EPF – Employee Provident Fund
The Employee Provident Fund Scheme India was enacted in the year 1952, replacing the Employee Provident Fund Ordinance, 1951. The EPF scheme is now known as the Employees’ Provident Fund and Miscellaneous Act, 1952.
The EPFO, therefore, services an unusually large number of subscribers. This, coupled with the large number of associated transactions involved, ranks the EPFO among the largest organisations, globally. There are currently more than 5 crore members that the EPFO services. Under the Act, the EPFO operates three schemes in all viz.
- Employees’ Provident Fund Scheme, 1952
- Employees’ Pension Scheme, 1995 (which replaced the Employees’ Family Pension Scheme, 1971)
- Employees’ Deposit Linked Insurance Scheme, 1976
Under the Act, member employees are eligible for provident fund, pension and insurance benefits as per the abovementioned schemes.
Benefits of the EPF Scheme 1952
The EPF scheme is one of the most important savings schemes in India for many reasons. Key advantages are highlighted below.
- Tax-free earnings: The interest earned on funds held in an EPF account is tax-free. Withdrawals at maturity / beyond 5 years are also tax-free (except in case of premature withdrawal). This helps optimise growth and returns on savings. Contributions made towards EPF are tax deductible u/s 80C of the Income Tax Act, 1956.
- Financial Security: Funds in the account are not easy to withdraw and so savings is ensured.
- Retirement – eventually, the amount collected provides financial security at time of retirement.
- Emergencies – The funds are also useful in times of emergencies to meet certain requirements for which premature withdrawals are allowed in certain cases
- Loss of income – If an employee for some reason cannot work any longer, these funds help tide over loss of income.
- Resignation – after 2 months of resignation employees can withdraw accumulated amounts in their PF accounts
- Death – the accumulated amount is passed on to the employee’s nominee providing them financial stability.
- Disability – If employees cannot work any longer, EPF balances can be withdrawn to tide one over.
- Retrenchment or discharge – This where employees are laid off from work. PF savings can bridge the income gap till another job can be found.
- Long-term savings option: This is a sound savings option for employees with long-term investment goals.
- Source of funds: In times of need, EPF funds can provide an employee much needed liquidity. Funds can be borrowed to meet certain pressing needs such as medical, housing, marriage and education.
- Pension: Under the Act, along with provident funds, an employer also contributes towards an employee’s pension fund which the employee can eventually use upon retirement.
- Insurance: Under the Act, an employer also contributes towards an employee’s life insurance in the absence of a group cover, thereby ensuring employees are insured.
- Universal access: Employees can transfer their accounts when they change employers and with the introduction of the Universal Account Number (UAN) they can now access their EPF accounts through a single-point.
New Features on the EPFO portal
With the drive to make India a digitally developed nation, the government has been constantly introducing new and more convenient facilities to further the idea of creating paperless transactions throughout and increasing transparency in government procedures.
The labor ministry found that there were lakhs of inactive EPF accounts because each employee had more than one PF account owing to the number of job changes one had made. The government hence decided to allow employees to merge all PF accounts into one with the use of UAN (Universal Account Number). Added to this, EPFO services are made available on a new application named UMANG.
One Member – One EPF Account
Under the ‘Services’ tab on the EPFO portal, the ‘One Employee – One EPF Account’ link can be found. Clicking on the link will redirect you to a page where you can enter your phone number and then your UAN, after which you can provide details about all your previous PF accounts (Up to 10 PFT accounts at a go). With the help of this facility, you can consolidate all your PF accounts with the help of one unique 12-digit number called the UAN.
EPF Membership – Eligibility
To avail benefits of the EPF scheme, employees have to become members of the provident fund.
- Employees are eligible for membership on the day of joining an establishment. This includes eligibility for provident funds, insurance and pension. Establishments with 20 or more employees have to provide PF to their employees.
- The Act does not apply to the State of Jammu and Kashmir.
EPF Contributions
An employee’s provident fund account is made up of contributions
- made by the employee him/herself and his/her employer
- at a fixed rate; pre-determined
- on a monthly basis
- based on the employee’s basic pay + DA
- funds under the EPF scheme are invested as prescribed.
Currently, contributions are made at 12% but for the following establishments it is 10% i.e.
- establishments with less than 20 employees
- sick industries as identified by the BIFR
- establishments whose year-end losses are as much or more than their net worth
- jute, beedi, brick, coir and guar gum establishments
- establishments subject to a set wage limit; currently Rs.6,500
Employer’s Contribution to EPF
The minimum contribution is now set at 12% of Rs.15,000 = Rs.1,800 i.e. Rs.1,800 from the employee and Rs.1,800 from the employer. (It was earlier at 12% of Rs.6,500 p.m. = Rs.780).
While the entire contribution from an employee is directed towards his/her provident fund, a part of the employer’s contribution goes towards pension and insurance and also administration costs in the following proportions
12% of salary (basic + DA) total contribution = 8.33% to EPS and 3.67% to EPF
Additionally, 0.5% to EDLI; 1.1% to EPF administration costs and 0.01% to EDLI administration costs. This means the employer’s total contribution is 13.61%
EPF Interest Rate
The latest EPF interest rate stands at 8.8% p.a. (2015 – 2016). Interest rate for EPF deposits for the year 2017 – 2018 is 8.65%
- Balances held in the EPF account earn interest. Such interest earned is entirely tax-free. Interest is calculated and credited to the account based on a set rate of interest.
- As with many other state-run savings schemes, EPF interest rates are decided every year by the Indian government in conjunction with the Central Board of Trustees (CBT) who administer the Act in association with the EPFO. The rate announced is applicable for the year it is announced.
- The year for which EPF interest rates are applicable refers to a financial year i.e. April 1st of one year to March 31st of the following year. For e.g. for the period 2014 – 2015, the interest rate of 8.75% is applicable on EPF deposits from April 1st 2014 to March 31st 2015.
- Interest is calculated based on monthly running balances but credited on an annual basis, at the end of the year i.e. March 31st. Interest so credited is then added to the following month’s balance i.e. it is included in April’s balance for interest calculation.
- If an EPF account is deemed inoperative, interest will no longer be credited to it.
- Interest is not payable on withdrawn amounts.
- Interest is not payable on the amounts directed towards EPS by the employer.
| Year/Period | Interest Rate (p.a.) |
|---|---|
| 1952 – 1955 | 3.00% |
| 1955 – 1957 | 3.50% |
| 1957 – 1963 | 3.75% |
| 1963 – 1964 | 4.00% |
| 1964 – 1965 | 4.25% |
| 1965 – 1966 | 4.50% |
| 1966 – 1967 | 4.75% |
| 1967 – 1968 | 5.00% |
| 1968 – 1969 | 5.25% |
| 1969 – 1970 | 5.50% |
| 1970 – 1971 | 5.70% |
| 1971 – 1972 | 5.80% |
| 1972 – 1974 | 6.00% |
| 1974 – 1975 | 6.50% |
| 1975 – 1976 | 7.00% |
| 1976 – 1977 | 7.50% |
| 1977 – 1978 | 8.00% |
| 1978 – 1979 | 8.50% (i.e. 8.00% + 0.5% as bonus) |
| 1979 – 1981 | 8.25% |
| 1981 – 1982 | 8.50% |
| 1982 – 1983 | 8.75% |
| 1983 – 1984 | 9.15% |
| 1984 – 1985 | 9.90% |
| 1985 – 1986 | 10.15% |
| 1986 – 1987 | 11.00% |
| 1987 – 1988 | 11.50% |
| 1988 – 1989 | 11.80% |
| 1989 – 2000 | 12.00% |
| 2000 – 2001 | 12.00% – till June 2001
11.00% – From July 2001 |
| 2001 – 2004 | 9.50% |
| 2004 – 2005 | 9.50% (i.e. 9.00% + 0.5% as Golden Jubilee Bonus ) |
| 2005 – 2010 | 8.50% |
| 2010 – 2011 | 9.50% |
| 2011 – 2012 | 8.25% |
| 2012 – 2013 | 8.50% |
| 2013 – 2015 | 8.75% |
| 2015 – 2016 | 8.8% |
| 2016 – 2017 | 8.65% |
| 2017-2018 | 8.65% |
How to calculate interest on EPF Balance
The interest rate is declared on a per annum basis but the interest is calculated for every month. The interest rate for a month is the per annum rate divided by 12 months. E.g. if you consider an EPF interest rate of 12% p.a. then the rate for each month is 12/12 = 1% p.m.
EPF Forms
To register, make withdrawals or avail advances from an EPF account or to file EPF returns, as well as for other reasons, an employee/member will have to fill out a form. The form depends on what the member is applying for and each form has to be filled and submitted along with supporting documentation or proofs (if required). Eligibility to make a claim is subject to fulfillment of predetermined criteria.
Broadly elucidated below are the various types of forms a member would fill in various circumstances.
-
EPF Claim Forms
- Form 31 – This pertains to withdrawals or advances that a member/employee applies for under various circumstances e.g. to fund education or marriage, housing loans, house repairs/renovation/construction etc. Details on each of these claims are elucidated below.
- Form 14 – This pertains to funding an LIC policy
- Form 10D – This pertains to pension fund settlement through monthly pension on completion of 58 years of service with a minimum of 10 completed years of service.
- Form 10C – This pertains to pension fund settlement through withdrawal on completion of 58 years of service without a minimum of 10 completed years of service.
- Form 13 – Transfer of EPF Account
- Form 19 – Final EPF Settlement
- Form 20 –
- Form 51F –
- Registration Forms
- Returns Forms
Form 31 – EPF Withdrawals/Advances
Restrictions discourage premature withdrawals from PF accounts being a long-term savings mechanism. However, there are certain circumstances under which employees may borrow against their EPF deposits or withdraw from their accounts. These are specified below:
- To buy a or build a house for residential purposes or to buy a plot of land: As per Para 68-B of the EPF scheme, an employee can avail this facility
- For a property that is held only in his/her own name, in the name of his/her spouse or held jointly between him/herself and his/her spouse (i.e. there should be no other joint owners)
- To either buy or build a residential house or flat
- Only once during his/her entire tenure of service, which can be only on completion of 5 years of service.
- For an amount up to 36 times his/her wages (basic pay and DA) to buy or build a house or flat; for an amount up to 24 times his/her wages (basic pay and DA) to buy a plot OR the total amount of his/her EPF account share and interest OR the total cost of the house/flat/plot, the lower of the three.
- By submitting Form-31 to his/her employer along with a signed declaration
- If purchase is made from an agency, the amount will be paid out to the agency; for purchases made from an individual or promoter, the amount will be paid out to the employee.
- To renovate/repair a house including making additions or removing parts of a house: As per Para 68 – B(7) of the EPF scheme, an employee can avail this facility
- Once during his/her entire tenure of service, provided he/she has completed 5 years of service if withdrawal is for making alterations or additions to the house and 10 years of service if withdrawal is for repairing the house.
- For property held in either his/her name, his/her spouse’s name or jointly between themselves.
- For an amount up to 12 times his/her total wages (basic and DA) OR his/her share of EPF account balance and interest OR total cost of renovations/repairs, whichever is lower of the three
- By submitting Form-31, duly filled and other required construction certificates as proof of such renovations/repairs viz. Annexure III for alterations or additions and Annexure XIII for house repairs.
- The amount will be paid out to the employee
- To repay a home loan: As per Para 68-BB of the EPF scheme, an employee can avail this facility
- Once during his/her entire tenure of service, anytime after completing 10 years of service
- For property held in his/her name or in his/her spouse’s name or jointly between themselves.
- For an amount up to 36 times of his/her wages (basic and DA) OR the total amount of his/her share of EPF account balance and interest OR the total loan principal amount payable and interest, whichever is lower of the three
- By submitting the duly filled in Form-31 and a signed declaration.
- The amount will be paid to the agency i.e. lender
- To pay for medical treatment: As per Para 68-j of the EPF scheme, an employee can avail this facility
- For his/her own self or spouse or children (son or daughter) or dependent parents (father or mother).
- Only for the following types of treatments needing hospitalisation for or more than a month –
- In case of treatment for self-
- Major surgery as an in-patient
- Leprosy, TB, paralysis, mental disorders, cancer, heart problems
Only if his/her employer grants the required period of medical leave i.e. one month or more. The need for such long medical leave should be supported by a doctor’s/specialist’s certificate.
- In case of treatment for his/her own family
- Major surgery as an in-patient requiring hospitalisation for or more than a month
- Leprosy, TB, paralysis, mental disorders, cancer, heart problems
- In case of treatment for self-
- Anytime during his tenure of service and as many times as is required for such permitted treatment
- If he/she is certified by ESI/employer that he/she is not covered under ESI scheme.
- For up to the total amount in balance (employee’s portion of contribution only) as on the application date or up to 6 times the amount of the employee’s wages
- By submitting the duly filled in Form-31 to his/her employer and required proofs as mentioned above
- To fund a marriage: This facility as per Para 68-K of the EPF scheme can be availed by an employee
- For his/her own self, children (son or daughter) or siblings (brother or sister).
- Up to 3 times during his total period of service
- After having completed a minimum of 7 years of service, when availing this facility for the first time.
- By submitting the duly filled in Form 31 to his/her employer along with a marriage invite/card as proof
- For up to half (50%) of his/her share and interest in his/her EPF account.
- To finance education: This facility, as per Para 68-K of the EPF scheme, can be availed by an employee
- For his/her own self or children (son or daughter).
- For post matriculation education
- Up to 3 times during an employee’s total tenure of service.
- Only after completion of a minimum of 7 years of service.
- By submitting the duly filled in Form 31 to his/her employer along with the educational institution’s fee certificate as proof.
- For up to half (50%) of his/her share and interest in his/her EPF account.
- The amount will be paid out to the employee
- To make an EPF withdrawal before retirement: This facility, as per Para 68-NN of the EPF scheme, can be availed by an employee
- Once during his tenure of service subject to having completed at least 54 years of age and being due for retirement in one year’s time.
- For an amount up to 90% of the account balance at time of withdrawal. This includes the total amount i.e. the employee’s and the employer’s share. (This is subject to a minimum balance requirement)
- By submitting Form-31, duly filled in along with an employer-issued certificate stating the retirement date.
- The amount will be paid out to the employee
- To make an EPF withdrawal in case of closure or lockout of the employee’s employing establishment: As per Para 68-H of the EPF scheme, this facility can be availed by an employee
- In case of lockout or closure stretching beyond a period of 15 days.
- When he/she has not received wages for 2 months or more
- Irrespective of tenure of service
- For an amount up to the total amount of his/her wages X the number of months of closure/lockout, provided he/she holds a balance in his/her EPF account i.e. employee share. For lockout/closure period beyond 6 months, he/she can avail an advance from the employer’s share of the account balance as well
- By submitting Form-31 along with a declaration
- The amount will be paid out to the employee
- Other purposes: This would include withdrawals for employees affected by
- power cuts – applies to employees whose wages were 75% or less than the total monthly wages as of Jan 1973. Amount of advance can be a month’s wages or Rs.300. It can be availed by submitting Form-31 with a government-issued certificate stating power cut.
- abnormal conditions – applies in case of natural disasters and the like; for an amount of Rs.5,000 or half of the employee’s EPF account share and interest; availed by submitting Form-31 with a state government declaration as well as a certificate from an authorised department stating the damage incurred.
- and as grants to handicapped employees (physically).- to buy required equipment to minimize his/her disability; can be availed for an amount up to 6 months worth of basic wages and dearness allowance or the employee’s EPF account share and interest or the actual equipment charges, whichever is lower of the three; can be availed by submitting Form-31 and a doctor’s certificate stating said employee is physically handicapped.
- pending court case of dismissal/retrenchment/discharge of employee
- The amount will be paid out to the employee
*where agency is mentioned, this refers to the government (central or state), cooperative society, local body, trust, institution, Housing Finance Corporation (HFC).
in case of natural disasters and the like; for an amount of Rs.5,000 or half of the employee’s EPF account share and interest; availed by submitting Form-31 with a state government declaration
The following important factors should be kept in mind while filling the form
- Fill the form using block letters only
- Write legibly and clearly and do not overwrite
- Fill in the ‘Member’s Account Number’ clearly indicating the region, office, number and extension code and account number. Ensure the correct region and office codes are filled, You can find the latest code relevant to you at the epfo website under ‘Establishment Search’.
- Provide a mobile number at the top of the form to receive SMS updates and to track the claim status
- Clearly fill in a postal address and pin code
*region codes have been recently changed; check codes for the following states – Karnataka, Maharashtra, Gujarat, Tamil Nadu, West Bengal, Andhra Pradesh, Punjab, Uttar Pradesh, Delhi, Haryana.
Receiving payment for Form-31 Claims
For successful claims, the amount to be paid out to the member or agency will be done to the mentioned bank account.
- Electronic transfers are a faster mode and can be facilitated by providing a cancelled cheque while submitting Form-31. This should clearly indicate electronic transfer details viz. the claimant’s account number and relevant IFS Code.
- For claims below Rs.2,000, money order payments are possible.
- For payments to agency, the agency’s name and address should be clearly provided
Form 14 – Funding an LIC policy by withdrawing from the EPF account
This facility is available to an employee
- who has completed at least 2 years tenure of service
- who can declare an account balance sufficient for 2 years of payments and an annual contribution sufficient to cover premium payments
- to pay the first and subsequent premiums of an LIC policy. The amount required as per the schedule of premiums due will be credited to LIC. Details of the LIC policy to be funded will have to be provided.
- to pay interest or late fees.
- from the employee’s share of contributions only
- who declares that the policy is not encumbered and required details are provided viz. the relevant LIC branch address, the LIC policy number and date/proposed number and date, sum assured under the policy, premium amount, premium due dates, nominee names.
- duly signs and submits the form
Form 10D – Application for monthly pension under Employee Pension Scheme (EPS)
This form is applicable to employees who are over the age of 58 years and have completed the 10 years of service to make them eligible to settle their pension fund. The following kinds of pension can be claimed using this form.
- Superannuation pension
- Reduced pension
- Disablement pension
- Widow & Children pension
- Orphan pension
- Nominee pension
- Dependent parent
Form 10C – Application for withdrawal certificate or withdrawal benefit under Employee Pension Scheme (EPS)
This applies to employees who are over 58 years of age but have not completed the required 10 years of service to be eligible to make such claim. This can be either because the employee didn’t complete 10 years’ service before he/she turned 58 years or because he/she discontinued his/her employment before completing 10 years’ service. Such claim can also be made by employees who have completed 10 years’ service before discontinuing his/her employment but are below 50 years of age. Such claim can also be made by employees who have completed 10 years’ service but are between the age of 50 and 58 years and do not wish to opt for reduced pension. This claim can also be made by an employee’s family/nominee/heir where the employee died after the age of 58 years but before completion of 10 years’ service.
This claim can only be made by employees who have been members for 180 days or more i.e. without considering period for which contributions do not apply. The form should be duly signed and submitted with supporting documentation viz. a cancelled cheque copy, children’s birth certificate (for scheme certificate), death certificate (for deceased member), succession certificate (by legal heir), one rupee stamp (withdrawal benefit).
Form 13 – Transfer of EPF account
In order to transfer the EPF balance from an employee’s old EPF account to the new one, a member/employee will have to fill in Form-13 which is the transfer claim form. When making a transfer, PF contributions are sent to a Trust and details of the employee’s service are also sent to the EPFO. When transferring EPF balances, the pension contributions are not transferred (unless the establishment is exempt from the pension scheme, in which case both the PF and pension contribution will be sent to the Trust). For establishments exempt under the EPF/Pension scheme, PF accounts are held with the Trust and for those not exempt, they are held with the EPFO.
- Form 13 (revised) consists of Part A, B and C.
- Part A – Personal Information, Part B – Old PF account details and Part C – Current PF account details
- The old EPF account number and the new EPF account number will have to be clearly indicated. If the establishment is not under the purview of the EPF Scheme, 1952 then the Pension Fund account number will have to be provided.
- Also, to be indicated is the name of the holding EPF office or trust, both old and new.
- In addition to these details, the names and addresses of the old and new establishments and the respective joining and leaving dates will have to be mentioned
- The form has to be attested/signed by either employer i.e. the old or new employer.
- Depending on who attests the form, it will have to be submitted to the relevant employer’s EPF office i.e. if the old employer attests the form, the form will have to be submitted to the EPF office maintaining the old EPF account. If the new employer attests the form, it will have to be submitted to the office maintaining the new account.
