The Employee Provident Fund (EPF) is an investment scheme introduced by the Employees Provident Fund Organization (EPFO) of India, which is an organ of the Labour and Employment Ministry of the Indian Government. It states that an organization that has 20 or more permanent employees must register with the EPFO.
Employee Provident is a retirement benefits scheme, and any salaried employee can join an EPF. The scheme creates a common provident fund where the employer and the employee each will have to contribute 12% of the basic salary.
The deposits are made every month. In this way, employees are stashing away a part of their salary each month, ensuring that they have enough savings after retirement. EPF is eligible for tax benefits under Section 80C. Both the interest gained and the returns are made tax free.
In this blog, we have provided every detail related to EPF for enhancing your knowledge about it. Fintra suggests before jumping to conclusions, you should do a bit of research, consider other options, weigh in all the factors, and then carefully make a decision.
The topics that will be highlighted are:
Employees need to turn into a functioning individual from the plan to profit benefits under this plan.
Employees of an association are straightforwardly qualified for profiting Provident Fund, and protection benefits such as annuity benefits are given from the day, they join the association.
Any association utilizing at least 20 laborers is at risk to give EPF advantages to the laborers. To learn more about the EPFs eligibility criteria, click here.
By the rules and regulations of the Government of India, only the employer, individual or organization can open an EPF account, on behalf of its employees. Almost every legitimate organization has an EPF account for its employees.
The employer asks the employee to sign a form stating personal details and the name of the account nominee. Once it is duly filled up, the form is sent to the EPFO. After processing and verification, the EPFO activates the EPF account, and an account number is generated for the employer and the employee.
The EPFO also provides the employee with the Universal Account Number (UAN), with which the employee can access his or her EPF account online and enjoy other benefits as well.
Visit the administration site Employee Provident Fund Organization (EPFO)
Go to the segment of 'Foundation Registration' that opens up another page with 'Guidance Manual'. It will clarify the cycle of Employer Registration, trailed by the enlistment of DSC [Digital Signature Certificate] of the Employer which is essential for new application accommodation
Acknowledge 'I have perused the guidance manual' tick box to continue and fill in the subtleties to enlist
An email e-connect will be sent to you, which is to be enacted, and a portable PIN is likewise sent. You have to transfer certain archives to enroll
The individuals who are as of now enlisted can sign in utilizing their Universal Account Number (UAN)
By investing in an Employee Provident Fund, you get to enjoy various benefits, a few of which are already stated above. The advantages that an EPF account offers are listed as follows-
Despite its many benefits, EPF has its drawbacks as well. The disadvantages of an EPF account are listed as follows-
Previously, you could only withdraw money from an EPF account after your retirement. However, the new changes implemented by the EPFO have made the rules less strict.
According to the new rules, an EPFO subscriber is allowed to withdraw the account balance after two months of unemployment. If an employee is terminated from the job due to circumstances beyond his or her control, that employee is perfectly capable of withdrawing the full amount, and the amount will be completely tax-free.
Nowadays, partial withdrawal is granted on specified circumstances such as payment of Interests or mortgages, the marriage of self or someone in the immediate family, higher education of children, illness of self, spouse or dependent children, etc.
The current rate of interest is 8.50% applicable to the contributions made by both the employer and the employee. The EPF contribution is divided into two categories, such as-
The Interest cost for the monetary year 2020 – 2021 is 8.50%. The amassed store in the PF account draws in a certain premium, which is 100% duty absolved.
The premiums purchased are legitimately transferred to the Employees' Provident Fund account and determined by the Central Board of Trustees (CBT) at a rate pre-chosen by the Government of India.
The year wherein the new Interest costs are reported Act remains substantial for the following money-related year for example from the year beginning on first April of one year to the year finishing on 31st March of the following year. How about we comprehend this with the assistance of a model:
For example, the pace of interest of 8.50% is legitimate and will be appropriate just on EPF stores made between the money-related long periods of April 2019 to March 2020.
The interest although determined consistently is moved to the Employees' Provident on 31st March of the relevant monetary year.
On the off chance that the commitment isn't made into an EPF represent three years persistently, the record gets torpid or broken.
Interest is offered on defective records of workers who have not achieved the retirement age.
Interest isn't given on the sum stored in out of commission records of resigned Employees.
The premium acquired on defective records is available according to the part's piece rate.
For commitments made towards the Employees' Pension Scheme by the business, the worker will not get any interest. Nonetheless, a benefit is paid out of this sum after the age of 58.