Every working individual knows about the CTC (cost to the company) as salary, and some people don’t worry about various deductions after seeing them in CTC. Still, some become skeptical after seeing that a chunk of the salary will be deducted as Provident Fund(PF) or EPF (Employees Provident Fund). The primary goal of all financial planning is to achieve a financially secured future. This goal may include getting good interest on savings, a pension after retirement, and other such goals.

The Government of India, to ensure this security, has taken some measures such as Employee Provident Fund (EPF)

Employees’ Provident Fund (PF) is a statutory benefit available to all Indian employees. The Employees’ Provident Fund (EPF) is administered and managed by the Central Board of Trustees (CBT), founded by the Central Government, and consists of members from the government, employers, and employees. The Employees’ Provident Fund Organization (EPFO) supports board activities.

1. What is Concept of Provident Fund?

The Employees’ Provident Fund (EPF) is administered and managed by the Central Board of Trustees (CBT), founded by the Central Government, and consists of members from the government, employers, and employees. The Employees’ Provident Fund Organization (EPFO) supports board activities. 

Employers must contribute on behalf of their employees, and employees must donate a portion of their salaries to the provident fund. The money in the fund is retained and administered by the government, with retirees or their surviving families eventually withdrawing it.

2. Eligibility of an employee for Provident Fund.

Any employee earning up to Rs 15,000 per month is eligible. However, most Indian companies include it as part of every employee’s salary package.

Any person employed through a contractor or engaged as an apprentice but not being an apprentice under Apprentices Act, 1961.

Any person employed for wages for any work of an establishment either manual or otherwise.

3. Different Type of Provident Funds

  • The General type of PF is maintained by government bodies, such as local authorities, the railways, and other such local bodies.
  • The recognized provident fund is applicable to all the organisations with more than twenty employees. These organisations will provide a Universal Account Number (UAN); this helps in transfer of funds from one employer to another.
  • The public provident fund is a voluntary provident fund an employee can associate minimum Rs 50 to maximum Rs 1.5 lakhs and for a compulsory lock in period of 15 years.

4. Contribution to Provident Fund:

Both the employee and employer contribute equally to the Provident fund. Employer contributes 12% of basic salary and employee contributes 10 or 12% which totals to 24 percent. From this 24%, 3.7% goes to provident fund and remaining 8.33% towards pension fund.

5. How to check PF balance:

One can check the passbook by going to the EPFO portal and following the procedure mentioned on the EPFO website. The important thing is you should have a UAN, which should be linked to your Mobile number. Also, one can download the UMAANG app and view the passbook.

6. How to Withdraw Provident Fund?

An individual can withdraw provident funds partially or entirely. An employee can withdraw the provident fund only upon retirement or after unemployment for more than two months and if certain conditions are fulfilled.

An Individual can withdraw PF either by online process or offline process. The EPFO portal website has described both the process in detail.

Employee provident funds (EPFs) have long been the most popular way for salaried Indians to save for retirement.

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Company: Taxblock
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Taxblock, founded in 2019, is a fintech startup located in Pune, Maharashtra. We are enrolled as an E-Return Intermediary with Income Tax Department & have established an In-House team of Technology & Tax Experts to build a “Financial Compliance Ecosystem” for Individual & Corporate View Full Profile

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