PROVIDEND FUND 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. Such fund is a form of social safety net into which workers must contribute a portion of their salaries and employers must contribute on behalf of their workers. Aprovident funds created with a purpose of providing financial security and stability to elderly people. Generally one contributes in these funds when one starts as employee, the contributions are made on a regular basis (monthly in most cases). It's purpose is to help employees save a fraction of their salary every month, to be used in an event that the employee Is temporarily or no longer fit to work or at retirement. Applicability & Eligibility Employee Provident Fund (EPF) is implemented by the Employee Provident Fund Organisation (EPFO) of india. An establishment with 20 or more workers working in any one of the 180+ Industries should register with EPFO. Typically 12% of the Basic, DA, and cash value of food allowances has to be contributed to the EPF account. Also, if the establishment has employed less than 20 employees, the PF deduction rate will be 10%. Employees drawing basic salary upto Rs 15,000 (From Sep 1 2014 salary limit has been Increased to Rs 15,000, previously it was Rs 6,500) have to compulsory contribute to the Provident. The employer contribution is exempt from tax and employee's contribution is taxable but eligible for deduction under section 80C of Income tax Act NOTE: Employees who earn more than Rs.15,000 can also register for an EPF account; however, they must get approval from the Assistant PF Commissioner. Contributions 1) | Employee Contributions: Provident fund contribution is recovered @ 12% of wages from employees who earn up to.a maximum wage of Rs.15,000/- p.m, However, employees can contribute more than this statutory maximum which will be considered as Voluntary Contribution. Voluntary Contributions: An employee can contribute voluntarily over and above the stipulated rate of PF contribution by opting for Voluntary PF scheme at any rate as they desire i.e up to 100% of Wages. However, the contribution to VPF should bea certain % of wages and not a fixed amount. But the employer is not bound to contribute at the enhanced rate. Itis suggested that the enhancement canbe done at the beginning of the financial year for comfort level of calculation.li) Employer Contributions: Employer is also required to contribute towards provident fund; the deduction rate is same as employee's contribution i.e, 129% of the wages. OF this 12%, 3.67% goes to Provident Fund and the balance of 8 33% goes to Pension Fund. The employer is required to pay the contribution tecovered from employees into the provident fund account on of before 15th of the following month. Table below gives the rates of contribution of EPF, EPS, EDLI, Admin charges in India, Employee Scheme Name contribution Employer contribution Employees’ Pension scheme o 8.33% 0.50% (wef 01-06- EPF Administrative charges ° 2018) 0.25°-(Earlier) 0.00%6(weF 01-04-2017) 0.01" EDLIS Administrative charges ° (earlier) Computation of Employees Provident Fund Contributions If Basic salary of Rs 3500 Let us calculate the contribution of an employee who is getting a basic salary of Rs 3500. ContributionTowards Calculation EPS Employer share 3500 x 8.33% EDLI charges 3500 x 0.5%If Basic salary above Rs 15,000 (Before Sep 1 2014 limit was Rs 6500) company uses different method for calculation as per thelr pay roll policy. Interest on PE Accumulations: ‘Compound interest as declared by Central Govt. is paid on the amount standing to the credit of an employee as on Ist April every year.Contribution is made monthly but interest is calculated yearly. In the past several decades, the interest rate has ranged from 8-12 % (currently 8.5%) 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.At the beginning of each year there would be opening balance, the amount accumulated till then, One gets interest on opening balance and monthly contribution. So for next year the new opening balance would be:old opening balance + contribution throughout the year + interest on the (old opening balance + contribution) Due Dates Of Payment: Due Date of Provident Fund paymentiis 15% of every preceding month, How to check EPF balance? EPFO has been using technology to tur into a more professional organisation. Now you can check your EPF balance through SMS, see your passbook. It has introduced online facility for transferring the balance to a new account. Going forward, all members will have a Universal Account Number(UAN) which will be portable across employers and cities. UANs have already been allotted to active contributors to the EPF You can check your EPF balance through various ways. 1) Annual Statement: EPFO used to send an annual statement through the employer to the employee which gives details about the PF accumulations. It is wide slip of paper. The statement contains details like, Opening balance, amount contributed during the year, withdrawal during the year, interest eamed and the closing balance in the PF account. 2) EPF balance by SMS _: From July 2011 one can check the EPF Account balance online. Goto http://epfindia.com/ | Select EPFO OfficeEnter PF Account Number which isin the format : EPFO Office Code/Establishment Code(Max. 7 Digits/Extension(Max. 3 digts)/Accourt Number (Max 7 digit) (PF Account Number may not have Extersion ¢ode, in that case leave It blank), Enter your Mobile ani Name, Accept Terms and congition and Submit. ‘You will get SMS alert from EPFO : EE amount :Rs XXX and ER amount RSXXX as on (Account updated upto Datel. Sequence of steps is shown in the images below. Click on image to enlarge. know your balance instructions SelectPF office _EPF Select PF Office Code EPF Enter account Nur EE = Employee Contribution and €R = Employer Contribution on date(shown in Account Updated date) mentioned in your SMS. It does not show current balance of PF Account as on Today 3) EPF Passbook On 30Nov 2012 EPFO launched e-passbook facility. The online EPF or EPF ePassbook is an online version of the employee's provident fund account. You need to register at members epfoservices.into get the passbook. Note it takes time for registration to become active. You will get an SMSwhen you wauld be able to download the passbook. It shows information in detall, opening balance, contribution every month from employee and employer, how employer contribution is being split into PF and EPS, Withdrawals if any that has been made from the EPF account. 4)EPF passbook with UAN: The UANis a 12-digit number allotted to each Employee Provident Fund member by the Employee Provident Fund Organization(EPFO) which ives him control of his EPF account and minimises the role of employer. UAN number activation started in Oct 2014. You can download the EPF passbook if you have activated your UAN number. Our article UAN or Universal Account Numberand Registration of LUAN talks about how to register for UAN.EPF and Mobile: You can also view it through the Mobile App launched by EPFO in Sep 2015, as explained in our article EPEO Mobile App , SMS Service and Missed Call Employee Provident Fund Withdrawal and Transfer of EPF Withdrawal of Provident Fund and Pension Fund ‘Amember is eligible to apply for withdrawing his provident fund and pension fund only after 2 months from the date of resignation, provided that he / she is not employed during the said 2 months. 1) The member should submit Forrh 19 to-withdraw his provident fund dues on leaving service/retirementitermination: 2) To claim pension, the member is required to submit Form 10. 3) The member needs to filln Forms 19 and 10C and get it signed from the previous employer and submit it to the provident fund office (in many cases, the employer will themselves help by submitting the forms) 4) Normally, it takes about 40 days to have the monies credited to the bank account of the member after submission of the relevant forms (On many occasions, members face problems in withdrawing the provident fund monies. Some of the normal reasons for the problems are quoted here below: i) Mismatch of Signature of the employer/ Member: {)Mismatch of Signature of the member ill) Mismatch of Provident Fund Account number of the member iv) Incorrect bank account details furnished by the member Vi Incorrect address given by member ‘vi Mismatch of date of joining / resignation vil) Communication from PF department while processing the request would not have reached the employer vill Failure of employer to remit the PF amount recovered from members to PF Account ix) Member might have changed his / her official name and the sane has not been informed to the provident fund office x) Change in Authorised Signatory of the employer when the application isin processIl) Transfer of Provident Fund monies from previous employer to current employer A resigned employee who joins’ another company is left with an option of transferring the PF ‘monies from his previous PF account to the current PF account, by filing the Form 13. Form 13, When an employee joins new company and he wishes to transfer his previous company provident fund amount, he should inform the HR department or Accounts department of the new company. The employer will issue Form 13, in which the member has to fill the details of previous company like ~ name, address, provident fund account number and address-of the provident fund office where the account was held. (On form 13, the signature of the previous employers not required. Once he fills the required details afid submit it to the current employer, the current employer will forward it tothe provident fund office for transferring process. The time taken for transferring the fund from one account to other account normally takes about 40 days from date of submission. Problem during Transfer of Monies In the case of transfer and when the previous employer is an exempt establishment (which ‘means, having own PF trust), the procedures Is that the current employer should forward the transfer form (Form 13) to the previous employer who will process.a cheque (after validation) in favour of PF office of the current employer anid it will be Sent to the current employer. It becomes the responsibility of the current employer to submit the cheque along with a request letter to the PF office for transferring the monies. Here, the normal problems that might occur are: previous employer might have changed their address Documents fost in transit / do not reach the concerned department delay in processing the application for reasons like tedious internal processing procedures, processing person is on vacation / busy on some other assignments, signatory not available ete ‘Advances from PF Account The members are eligible to withdraw monies /as advances from their PF Account for purposes like marriage, education, medical treatment etc, subject to their prescribed conditions.