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Employees Provident Fund

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Employees Provident Fund or EPF is a savings scheme available to all employees who are residing in India.

It is a retirement saving scheme.

During the course of employment, a small part of the employee salary is saved so that at the time of their retirement, the funds will be made available to them.

This facility is available to all employees whose monthly salary is above Rs 6500.

Employees with over Rs. 6500 can voluntarily make the contributions.

The good thing with this facility is that both the employee and the employer make contributions to the fund.

Employee Provident Fund Organisation or EPFO is the organization that maintains a record of the contributions and helps in settlement of the fund.

How it works?

Usually, an employee can opt for a EPF saving of 12% or more of his salary.

The Employer’s contribution of 12% of basic salary is totally deposited in provident fund account.

Out of employee’s contribution of 12%, 3.67% is contributed to provident fund & 8.33% is deposited in Pension scheme.

The amount invested in an Employee Provident Fund is exempt from tax under Section 80C of the Income Tax Act.

In EPF, the amount is paid at the time of retirement or resignation, whichever occurs earlier.

The employee can check the amount invested in their EPF account online on the EPF India website with their Universal Account Number(UAN)

Partial withdrawals allowed for specific expenses such as house construction, higher education, marriage, illness etc.

Claim EPF after the death of a subscriber

Upon the death of an EPF member, the Employee Provident Fund amount is paid to the nominee that was nominated at the time of initiation of the account.

If there was no nominee assigned then the EPF amount is paid to the immediate members of the family.

If the family members and the nominee are not applicable for the account then the legal heir can claim EPF amount. .

The claim can be made through Form 20 by the legal heir or whoever is eligible to get the EPF amount.

The claim can be forwarded only through the employer. In case of closure of establishment the claim may be sent through the authorised persons as per the list given in the application form.

It is desirable that in such cases the claim may be got attested by the bank manager wherein the bank account is kept.

EPF Rates

For FY18, the interest rate on Employees’ Provident Fund stands at 8.55 per cent, 10 basis points less than that in the previous financial year.

EPF Online Filing

In early 2018, the EPFO also made it mandatory to file online claims for withdrawals above Rs 10 lakh. Under the Employee Pension Scheme, all claims above Rs 5 lakh will have to be filed online.

Related News

  • April 11, 2018: Business Standard: FinMin questions EPF interest rate of 8.55%. FinMin questions EPF interest rate of 8.55%

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