All You Need To Know About EPF - Employee Provident Fund
  • EPF (Employee Provident Fund): Payroll solutions companies provide EPF (Employee Provident Fund) a scheme the government manages to promote savings for individuals employed in the service sector. Under this scheme, the employee and employer must contribute a certain amount of money towards the scheme. Interest is paid on both employees’ and employers’ contributions. Let us understand all you need to know about the EPF scheme.
  • UAN (Universal Account Number): It’s a unique number that is allotted to every member of the EPFO. All the member IDs allotted to the employee by different organizations he has worked in are linked with his UAN. The employee can view all the member IDs in one place. When the employee joins a new Organization, he must provide his UAN to the employer to link his new PF account with the UAN. It helps in withdrawing funds and transferring PF accounts quite easily.
  • EPF Contribution: Both employee and employer equally contribute to the EPF scheme. The employee contributes 12% of the combined basic pay, DA, and RA. Here, only a part of the employer’s contribution is sent to the EPF account, and the remaining 8.33% is sent to the Employee Pension Scheme. This applies to organizations with more than 20 employees, and if the number is less than 20, then the contribution is 10% for both parties.
  • Interest Rate: The current Interest Rate offered is 8.65%, governed by the Ministry of Labour and Employment. It’s calculated based on the employee’s monthly running balance. To promote savings and avoid early withdrawals, the government has introduced TDS, i.e., no TAX will be deducted when withdrawing the PF after 5 years.
  • Auto Transfer: When an employee switches jobs, the new employer opens a new PF account for him. The employee has to then transfer the funds from his old PF account to the new one. The employee must complete Form 13 to transfer the funds into the new account. However, the employee has to fill out a composite form 11 to transfer the funds automatically into the new account.
  • Online Facilities: EPFO has eased the process of availing various services by EPF members; one can simply log into his EPF account using their UAN and avail of many services such as PF withdrawal, transfer of funds/accounts, Updation of KYC, Enquiry, etc. One must first register on the portal using his UAN and create a password. He can then login and access all the available online services, which are free and can be accessed anytime. However, the employee must submit his PAN and AADHAR before applying for an online claim or withdrawal.
  • Paperless Registration: We are payroll solutions companies with 20 or more employees under EPFO supervision. A hard copy of form 5A and all the required documents had to be submitted to the nearby office to open such an establishment. This was also applicable in the case of a change of ownership of the establishment. But now, one can update form 5A online after signing in, thus eliminating unnecessary paperwork and the need to visit the EPFO office. 
  • Integration of Centralised Payment System NPCI: 
  • EPFO has integrated the NPCI (National Payment Corporation of India) platform with its interface. This ensures that the fund transfer process becomes more convenient and transaction charges are reduced. 
  • PF Advances: The main objective of EPF is to provide a substantial amount of money to the employee at the time of retirement. However, EPFO allows the employee to withdraw funds before retirement as well in some cases, such as buying a new house, paying an existing home loan, meeting medical requirements, and marrying/educating their children. The amount of money disbursed depends on specific requirements, such as years in service, etc. Also, it is not mandatory to repay the amount withdrawn. If you have attached your AADHAR and PAN with your UAN account, you can fill out the online form at the portal and withdraw the amount without anyone’s approval.

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