Employees’ Provident Fund
Benefits administration is very important in an organization as it is wholly focused on providing employees with benefit packages that would support the company’s workforce and help in advancing toward its goals. To handle this, a company hires a benefits administrator whose duties are to keep the costs down while implementing a safety net for the employees. The benefits package is going to act like a commodity that you can leverage to attract new and talented employees to your company and to also retain the current employees. Under benefit administration packages provided by the company, there come various schemes for employees, one of which is the Employee’s Provident Fund.
What is Employee’s Provident Fund (EPF)?
Employee’s Provident Fund(EPF) is a very popular investment scheme for salaried employees. It is a statutory body under the Ministry of Labour and Employment, Government of India administers social security schemes framed under the Employee’s Provident Funds & Miscellaneous Provisions Act, 1952. The EPF is very transparent, efficient, and comfortable for everyone as its services can be enjoyed online by being members of its portal.
All employees are eligible of becoming a member of the EPF scheme from the date of their joining the organization. By becoming a member, one can enjoy all the Provident Fund benefits, pensions, and insurance benefits. Every employee is been asked to give a nomination at the time of joining the PF scheme. Under this scheme both the employees and employers have to make their respective contributions. Employees and employers are supposed to contribute 12% of their salary to the Employees’ Provident Fund.
The idea behind provident funds is to provide the employees a relief when it comes to financial security and stability. A person is deemed to start contributing to the PF funds as soon as he joins the company as an employee. Through PF funds, employees will tend to save a fraction of their salary. Some percentage of their salary is directly contributed to their PF accounts.
Eligibility criteria for EPF
It is compulsory to make an EPF account for an employee whose salary is below Rs. 15000 . As per the law, organizations with 20 or more employees must register for the EPF scheme. Even an organization with less than 20 employees is supposed to voluntarily register for the scheme. The employee who has a salary of above Rs. 15,000 are not eligible for the EPF, although they can still opt for it with the permission of the employer and approval from the Assistant PF Commissioner.
Benefits to employees under EPF scheme
Employee Provident Fund has been set up to provide the right investment to the employees. The tax-free interest and the maturity award ensure very good growth in the employee’s money. EPF will help the employee fulfill their necessities for the future, the longer the EPF continues the more money an employee saves and more requirements for the future will be pleased. The interest will be credited tax-free to the PF account only when an employee has a interest of up to 2.50 lakh per annum. For employees’ with interest over Rs. 2.50 lakh, the tax will be charged year after year. Also, more senior people whose interest in the capital has now accumulated to over Rs. 2.5 lakh per annum are going to be affected because of the new PF policies. Contributions to the Provident Funds are made for the welfare of the employees and the employer only.
The moment the person retires the amount of interest being credited in the PF account becomes taxable and is required to be offered for tax under the head ‘Income from other sources. Exemption on EPF withdrawal can be enjoyed based on the number of months for which EPF contributions have been made which entitles one to the exemption.
In times of emergency when an employee falls short of funds, he/she can always look up to the money they saved in their EPF account. The kind of benefits EPF provides for an employee, no other investment can offer a similar remuneration. It guarantees benefits such as :
l Accumulation plus interest upon retirement, resignation, and death
l Partial withdrawals allowed for specific expenses such as house construction, higher education, marriage, illness, etc
l PF account can be transferable if any member changes employment from one establishment to another where such a Provident Fund scheme is applicable.
The EPF also provides online services to the employees. Through this scheme, an employee can keep track of the balance inquiry, claim status check, transfer facility, etc. An online passbook can also be generated which further eases the load of keeping track of the transactions being made.
EPF and its services
EPF has been created by the Government of India in the awakening of keeping stability and good life for the employees working in different organizations. Listed below are some of the major services provided by EPO:
Ø Online Registration- Online services have eased the load of keeping a track of one’s account in the EPF portal. Therefore, employees can easily complete the online registration of their establishment through the portal.
Ø Generation of UAN details — Employees can generate their UAN details using the EPF portal and then log into the UMANG application wherein they can get all the PF-related information.
Ø Online EPF subscription- Companies can easily make PF payments/subscriptions online through the portal.
Ø Redressal of Grievances- EPF members can raise a complaint in case of queries relating to the transfer of PF, settlement of pension, PF withdrawal, etc.
Ø Online claims and Transfer Status and Passbook- EPF members can easily check the status of their PF claims and check/download their PF passbook with the help of UAN.
EPF is regarded as an excellent saving and investment scheme for the employees. It builds them a sufficient amount of money for retirement. The benefits are added directly over the course of the UAN. It also comes with numerous tax benefits. It ensures higher earnings and improves savings for employees in the long run.
Click here to read about the new PF income limits and how it is affecting employers’ payroll: https://megasoftsol.medium.com/new-pf-income-limits-and-taxability-analysis-5e70e4623596
