Employees Provident Fund or EPF is a part of your salary which is deducted every month to promote retirement saving habits across the nation. The amount that is deducted for the fund is based on a fixed rate, and the contributors can also earn a certain amount of interest in their respective EPF balance. The prime focus of EPF India is to offer financial stability and security to seniors after their retirement. Right from the beginning of the employment, the employees are expected to contribute on a regular basis to their PF fund, and the employers on the other hand also contribute to the retirement fund of their respective employees.
Origin of EPF India!
EPF India was created by Employees Provident Fund Organization or EPFO of India, and it is the statutory body that is governed by Government under Labor and Employment Ministry. Under this scheme, an organization with over 20 employees with permanent payout needs to register under the EPFO. The primary scope of this scheme in India is to create funds through contributions from both employees and employers in a bid to provide them with financial support after their retirement. EPF is a fund, and the contributions are made on a monthly basis by both the employers and employees. This encourages the employees to save a portion of their salary every month and compel the employers to contribute equally to guarantee financial stability post-retirement. The investments or contributions made by the organization and employees across the world are invested by trust.
The EPF funds are tax exempted entrustment for the salaried class and the interest that you earn is also tax-free. However, the returns that you get are not tax exempted. The deduction made to your funds is under Section 80C.
Who is Eligible for EPFIndia?
It is mandatory for all employees across India to become the member of EPF if they are earning less than Rs 15000 per month. According to the guidelines of EPF India, employees with basic pay more than Rs 15000 per month at the time joining is not exempted from making PF contributions. However, there is a scheme for people who are earning a monthly income of Rs 15000. They can still make PD contribution under the scheme with prior approval from Assistant PF Commissioner and Employer.
The Amount for the PF Contribution
The employer makes a total contribution of 12% into the employee’s EPF account which is the combination of retaining allowance, dearness allowance, and basic salary. The employee also contributes an equal amount to their EPF account from their monthly salary. If in case the organization engages less than 20 employees or meets any other criteria set by the EPF India, the contribution rate of the employer and the employees are limited to 10% only. For all the private sector employees the contribution is mainly calculated by their basic salary.
How Much is Routed to Pension Scheme?
From the contribution of the employees 8.33% is expected to be routed to the Employee’s Pension Scheme which is actually calculated at Rs 15000 and hence the fund routed to the EPS is estimated to Rs 1250 for employees with the basic monthly salary of Rs 15000 or more. However, in case the monthly salary of the employee is less than 15000/- INR then the 8.33% of the basic pay would be routed to EPS and the remaining balance would be retained in EPF Scheme of the employees. At the time of superannuation, an employee is expected to receive the full share of employee plus the balance of the employer’s share that is reserved for their credit in EPF account.
The Total Breakup of PF Contribution
Let discuss the breakup @ of 12% based on the following subdivision:
- 1.1% of contribution towards the EPD Administration Charges.
- 3.6% of contribution towards the Employee’s Provident Fund.
- 0.01% contribution towards EDLI Administration Charges.
- 0.5% of contribution towards the Employee’s Deposit Linked Insurance.
- 8.33% of contribution towards Employee’s Pension Scheme.
The EPF Charges According to EPF India
- The contributions are summed to nearest rupee for each of the employees for the pension contribution, employee share and EDLI contribution.
- The employer share is the difference between the pension contribution and employee share payable as per statue.
- According to EPF India, the monthly payable amount that is eligible for EPF Admin charges are rounded to the nearest rupee, and a minimum amount of Rs 500 is payable.
- If the organization has no registered member in EPFO, the minimum administrative charges they need to pay is Rs 75/-.
- The payable amount per month under EDLI Administrative charges is calculated according to nearest rupee and minimum of Rs 200 is payable.
- If there is no member for a month, then the organization needs to make payment of Rs 25.
- If the organization is exempted from the PF scheme, there will be an inspection charge @ 0.18%, and a minimum of Rs 5 is payable against the admin charges.
- If the organization is exempted from the EDLI Scheme, then 0.005% is payable for inspection charges and a minimum of Rs 1 is payable as admin charges.
Where the Monthly EPF Contribution Goes Into?
Presently in India there are three schemes are running under the EPF India Act of 1952 and it is under this trust that your monthly contribution goes into. This includes:
- Employee’s Pension Scheme 1995.
- Employee’s Deposit Linked Insurance Scheme 1976.
- Employee’s Provident Fund Scheme 1952.
The EDLIS, EPF, and EPS are calculated based on the Basic Pay Monthly, Dearness Allowance and Retaining Allowance and every organization in India follow this rule of calculation. Some of the other private sector firms consider the basic pay monthly, the cash value of food allowance, retaining allowances and dearness allowance.
When To File for EPF with EPFO?
The employer of every establishment is responsible for deducting the modest contribution of employees from their monthly salary and combining it with employer share; they need to pay it to the EPFO every month. Paying within 15 days of close of every month is necessary.
How to Check Your EPF Balance in India?
Recently, EPFO has designated a unique UAN or Unique Account Number to all EPF account holder. So, before checking your balance with EPF India, it is necessary that you have your UAN handy with you. UAN is the unique code which all employees have when they enroll under EPF scheme, and it is constant regardless of the change of organization. There are five different ways to check the EPF Balance in India.
- Visit EPFO web portal and click on the “Our Services” tab and choose for employee’s option.
- Under the service menu, you need to click on “Member Passbook.”
- On the login page, you need to enter the UAN number and the set password.
- In a bid to enjoy this facility, you need to ensure that the UAN registered with full KYC details including Aadhar Number, Bank Account number and Pan Number.
- If you are done with the KYC part, you can check your EPF balance through SMS services. You need to send a message to 7738299899 from your registered number. You need to type EPFOHO UAN ENG and send it to 7738299899. The last three characters refer to your selected language. You can also get the details in your language as it is available Hindi, English, Gujarati, Bengali, Malayalam, Telugu, Tamil, Kannada, Marathi, and Punjabi.Miss Call Alert!
- Just like the SMS service, users are required to link their UAN to the KYC details to avail of this service.
- You need to give a missed call to the number 011-22901406 from the registered telephone number and know your EPF balance through SMS.
- This is the toll-free number, and hence you don’t have to pay any money for availing the Miss Call Alert Service.
- EPFO has also launched their official application which is available for download from Google Play Store. Users are required to download the m-sewa app of EPFO from Play Store.
- On the homepage of the application, you need to go to the “Member” page and then click on “Balance/Passbook.” There you need to enter the UAN number and registered phone number to check the recent balance on your EPF account.Umang Portal
- The last option is Umang App which was launched by the Government of India to provide the users with access to different government services under one roof. This application can also be used by EPF account holders to check their EPF balance.
- To register with the application, users are required to complete the one-time registration process using their mobile number.
- Once they complete the registration process, they can access all the governmental services through this application and also check their EPF balance online through this application for free.