2. INTRODUCTION
SCOPE & EXTENT
APPLICABILITY / ELIGIBLITY
INTERESTS
INVESTMENT PATTERN FOR A PF TRUST
WITHDRAWL OF PF
SETTLEMENTS
EXEMPTION OF TDS ON SETTLEMENT
FORMS & RETURSN
BENEFITS
CONCLUSION
3. Employee Provident Fund (EPF) is one of the main
platforms of savings in India for nearly all people
working in Government, Public or Private sector
Organizations. It is implemented by the Employees
Provident Fund Organization(EPFO) of India.
It is a mandatory, tax-qualified, defined,
contribution retiral benefit plan wherein
equal contribution at the specified rate is
made by the employer and the employee and
the same is payable in lump sum on retirement.
4. Employees’ Provident Funds Scheme, 1952
Employees’ Deposit-Linked Insurance Scheme,
1976 (EDLI) and
Employees’ Pension Scheme, 1995 (EPS) (Earlier
the Employees’ Family Pension Scheme, 1971)
5. The employee provident fund act
1952 implies to the whole of
India except the state of Jammu
& kashmir (section 2).This act
implies (section 3) to:
Every establishment which is a
factory engaged in any industry
specified in schedule I & in
which 20 or more persons
employed;
Any establishment employing 20
or more persons of such
establishments which central
government may, by notification
in the official gazette specify.
NGO’S
Considering the operations of
charitable institutions these
includes the following:
Educational, scientific research
& training institute ;
Establishment known as
hospitals;
Establishment rendering expert
services;
Establishments engaged in
poultry farming
Establishment engaged in cattle
feed industry;
6. FOR NEW ENTRANTS
An employee is eligible for membership
from the day he joins the company who has
enrolled for EPF Scheme
If an Employer has equal to or more than 20
employees, it is mandatory for him or to
join the Employee Provident Fund Scheme.
If the employee’s emoluments exceed Rs.
6,500/- per month, he has the option to join
the Scheme(s) with the consent of
employer.
Declare previous employment details, if
any, in Form No. 11 to the employer.
On becoming a member of the Schemes file
details in Form No. 2 ( family particulars/
nominations) through the employer.
Rate of contribution payable by a member
shall be @ 12% of his emoluments.
A member can contribute statutorily over
and above the prescribed rate.
FOR EXISTING ENTRANTS
Enrolment:
Any change in the family status, such as, –
marriage of the member.
additions / deletion in the family.
Legal adoption of the children.
Change of nominee, is to be filed in
Form No. 2 through the employer.
In the event the member is holding a
Scheme Certificate (under EPS, 95), he
should surrender the same to the
concerned EPFO office, through his
employer.
A member is entitled to various benefits &
facilities such as withdrawals, advances,
pensions, death insurance etc.
7. WHAT IS THE EPF
INTEREST RATE?
The EPF interest rate of
India is decided by the
central government
with the consultation of
Central Board of
trustees. In the past
several decades, the
interest rate has ranged
from 8-12 % of the
balances maintained in
the fund. The EPF
interest rate notification
is available on the
official website of EPF
India on an annual
basis. The same is
communicated through
major dailies in all cities
8. HOW MUCH ONE
CAN SAVE BY
INVESTING IN EPF?
Let’s say Swayam starts with a
basic salary of Rs. 20,000. Every
year, on an average, he gets a 5%
increment. He started at 25
years and worked till 60 years so
his working life is, 35 years. He
contributes 12% of his basic
salary towards PF which is
matched equally by one’s
company, (EPF contribution is
3.67%, EPS 8.67%). In this case,
over the course of 35 years of his
working life, his total
contribution is Rs. 26.01
Lakhs. Of course, his company
makes a contribution of Rs.
7.955 Lakhs, total contribution
of Rs 33.967 lakh. And this
amount grows into – Rs. 1.38
Crores at the time of his
retirement.
9. HOW IS IT
CALCULATED ?
At the beginning of each
year there would be
opening balance, the
amount accumulated till
then. Contribution is
made monthly but
interest is calculated
yearly. On gets interest on
opening balance and
monthly contribution. So
for next year the new
opening balance would
be: old opening balance +
contribution throughout t
he year + interest on the
(old opening balance +
contribution)
10. HOW WOULD I KNOW
THE AMOUNT OF
ACCUMULATION IN MY
PF ACCOUNT ?
PF office sends an annual
statement through the
employer which gives
details about the PF
accumulations. The
statement contains details
like, Opening balance,
amount contributed during
the year, withdrawal during
the year, interest earned
and the closing balance in
the PF account. This
statement is sent by the PF
department on completion
of the financial year.
11. AFTER REVISION IN WAGE CELLING
FROM Rs.5000 to Rs.6500 w.e.f. 1-6-2001
PER MONTH THE GOVERNMENT
CONTINUE TO CONTRIBUTE 1.16% UPTO
THE ACTUAL WAGE OF MAXIMUM
Rs.6500 PER MONTH TOWARDS
EMPLOYEES’ PENSION SCHEME. THE
EMPLOYER’S SHARE IN THE PENSION
SCHEME WILL BE Rs.541 w.e.f. 1-6-2001.
UNDER EMPLOYEES’ DEPOSIT-LINKED
INSURANCE SCHEME THE
CONTRIBUTION @ 0.50% IS REQUIRED
TO BE PAID UPTO A MAXIMUM LIMIT
OF Rs.6500. THE EMPLOYER WILL PAY
ADMINISTRATIVE CHARGE @ 0.01% ON
MAXIMUM LIMIT OF Rs.6500.
THE EMPLOYER ALSO WILL PAY
ADMINISTRATIVE CHARGES @ 0.01% ON
MAXIMUM LIMIT OF Rs.6500 WHEREAS
AN EXEMPTED ESTABLISHMENT WILL
PAY INSPECTION CHARGES @ 0.005% ON
THE TOTAL WAGES PAID.
NOTES
• THE ABOVE CLARIFICATION IS GIVEN BY
TAKING WAGES UPTO A MAXIMUM OF
Rs.6500 TOWARDS WAGE (BASIC+DA).
• SINCE AN EXCLUDED EMPLOYEE i.e.
DRAWING WAGES MORE THAN Rs.6500
CAN ALSO BECOME MEMBER OF THE
FUND AND THE SCHEMES ON JOINT
REQUEST AND IF, FOR INSTANCE, SUCH
AN EMPLOYEE IS GETTING Rs.10,000 PER
MONTH, HIS SHARE TOWARDS
PROVINDENT FUNDCONTRIBUTION
WILL BE Rs.1200 e.g. 12% AND
EMPLOYER’S SHARE TOWARDS
PROVIDENT FUND CONTRIBUTION
WILL BE Rs.659 AND Rs.541 TOWARDS
EMPLOYEES’ PENSION FUND.
12. • THE EMPLOYER SHALL PAY THE
CONTRIBUTION PAYBLE TO THE
EMPLOYEES PROVIDENT FUND,
EMPLOYEES DEPOSITE LINKED
INSURANCE, AND EMPLOYEES
PENSION FUND IN RESPECT OF THE
MEMBER OF THE EMPLOYEES
PENSION FUND BY HIM DIRECTLY
BY OR THROUGH A CONTRACTOR.
• IT SHALL BE THE RESPONSIBILITY
OF THE PRINCIPAL EMPLOYER TO
PAY THE CONTRIBUTIONS PAYBLE
TO THE EPF, EDLI AND EPSBY HIM
SELF IN RESPECT OF THE
EMPLOYEES DIRECTLY EMPLOYED
BY HIM AND ALSO IN RESPECT OF
THE EMPLOYEES EMPLOYED BY OR
THROUGH A CONTRACTOR.
A/c – 1 EPF EMPLOYERS 12% +
EMPLOYEES 3.67% = 15.67 %
A/c – 2 EPF ADMIN CHARGES 1.10%
A/c – 10 EPS EMPLOYEES 8.33 %
A/c – 21 EDLI 0.50 %
A/c – 22 EDLI ADMIN CHARGES 0.01%
TOTAL = 25.61%
13. WITHDRAWL BEFORE
RETIREMENT
You can withdraw up to 90% of the amount in
you EPF account after you attain the age of 54
years, or within one year before actual
retirement on superannuation whichever is
later. Claim application in form 19 has to be
submitted to the concerned Provident Fund
Office.
For other cases such as
Ø Shifting of Jobs
At such times, the PF balance could be
transferred from one employer to another. The
existing balance would continue to stay. With
fresh contributions made by the new
employer.
Ø Quitting of Job
PF could be withdrawn, if you quit your job
and provide a declaration that you do not
intend to work for the next six month.
WITHDRAWL AFTER
RETIREMENT
You can withdraw full amount in the
fund on retirement from service
after 55 years of age. You can also
withdraw the full amount due to any
of the following occurrences:
1. If you have not attained the age
of 55 year at the time of termination
of service.
2. If you retired on account of
permanent and total bodily or
mental disablement
3. If you migrated from India for
permanent settlement abroad or for
taking employment abroad.
4. In the case of mass or individual
retrenchment.
14. IMMEDIATE SETTLEMENT WITHOUT
WAITING PERIOD OF TWO MONTH
SETTLEMENT ONLY AFTER A WAITNG
PERIOD OF TWO MONTHS
69(1)(a)Retirement after attaining 58yrs of
age.
69(1)(e)(i)Transfer of a non retrenched
employee from a closed establishment to
uncovered establishment.
69(1)(b)Retirement on a/c of total &
permanent incapacity due to bodily or
mental infirmity.
69(1)(e)(ii)Transfer of an employee from a
covered establishment to an un-covered
establishment under the same employer.
69(1)(d)Termination of service on
retrenchment.
69(2)Other cases viz. Resignation,
Leaving Service, etc.
69(1)(dd) Termination on V.R.S NOTE: For female members leaving
service for the purpose of getting
married; waiting period not applicable.
69(1)(c) Migration from India for
permanent settlement abroad or taking
employment abroad.
69(1)(e)(iii)Members discharged &
retrenchment compensation paid under
I.D Act 1947.
15. Head Statutory PF Recognized PF UnRecognised PF
Employers contribution to PF Exempt from tax Exempt up to 12% of salary
(Basic +DA)
Exempt from tax
Deduction under sec 80C Available Available Not available
Interest credited on PF account Exempt from tax Exempt up to 9.5% Exempt from tax
Lump sum payment received at
the time of retirement or
termination of service
Exempt from tax Exempt from tax: Only employees share of
contribution is exempt
a. If the employee has worked for
at least 5 years with the employer
b. If the service is terminated on
account of ill-health or by
contraction or discontinuance of
the employer’s business or any
other reason beyond control of
employee
c. If the employee transfers the
balance in his PF to his new PF
a/c maintained by his new
employer
16. Form No. 2 --Nomination form
Form No. 11 –Declaration of previous employer &
PF and Pension amount
Form No. 13 –PF Transfer from previous employer
17. MONTHLY RETURNS
12 A (Employees Strength and paid)
Form 5 - New Joining (Name, Father’s Name,
DOJ, DOB, Gender.
Form 10 – Left Employees (Name, Father’s
Name, DOJ, DOL, Reason.
COMBINED CHALLAN A/C – 1,2,10,21 & 22
Note : Above all contribution count on
Employees Basic Earnings.
Nomination : Form – 2 (Revised)
Nominee Change : Form – 8
For Withdrawal : Form 19 (Green) & 10 c
(White)
Loan : Form – 31 after 7 Years
ANNUAL RETURNS
3 A : Employees individual detail month wise
(Period 1st April to 31st March)
6 A : All Employees combined detail month
wise
18. Purchase dwelling site
Construction of a dwelling house
Completing construction of the house
Buy a dwelling house /Flat from Agency
Purchasing a newly constructed/old dwelling house or flat from an individual
Purchasing house/flat from a promoter
Additional Loan -alterations/improvements
Further housing withdrawal
Repayment housing loan
19. An employee may be allowed to make a nomination conferring on one or more persons the right to receive
the provident fund amount
If an employee nominates more than one person, he shall, in his nomination specify the amount or share
payable to each of the nominees.
Where an employee has a family at the time of making a nomination, the nomination shall be in favour of
one or more persons belonging to his family
Any nomination made by an employee in favour of a person not belonging to his family shall be invalid.
If at the time of making a nomination the employee has no family, the nomination may be in favour of any
person or persons
A nomination made by an employee may, at any time, be modified by filing Form no. 2
g) Where the nomination is wholly or partly in favour of a minor, the Member may, appoint a major person
of his Family to be the guardian of the minor nominee Provided that where there is no major person in the
Family, the Member may, at his discretion, appoint any other person to be a guardian of the minor nominee.
“Family” means: -
For Provident Fund (PF): -
in the case of a male member, his wife, his children, whether married or unmarried, his dependent parents
and his deceased son’s widow and children;
In the case of a female member, her husband, her children, whether married or unmarried, her dependent
parents, her husband’s, dependent parents, her deceased sons’s widow and children;
20. • LESS THAN 2 MONTHS @17% p.a.
• 2 MONTHS & ABOVE BUT LESS THAN UPTO 4
MONTHS @ 22% p.a.
• 4 MONTHS & ABOVE BUT LESS THAN UPTO 6
MONTHS @ 27% p.a.
• 6 MONTHS & ABOVE @ 37 % p.a.
21. • LIABLE TO BE ARRESTED WITHOUT WARRANT
BEING A COGNISABLE OFFENCE.
• DEFAULTS EMPLOYER IN PAYING
CONTRIBUTIONS OR INSPECTION-ADMINISTRATIVE
CHARGES ATTRACT
IMPRISONMENT UPTO 3 YEARS AND FINES
UPTO Rs.10,000 (Sec.14).
• FOR ANY RETROSPECTIVE APPLICATION, ALL
DUES HAVE TO BE PAID BY EMPLOYER WITH
DAMAGES UPTO 100% OF ARREARS.
22. EMPLOYEES COVERED ENJOY A BENEFIT OF SOCIAL
SECURITY IN THE FORM OF AN ATTACHABLE AND
UNWITHDRAWABLE (EXCEPT I SEVERLY
RESTRICTED CIRCUMSTANCES LIKE BUYING
HOUSE, MARRIAGE, EDUCATION etc.). FINANCIAL
NEST EGG TO WHICH EMPLOYEES AND EMPLOYERS
CONTRIBUTE EQUALLY THROUGHOUT THE
COVERED PERSONS EMPLOYMENT.
THIS SUM IS PAYBLE NORMALLY ON RETIREMENT
OR DEATH. OTHER BENEFITS INCLUDE EMPLOYEES
PENSION SCHEME AND EMPLOYEES DEPOSITE
LINKED INSURANCE SCHEME.
23. Contribution made to EPF and PPF gets deduction
under Section 80C and the interest earned is tax free.
That is both works under EEE (Exempt, Exempt and
Exempt) tax regime. However, PF is better than PPF in
two aspects -
In the case of PF, the employer also contributes to the
fund. There is no such contribution in case of PPF.
The rate of interest on PF is also marginally higher
(currently 8.50%) than interest on PPF (8%).
