If you are a working professional in India, you would have definitely heard about the term “EPF” or “Employee Provident Fund”. EPF is an essential component of the salary structure of every salaried employee in India. In this article, we will discuss in detail about the EPF, its full form, meaning, benefits, and other important aspects related to it.
What is EPF?
EPF stands for “Employee Provident Fund”. It is a retirement benefits scheme that is designed for the welfare of salaried employees. It is a mandatory saving scheme that is regulated by the Employees’ Provident Fund Organization (EPFO), which is a statutory body under the Ministry of Labour and Employment, Government of India. Every month, a portion of the employee’s salary is contributed to the EPF account, along with a matching contribution from the employer.
EPF Full Form
The full form of EPF is “Employee Provident Fund”. It is a savings scheme that is designed for the benefit of salaried employees in India.
How does EPF work?
EPF is a savings scheme where both the employee and employer contribute a certain percentage of the employee’s salary to the EPF account. The contribution is made every month and is calculated as a percentage of the employee’s basic salary plus dearness allowance. The current contribution rate is 12% of the employee’s basic salary plus dearness allowance, and an equal contribution is made by the employer. The accumulated amount in the EPF account earns interest at a rate determined by the government.
Types of Contributions in EPF
There are two types of contributions in EPF:
- Employee Contribution: 12% of the employee’s basic salary plus dearness allowance is deducted every month from the employee’s salary and contributed to the EPF account.
- Employer Contribution: An equal amount, i.e., 12% of the employee’s basic salary plus dearness allowance, is contributed by the employer to the EPF account.
EPF Contribution Rates
The current contribution rate for EPF is 12% of the employee’s basic salary plus dearness allowance. The same amount is contributed by the employer as well.
Benefits of EPF
The EPF scheme offers several benefits to the employees, which include the following:
- Retirement Benefit: The accumulated amount in the EPF account serves as a retirement corpus for the employee.
- Financial Security: The EPF scheme provides financial security to the employee and their family in case of unforeseen circumstances such as illness, disability, or death.
- Tax Benefit: The amount contributed to the EPF account is eligible for tax deduction under Section 80C of the Income Tax Act.
- Loan Facility: The EPF account can be used as collateral to avail of loans at a lower interest rate.
EPF Withdrawal Rules
The EPF amount can be withdrawn by the employee in the following cases:
- Retirement: The EPF amount can be withdrawn once the employee attains the age of 58 years.
- Resignation: The employee can withdraw the EPF amount if they remain unemployed for two months or more.
- Illness: In case of a serious illness, the employee can withdraw the EPF amount.
- Disability: If the employee is permanently disabled, they can withdraw the EPF amount.
- Death: In case of the employee’s death, the EPF amount can be claimed by the nominee or legal heir.
Documents Required for EPF Withdrawal
The following documents are required for EPF withdrawal:
- EPF Withdrawal Form
- Identity Proof (PAN card, Aadhaar card, Voter ID card, etc.)
- Address Proof (Aadhaar card, Passport, Driving License, etc.)
- Bank Account Details
- Cancelled Cheque
EPF Claim Status
The EPF claim status can be checked online on the EPFO website. The employee needs to enter their EPF account number and other relevant details to check the status.
How to Check EPF Balance?
The EPF balance can be checked online on the EPFO website or through the Umang app. The employee needs to enter their EPF account number and other relevant details to check the balance.
EPF Calculation
The EPF calculation is based on the employee’s basic salary plus dearness allowance. The current contribution rate is 12% of the basic salary plus dearness allowance. The accumulated amount earns interest at a rate determined by the government.
EPF Nomination
The EPF account holder can nominate one or more individuals to receive the EPF amount in case of their death. The nomination can be done online on the EPFO website.
EPF Pension Scheme
The EPF scheme also includes a pension scheme, which provides a pension to the employee after their retirement. The pension is based on the employee’s years of service and the average monthly salary in the last 5 years of service.
EPF vs PPF
PPF (Public Provident Fund) is another savings scheme that is designed for the benefit of individuals. While EPF is designed for salaried employees, PPF is open to all individuals. The contribution rate for PPF is determined by the individual, while the contribution rate for EPF is fixed at 12% of the basic salary plus dearness allowance.
FAQs on Employee Provident Fund
The full form of EPF is “Employee Provident Fund”.
Salaried employees in India are eligible for EPF.
The current EPF contribution rate is 12% of the basic salary plus dearness allowance.
You can check your EPF balance online on the EPFO website or through the Umang app.
Yes, you can nominate one or more individuals to receive your EPF amount in case of your death.
Conclusion
EPF is a mandatory saving scheme that is designed for the welfare of salaried employees in India. It provides several benefits to the employees, including financial security, tax benefits, and a retirement corpus.
The EPF account can be withdrawn in case of retirement, resignation, illness, disability, or death. The EPF balance can be checked online on the EPFO website or through the Umang app.