Frequently Asked Question on EPFO
The EPF (Employee Provident Fund) – most popular investment for salaried individuals is maintained solely by the Employees Provident Fund Organisation of India (EPFO). As a statutory rule, any company having more than 20 employees, have to register with the EPFO.
We bring you the top 10 Frequently Asked Questions on EPF and its operation.
I. Is contribution to the EPF mandatory?
For those who have a basic salary of up to INR 6500, contributing to the EPF is mandatory. Contributions are voluntary for those whose basic salary exceeds INR 6,500.
However it is strongly recommended to make such contributions to avail of the various benefits an EPF Account has in store.
II. What should I do when I change my job? And what should be done when I quit my job (without joining elsewhere)?
At such times, the PF balance could be transferred from one employer to another. The existing balance would continue to stay, with fresh contributions made by the new employer.
When you quit your job, PF could be withdrawn. You need to provide a declaration that you do not intend to work for the next six months.
III. EPF vs. PPF – Which is better?
Employee Provident Fund (EPF) and Public Provident Fund (PPF) are long term investment instruments for retirement. However a lot of people are confused between these two. We clarify all your doubts.
IV. Change in Employee Provident Fund Rules – Things you need to know
As per the new 2012 rules issued recently, The EPFO has made amendments to the way in which employee and employer contribution would be calculated hereon.
For employees, this amendment is particularly important as it impacts his/her take home salary and income tax liability as well.
A quick look at the amendment
V. Where does my monthly EPF contribution go to and what is the break-up of the contribution to the above schemes?
An employee’s monthly contribution would go into the following 3 schemes as per EPF Act, 1952.
Ø EPF, 1952
Ø EDLIS (Employees’ Deposit Linked Insurance Scheme), 1976
Ø EPS (Employees’ Pension Scheme), 1995
Most companies calculate ‘salary’ as: Basic + DA. Some calculate: Basic + DA + Allowances that are ordinarily necessarily and uniformly paid to employees.
The EPFO has made recent amendments to the way in which employee and employer contribution would be calculated hereon. For employees, this amendment is particularly important as it impacts his/her take home salary and income tax liability as well.
Employees drawing Basic of more than INR 6,500 per month:
Assume Employee’s basic at INR 8,000 per month.
Employer can calculate his contribution in 3 ways as below:
|Method||‘Employee’ Contribution||‘Employer’ Contribution|
|Method-1||12% of INR 8,000||12% of INR 8,000 ‘minus’ EPS amountà||8.33% of INR 6,500|
|Method-2||12% of INR 6,500||3.67% of INR 6,500||8.33% of INR 6,500|
|Method-3||12% of INR 8,000||3.67% of INR 6,500||8.33% of INR 6,500|
Method varies from company to company. Do check with your employer on what method they have employed.
VI. What is the current interest rate on EPF Account?
The Central Government revises EPF interest rates every year depending upon the revenues made by EPFO on its earlier years’ deposits.
For FY 2012-13, the EPF interest rate is 8.50% p.a.
VII How do I check my EPF Account statement online?
Employee Provident Fund (EPF) members can now access their account statements online atwww.epfindia.gov.in.
This facility is available only to active members who are currently contributing to their EPF accounts.
VIII When can I withdraw my EPF money?
You can withdraw from your EPF account on the account your children’s education, marriage of self, children and siblings, purchase/construction of a house or any medical emergencies.
However, withdrawal is subject to certain conditions, non-compliance of which would result in penal interest:
• You should have completed minimum 7 years of service;
• Withdrawal can be made only 3 times in the period during which you hold the EPF Account;
• Maximum aggregate withdrawal would be 50% of the total contributions made by you.
For medical emergencies, there is no minimum service period. However, the maximum amount one can withdraw is 6 times the basic salary and proof of hospitalization is required.
Withdrawal from EPF Account for purchase/construction of a house is available only once in an individual’s entire working life. The minimum service period is 5 years and the maximum withdrawable amount is 36 times your total salary (for construction of property) and 24 times (for purchase of property).
IX Can I make EPF contributions more than 12% of my salary?
Yes, you can. The additional contribution is called as ‘voluntary contribution’. But such additional contribution will not be matched by your employer.
All the same rules and interest rate will apply to your voluntary contribution regarding withdrawal, transfer, interest rate and so forth.
X How to locate an EPFO Office in case of any grievances?
You can now know the District-Wise geographical jurisdiction of EPFO Office.