The document outlines the key aspects of the Employee Provident Fund (EPF) scheme in India, including eligibility, contributions from employers and employees, investment patterns, withdrawal procedures, settlements on retirement or termination, exemptions from tax, and benefits. EPF is a mandatory savings program for employees in India that provides tax-deferred savings and a lump sum payment on retirement. Non-compliance by employers can result in penalties like fines and imprisonment.

1. BY
BIPENDER GUPTA

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  NGO’S
1952 implies to the whole of  Considering the operations of
India except the state of Jammu charitable institutions these
& kashmir (section 2).This act includes the following:
implies (section 3) to:
 Educational, scientific research
 Every establishment which is a & training institute ;
factory engaged in any industry
specified in schedule I & in  Establishment known as
which 20 or more persons hospitals;
employed;  Establishment rendering expert
 Any establishment employing 20 services;
or more persons of such  Establishments engaged in
establishments which central poultry farming
government may, by notification  Establishment engaged in cattle
in the official gazette specify. feed industry;

6.  FOR NEW ENTRANTS  FOR EXISTING ENTRANTS
 An employee is eligible for membership  Enrolment:
from the day he joins the company who has  Any change in the family status, such as, –
enrolled for EPF Scheme  marriage of the member.
 If an Employer has equal to or more than 20  additions / deletion in the family.
employees, it is mandatory for him or to  Legal adoption of the children.
join the Employee Provident Fund Scheme.  Change of nominee, is to be filed in
 If the employee’s emoluments exceed Rs. Form No. 2 through the employer.
6,500/- per month, he has the option to join  In the event the member is holding a
the Scheme(s) with the consent of Scheme Certificate (under EPS, 95), he
employer. should surrender the same to the
 Declare previous employment details, if concerned EPFO office, through his
any, in Form No. 11 to the employer. employer.
 On becoming a member of the Schemes file  A member is entitled to various benefits &
details in Form No. 2 ( family particulars/ facilities such as withdrawals, advances,
nominations) through the employer. pensions, death insurance etc.
 Rate of contribution payable by a member
shall be @ 12% of his emoluments.
 A member can contribute statutorily over
and above the prescribed rate.

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  NOTES
FROM Rs.5000 to Rs.6500 w.e.f. 1-6-2001 • THE ABOVE CLARIFICATION IS GIVEN BY
PER MONTH THE GOVERNMENT TAKING WAGES UPTO A MAXIMUM OF
CONTINUE TO CONTRIBUTE 1.16% UPTO Rs.6500 TOWARDS WAGE (BASIC+DA).
THE ACTUAL WAGE OF MAXIMUM
Rs.6500 PER MONTH TOWARDS
EMPLOYEES’ PENSION SCHEME. THE • SINCE AN EXCLUDED EMPLOYEE i.e.
EMPLOYER’S SHARE IN THE PENSION DRAWING WAGES MORE THAN Rs.6500
SCHEME WILL BE Rs.541 w.e.f. 1-6-2001. CAN ALSO BECOME MEMBER OF THE
 FUND AND THE SCHEMES ON JOINT
REQUEST AND IF, FOR INSTANCE, SUCH
 UNDER EMPLOYEES’ DEPOSIT- AN EMPLOYEE IS GETTING Rs.10,000 PER
LINKED INSURANCE SCHEME THE MONTH, HIS SHARE TOWARDS
CONTRIBUTION @ 0.50% IS REQUIRED PROVINDENT FUNDCONTRIBUTION
TO BE PAID UPTO A MAXIMUM LIMIT WILL BE Rs.1200 e.g. 12% AND
OF Rs.6500. THE EMPLOYER WILL PAY EMPLOYER’S SHARE TOWARDS
ADMINISTRATIVE CHARGE @ 0.01% ON PROVIDENT FUND CONTRIBUTION
MAXIMUM LIMIT OF Rs.6500. WILL BE Rs.659 AND Rs.541 TOWARDS
 EMPLOYEES’ PENSION FUND.
 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.

12. • THE EMPLOYER SHALL PAY THE  A/c – 1 EPF EMPLOYERS 12% +
CONTRIBUTION PAYBLE TO THE EMPLOYEES 3.67% = 15.67 %
EMPLOYEES PROVIDENT FUND,  A/c – 2 EPF ADMIN CHARGES 1.10%
EMPLOYEES DEPOSITE LINKED
INSURANCE, AND EMPLOYEES  A/c – 10 EPS EMPLOYEES 8.33 %
PENSION FUND IN RESPECT OF THE  A/c – 21 EDLI 0.50 %
MEMBER OF THE EMPLOYEES
PENSION FUND BY HIM DIRECTLY  A/c – 22 EDLI ADMIN CHARGES 0.01%
BY OR THROUGH A CONTRACTOR.
 TOTAL = 25.61%
• 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.

13. WITHDRAWL BEFORE WITHDRAWL AFTER
RETIREMENT RETIREMENT
 You can withdraw up to 90% of the amount in  You can withdraw full amount in the
you EPF account after you attain the age of 54 fund on retirement from service
years, or within one year before actual
retirement on superannuation whichever is after 55 years of age. You can also
later. Claim application in form 19 has to be withdraw the full amount due to any
submitted to the concerned Provident Fund of the following occurrences:
Office.
 For other cases such as 
 Ø Shifting of Jobs 1. If you have not attained the age
of 55 year at the time of termination
 At such times, the PF balance could be
transferred from one employer to another. The of service.
existing balance would continue to stay. With 2. If you retired on account of
fresh contributions made by the new permanent and total bodily or
employer. mental disablement
 3. If you migrated from India for
 Ø Quitting of Job permanent settlement abroad or for
 PF could be withdrawn, if you quit your job taking employment abroad.
and provide a declaration that you do not 4. In the case of mass or individual
intend to work for the next six month.
retrenchment.

14. IMMEDIATE SETTLEMENT WITHOUT SETTLEMENT ONLY AFTER A WAITNG
WAITING PERIOD OF TWO MONTH PERIOD OF TWO MONTHS
69(1)(a)Retirement after attaining 58yrs of 69(1)(e)(i)Transfer of a non retrenched
age. employee from a closed establishment to
uncovered establishment.
69(1)(b)Retirement on a/c of total & 69(1)(e)(ii)Transfer of an employee from a
permanent incapacity due to bodily or covered establishment to an un-covered
mental infirmity. establishment under the same employer.
69(1)(d)Termination of service on 69(2)Other cases viz. Resignation,
retrenchment. 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 69(1)(e)(iii)Members discharged &
permanent settlement abroad or taking retrenchment compensation paid under
employment abroad. 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 Exempt from tax
(Basic +DA)
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 Exempt from tax Exempt from tax: Only employees share of
the time of retirement or contribution is exempt
termination of service
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  ANNUAL RETURNS
 12 A (Employees Strength and paid)  3 A : Employees individual detail month wise
 Form 5 - New Joining (Name, Father’s Name, (Period 1st April to 31st March)
DOJ, DOB, Gender.
 Form 10 – Left Employees (Name, Father’s  6 A : All Employees combined detail month
Name, DOJ, DOL, Reason. wise
 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

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%).