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Decoding EPF A Simple Explanation

08 Feb 2024

EPF's full form is the Employees' Provident Fund. It is a plan under the Employees' Provident Funds and Miscellaneous Provisions Act 1952. It is administered by the EPFO. EPFO's full form is Employees' Provident Fund Organisation (EPFO). It is one of the world's largest social security organisations. EPF benefits employees and their dependents in case of retirement, illness, or death.

Let’s discuss what is PF in detail. 

Components of EPF

Now that you know the meaning of a provident fund, let’s understand the components of EPFO. 

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  • Employees Provident Fund (EPF): This is where your retirement benefits are accumulated. You and your company contribute 12% of your basic salary (or 10% in some cases) to this fund every month. The fund earns interest at a rate the EPFO decides (currently 8.15% for 2022-23). You can withdraw the full amount of your EPF after retirement or in some instances of emergency.
  • Employee Pension Scheme (EPS): This is where you get a monthly pension after the age of 58. Out of your employer’s contribution of 12%, 8.33% goes towards this scheme. The pension amount depends on your salary, service period, and age. You can also nominate your spouse or children to receive the pension in case of your death.
  • Employee Deposit Linked Insurance Scheme (EDLIS): This scheme provides up to Rs. 7 lakh life insurance coverage. Out of your employer’s contribution of 12%, 0.5% goes towards this scheme. The insurance amount is paid to your nominee in case of your death while in service.

Eligibility for EPF Registration

Now that you know what EPFO’s PF is, let’s discuss eligibility.

For Employers:

  • Any factory that employs 20 or more workers in any industry must register with the EPFO.
  • Any establishment with fewer than 20 workers can register with the EPFO voluntarily if it meets specific requirements and formalities.
  • An employer can also seek exemption from EPF registration by filling out Form 1 if they can prove that their employees are receiving provident fund benefits that are at least equal to or better than the statutory provisions.

For employees:

  • The EPF scheme is mandatory for any employee who makes Rs. 15,000 or more per month.
  • The EPF scheme is optional for any employee who makes less than Rs. 15,000 per month as long as the employer agrees.

EPF registration process

  • Go to the EPFO portal and click the "Establishment Registration" button on the homepage.
  • Sign up on the Unified Shram Suvidha Portal (USSP) by providing your name, email, phone number, and verification code.
  • Log in to the USSP and select the option "Employees' Provident Fund and Miscellaneous Provision Act 1952" under the "Registration for EPFO-ESIC" tab.
  • Complete the registration form with your establishment's details, such as name, address, contact person, activities, identifiers, etc.
  • Attach and verify your digital signature certificate (DSC) to the form.
  • Submit the form and wait for the approval and PF code from the EPFO.

The documents required for EPF registration are:

  • PAN card of the employer and the establishment.
  • Proof of incorporation or registration of the establishment, such as incorporation, partnership deed, and GST registration.
  • Specimen signature, passport-size photo, and ID proof of the employer and the authorised person
  • Bank account details and cancelled cheque of the establishment
  • List of employees with their details, such as name, date of joining, salary, etc.
  • Consent letter from the employees for voluntary registration, if applicable.

How to track EPF balance? 

Here are the ways to track EPF:

  • To check your EPF balance online, you need your UAN, a unique number assigned to every EPF member. To access your passbook, use your UAN and password on the EPFO website or UMANG app. You can download or print it for your convenience.
  • If you do not have your UAN, you can still get your EPF balance information by sending an SMS or making a missed call to the EPFO number. You must use the same mobile number linked to your EPF account. The SMS format is EPFOHO UAN <LAN>, where <LAN> is the first three letters of the language you prefer. For example, EPFOHO UAN ENG for English. The missed call number is 9966044425.
  • Another way to track your EPF balance without UAN is to use the EPFO online portal. You have to enter your PF account number, which consists of the establishment code, the extension code, and the member ID. You also have to provide your name and mobile number. You will get an SMS with your EPF balance details.

Conclusion

EPF secures your retirement. The interest earned on your EPF is tax-free, subject to certain conditions. You can also claim tax deductions on your EPF contributions u/s 80C of the Income Tax Act up to a limit of Rs. 1.5 lakh per year if you opt for the old tax regime.

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