing the EPF passbook, one needs to follow below steps-
STEP 1 – Visit https://www.epfindia.gov.in/site_en/index.php.
STEP 2 – Navigate path Services > For Employees.
STEP 3 – Click ‘Member Passbook’ and provide Login credentials.
STEP 4 – Click ‘View Passbook’.
Q.10 How do I register for EPFO passbook?
In order to avail e-passbook facility one needs to obtain registration under EPFO unified member portal (i.e., https://unifiedportal-mem.epfindia.gov.in/memberinterface/).
Q.11 What is EPF passbook balance?
EPF passbook balance is total contributions made by the employee and the employer in EPF and EPS accounts.
Q.12 What is EPF benefits?
EPF is a retirement benefit scheme which mainly inbuilt habit of saving money to build up a substantial retirement corpus.
Q.13 What is difference between PF and EPF?
PF (Provident Fund) is a popular name for EPF (Employees Provident Fund). It is a saving scheme for employees of the organized sectors.
Q.14 What is a unified portal?
A unified portal is a secure website which is designed to deliver your customers (i.e., members, partners, clients etc.) all the information they need in order to be successful.
Q.15 How do I login into unified portal?
Follow below steps to login into unified portal-
STEP 1 – Visit https://unifiedportal-mem.epfindia.gov.in/memberinterface/.
STEP 2 – Enter UAN, Password and Captcha.
STEP 3 – Click ‘Sign in’.
Q.16 What is the meaning of Employees State Insurance Corporation?
Employees State Insurance Corporation is a government organizations that manages ESI (Employees State Insurance) Scheme.
Q.17 Who is eligible for Employees State Insurance Corporation?
ESI Scheme is applicable to all the factories/ other establishment as defined in the Act with 10 or more persons employed and the beneficiaries’ monthly wage not exceeding INR 21,000.
Q.18 How do I reactivate my inactive UAN?
Following steps are to be followed to activate UAN-
STEP 1 – Visit https://www.epfindia.gov.in/site_en/index.php.
STEP 2 – Navigate Services > For Employees.
STEP 3 – Click ‘Member UAN/ Online Service (OCS/OTCP).
STEP 4 – Click ‘Activate UAN’ and enter all the mandatory details.
STEP 5 – Click ‘Get Authorization Pin’. Please note, authorization Pin will be received on registered mobile number.
STEP 6 – Click ‘I Agree’ and enter OTP.
STEP 7 – Click ‘Validate OTP and Activate UAN’.
Q.19 What happens if UAN is not activated?
In case the UAN is not activate, the employee will have to be dependent on the employer for every small PF related works.
Q.20 What are the benefits of joining Employees Provident Fund?
Capital appreciation; corpus for retirement; emergency corpus; tax-savings; easy premature withdrawal are some of the benefits of joining EPF.
Q.21 Is PF compulsory for employees?
Employees having pay less than INR 15,000 per month is compulsory required to join EPF scheme.
Q.22 What are the employer’s obligations under Employees Provident Fund Act, 1952?
The obligations of the employers are-
- Filing of monthly return before the due date,
- Submission of Aadhaar card and other relevant details for the employees who became member of EPF scheme,
- Submissions of details of employees joining/ leaving the service.
Q.23 Who are covered under EPF Act?
Every establishment having 20 or more employees under EPF Act. Exceptionally, it also covers some establishment which are having less than 20 employees.
Author Bio
i have a proprietary company which employs only 6 employees based in Mumbai. Is it compulsory to register for EPF and ESIC. If not compulsory what benefits do I get if I register voluntarily?
Answer to Q No. 08 of minimum monthly pension of Rs. 3,000/- is not correct. This is the demand of EPS members which has not been till today accepted by authorities. Currently, Rs. 1,000/- pm continues to be the minimum pension for it’s members.
I have left the service& joined the other company. I could not transfer the PF accumuation from earlier company for 4 years. Now I find that PF office has not given me interest on PF accumulation from earlier employer for 1 year. Can I get interest on the same since there is continuation of service with other employer. PL advice along with any notification or legal cases , if any as PF office has denied the claim. regards. Rakesh
Recent update received with regard to tax applicable on interest earned on EPF contribution. Please guide us how to assess interest earned by an employee on his PF and under which head we need to capture at the time of tax computation as an employer.
Thank & Regards
Tanuja
as of my limited knowledge employee can view their interest earned by them in their passbook through login to their account. employer can see in the Annual generated slip of employee, previously its obtain physically from EPF office in assessment year.