EPF - Provident Fund
EMPLOYEE’S PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT, 1952 was enacted with the main objective of making some provisions for the future of workers after their retirement and for their dependents in case of death.
Employee's Provident Fund Organization (EPFO)
EPFO or PF is an arrangement made by the government and managed by Employee’s Provident Fund Organization (EPFO), which is covered under the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952. The EPF organization is controlled by the Ministry of Labour and Employment, Government of India. The Act was framed to provide benefits to salaried class employees. Under this act, the employees are entitled to receive a pension, insurance, or special benefits on specific occasions by contributing a nominal amount towards this fund. The contribution is being deposited from applicable for both employee and employer.
Benefits of PF
Earlier this registration was being done manually by visiting the organization. But now it can be easily done online. An important investment plan for future needs has been made mandatory by the government for the employees drawing a basic salary less than Rs. 15000/-. The fund accumulated would be tax-free and if withdrawal is being made after 5 years of registration then the maturity amount with interest will also be treated as the tax-free income. The contribution also helps employees by facilitating the withdrawal of partial amounts for expenses like house construction, daughter’s wedding, in the case of critical illness, higher education, etc. Thus, it is very important to contribute towards this fund for both employer and employee.
PF Contribution
- 12% of Basic Salary of Employee deposited directly towards EPF
- 12% of Employer contribution is divided as –
- 8.33% of contribution towards Employees’ Pension Scheme
- 3.67% of contribution towards Employees’ Provident Fund
- 1.1% of contribution towards EPF Administration Charges ( After 01/04/2017 0.65% )
- 0.5% of contribution towards Employees’ Deposit Linked Insurance ( minimum RS. 500/-)
- 0.01% of contribution towards EDLI Administration Charges( After01/04/2017 RS. 0/-)