{"id":6133,"date":"2019-05-01T19:20:15","date_gmt":"2019-05-01T13:50:15","guid":{"rendered":"http:\/\/capitalante.com\/?p=6133"},"modified":"2019-05-01T19:16:52","modified_gmt":"2019-05-01T13:46:52","slug":"employees-provident-fund","status":"publish","type":"post","link":"https:\/\/capitalante.com\/employees-provident-fund\/","title":{"rendered":"Employees’ Provident Fund – Eligibility, Interest rate, Benefits"},"content":{"rendered":"
Apart from ensuring a stable income following the retirement, Employees\u2019 provident fund is one of the exempt-exempt-exempt category investment options along with public provident fund and National Pension Scheme. In this column, we will discuss what employees\u2019 provident fund is, eligibility, interest rate, calculation, what is UAN, how to check EPF balance, how to transfer EPF account from one employer to another, withdrawal options, tax implications, benefits, etc.<\/span><\/p>\n In accordance with Employees\u2019 Provident Fund and Miscellaneous Act, 1952 an employees\u2019 fund has been initiated to secure regular cash flow to the employee following retirement or in the circumstances of discontinuing of working either temporarily or permanently due to accident or disease which leads to disability. Since the Employee Provident Fund in the EEE category, the contributions are made by an employee, the interest earned, and the money in the hands of the individual are completely tax-free.<\/span><\/p>\n Any organization with the employee strength more than 20 is liable to give EPF benefits to its employees. Both the employer and the employee are liable to make a contribution towards the employee provident fund. Usually, the employee contributes [12% of the basic pay + Dearness Allowance] this contribution must be made once in a month. The interest rates offered by the EPF are in accordance with the guidelines of the EPFO. The scheme is not applicable in the state of Jammu & Kashmir.<\/span><\/p>\n An EPF account is just like a bank account where your contributions, as well as interest, are credited. After the activation of your EPF account, your contribution to the EPF is credited every month and the interest on the invested amount in a financial year also credited. Any individual is free to check the EPF balance by mobile app or via SMS or via missed call facility.<\/span><\/p>\n When you get the first salary, the employer deducts the [12% of the basic pay + Dearness Allowance] and contributes the same into your Employees Provident Fund account. The amount contributed by the employee directly goes to employees\u2019 provident fund account. But the employer\u2019s contributions are divided into 3 trusts in accordance with the EPF act of 1952, and they are \u2013<\/span><\/p>\n Apart from employees\u2019 contribution i.e. 12% towards the Employees\u2019 Provident Fund, the 3.67% of the employer\u2019s contribution [12%] goes to the EPF account.<\/span><\/p>\n In accordance with the EPFO guidelines, the employers\u2019 provident pension scheme came into existence in 1995. The scheme enables an individual employee to provide economic sustenance after the retirement of the individual employee. The 8.33% of the employer\u2019s contribution is made towards the Employees Pension Scheme. The benefits are as follows,<\/span><\/p>\n This scheme offers life insurance cover to the employees\u2019 up to a maximum sum assured of 6 Lakh. In the case of the death of the employee, the insured sum is credited to the nominee. The employer pays the premium i.e. [0.5% of the Basic pay + Dearness Allowance] towards EDLIS to give insurance coverage to the employee.<\/span><\/p>\n The employees\u2019 contribution towards EPF = 12%.<\/span><\/p>\n But the employer\u2019s Contribution towards the provident fund account of the employee is 13.61%.<\/span><\/p>\n How?<\/span><\/p>\n The current interest rate is 8.8% for the contributions made between April 2018 and March 2019. The interest calculation is done on a monthly basis but credited once in a year. The transferred interest is summed up with the contributions made in the following month.<\/span><\/p>\n Suppose the interest rate given for a financial year is 12%. Since the interest rate is calculated on a monthly basis, so the interest rate is 1% per month.<\/span><\/p>\n Suppose you have started contributions towards EPF from the month of June 2018.<\/span><\/p>\n The applicable interest rate is 1% per month.<\/span><\/p>\n Employees\u2019 Monthly Contribution towards EPF = 12% of Rs. 15,000\/<\/span><\/p>\n =Rs. 1800\/-.<\/span><\/p>\n Employers\u2019 Monthly contribution towards EPF = 3.67% of 1800= Rs. 550\/-.<\/span><\/p>\n Total EPF balance at the end of the financial year,<\/span><\/p>\n = Contribution from Employee & Employer + Interest earned<\/span><\/p>\n = Rs. 21,150\/- + Rs. 1055\/-<\/span><\/p>\n Even if your basic salary is Rs. 20, 000\/- and you contribute towards EPF is in accordance with your salary but the employer\u2019s maximum contribution towards EPF is on Rs. 15, 000\/- not Rs. 20, 000\/-, because the ceiling limit is fixed on Rs. 15, 000\/-.<\/span><\/p>\n Suppose an individual starts working in any organization at the age of 25 years with a basic salary of Rs. 15, 000\/-. The increment of salary is 5% in a year. Then the contribution in the EPF account is as follows,<\/span><\/p>\n Employee contribution towards EPF [12%] = [12% of 15000 = Rs. 1800\/-]<\/span><\/p>\n Employer\u2019s contribution towards EPF [3.67%] = [3.67% of 15000 = Rs. 550\/-]<\/span><\/p>\n Total contributions in a month = Rs. 1800\/- + Rs. 550\/- = Rs. 2350\/-.<\/span><\/p>\n Total Increment once in a year = 5%.<\/span><\/p>\n Now the employee is allowed to contribute towards the Employees\u2019 Provident Fund is 58 years.<\/span><\/p>\n The EPF balance at the time of retirement = Rs. 51, 21,199\/- [assuming fixed interest rate of 8.65%].<\/span><\/p>\n To calculate your EPF amount make use of EPF calculator<\/a>.<\/span><\/span><\/p>\n Employees\u2019 Provident Fund organization is a statutory body which came into existence in 1951 by the Employees Provident Fund Ordinance passed in 1951. This organization is one of the largest social security organizations in India. Generally, EPFO allots 12-digit Universal Account Number to all the employees who make contributions in Employees Provident Fund.<\/span><\/p>\n At the time of activation of EPF account, a 12-digit unique number is given to each EPF account holder. When one individual checks the account balance, interest credited, etc. this UAN number is necessary. The benefits of Universal Account Number is as follows,<\/span><\/p>\n Unique Identification Number enables to track the funds of any individual when you change the job from one employer to another at any point of time.<\/span><\/p>\n In order to transfer the EPF account from one employer to another by following the following steps,<\/span><\/p>\n You need to register as a member by visiting the home page of EPFO. While registration in the EPFO portal you need to furnish the PF details of the current employer, the previous employer if any, and digital signature. After the registration in the EPFO portal, you need to click on the \u2018Request for Transfer of Account\u2019 tab.<\/span><\/p>\nWhat is the Employees\u2019 Provident Fund?<\/span><\/strong><\/h2>\n
Eligibility<\/span><\/strong><\/h2>\n
What is an Employees\u2019 Provident Fund Account<\/span><\/strong><\/h2>\n
Where the contributions of employee and employer go to<\/span><\/strong><\/h2>\n
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Employees\u2019 Pension Fund<\/span><\/strong><\/h3>\n
Employees\u2019 Pension Scheme<\/span><\/strong><\/h3>\n
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Employees\u2019 Deposit Linked Insurance Scheme<\/span><\/strong><\/h3>\n
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Interest Rate of EPF<\/span><\/strong><\/h2>\n
How to calculate the EPF balance on retirement<\/span><\/strong><\/h2>\n
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\n Month<\/span><\/td>\n Opening Balance<\/span><\/td>\n Employees\u2019 Contribution<\/span><\/td>\n Employer\u2019s contribution<\/span><\/td>\n Closing Balance<\/span><\/td>\n Interest earned<\/span><\/td>\n<\/tr>\n \n June<\/span><\/td>\n 0<\/span><\/td>\n 1800<\/span><\/td>\n 550<\/span><\/td>\n 2350<\/span><\/td>\n Nil[First Contribution]<\/span><\/td>\n<\/tr>\n \n July<\/span><\/td>\n Rs. 2350\/-<\/span><\/td>\n 1800<\/span><\/td>\n 550<\/span><\/td>\n 4700<\/span><\/td>\n Rs. 23\/-<\/span><\/td>\n<\/tr>\n \n August<\/span><\/td>\n Rs. 4700\/-<\/span><\/td>\n 1800<\/span><\/td>\n 550<\/span><\/td>\n 7050<\/span><\/td>\n Rs. 47\/-<\/span><\/td>\n<\/tr>\n \n September<\/span><\/td>\n Rs. 7050\/-<\/span><\/td>\n 1800<\/span><\/td>\n 550<\/span><\/td>\n 9400<\/span><\/td>\n Rs. 70\/-<\/span><\/td>\n<\/tr>\n \n October<\/span><\/td>\n Rs. 9400\/-<\/span><\/td>\n 1800<\/span><\/td>\n 550<\/span><\/td>\n 11750<\/span><\/td>\n Rs. 94\/-<\/span><\/td>\n<\/tr>\n \n November<\/span><\/td>\n Rs. 11750\/-<\/span><\/td>\n 1800<\/span><\/td>\n 550<\/span><\/td>\n 14100<\/span><\/td>\n Rs. 117\/-<\/span><\/td>\n<\/tr>\n \n December<\/span><\/td>\n Rs. 14100\/-<\/span><\/td>\n 1800<\/span><\/td>\n 550<\/span><\/td>\n 16450<\/span><\/td>\n Rs. 141\/-<\/span><\/td>\n<\/tr>\n \n January<\/span><\/td>\n Rs. 16450\/-<\/span><\/td>\n 1800<\/span><\/td>\n 550<\/span><\/td>\n 18800<\/span><\/td>\n Rs. 164\/-<\/span><\/td>\n<\/tr>\n \n February<\/span><\/td>\n Rs. 18800\/-<\/span><\/td>\n 1800<\/span><\/td>\n 550<\/span><\/td>\n 21150<\/span><\/td>\n Rs. 188\/-<\/span><\/td>\n<\/tr>\n \n March<\/span><\/td>\n Rs. 21150\/-<\/span><\/td>\n 1800<\/span><\/td>\n 550<\/span><\/td>\n 23500<\/span><\/td>\n Rs. 211\/-<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n = Rs. 22205\/-<\/span>
\nWhat will happen if my basic salary exceeds the maximum limit,<\/span><\/strong><\/h3>\nWhat is the Employees\u2019 Provident Fund Organization?<\/span><\/strong><\/h2>\n
What is the Universal Account Number<\/span><\/strong><\/h2>\n
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How to transfer the EPF account if I change job?<\/span><\/strong><\/h2>\n