Know About Your EPF

An Employees' Provident Fund (EPF) is managed by the Employees' Provident Fund Organisation (EPFO) under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952.

Every establishment with 20 or more employed individuals or sometimes less than 20 in certain conditions come under this scheme. The employee and employer make equal contributions to the scheme and the employee receives the contribution with interest after retirement.

This is the permanent account number allotted by EPFO. When you change your job, a new member ID will be provided to you from the local PF office, which is your PF number. All the PF numbers will fall under one umbrella of UAN. You can find this number in your payslip, along with your PF number from the current employer.

Your Contribution Paid

Contribution made towards the EPF is:

• Government sector: 12% of your basic pay plus your dearness allowance plus retaining allowance
• Private sector: 12% of basic pay
• Establishment with less than 20 employees: 10% of the basic pay

Share of Contribution

All the contribution made towards EPF does not remain under EPF, some of it goes towards Employees' Pension Scheme (EPS). From the employer's contribution, 8.33% goes to EPS while the rest goes to EPF. However, for those with Rs 15,000 or more basic salary, the EPS contribution is limited to 8.33% of Rs 15,000 that is Rs 1,250.

Voluntary Provident Fund

You can choose to contribute higher than 12% of your basic pay towards EPF by applying for the Voluntary Provident Fund (VPF). Here the employer does not require to match the contribution and your contribution is tax-free.

Withdrawal of EPF

You can withdraw your full PF balance:

• If you have retired from your employment after attaining 55 years of age.
• If you are out of employment for 60 straight days or more.

However, those over 54 years of age, nearing retirement can withdraw upto 90% of the balance with interest.

Interest

EPF interest is calculated on monthly running balance. If you do not contribute to your account for three years, it becomes inactive and you will not earn any interest.

Withdrawal after 5 years of employment

If you have worked for 5 continuous years, you can withdraw your PF balance without any tax implications if you have quit the job and are unemployed for over 60 days. The five years of service does not have to be with the same employer provided, you have transferred your EPF to the new employer instead of withdrawal.

Withdrawing before 5 years of employment

Employer's contribution along with interest is taxable in the year of withdrawal. Deduction claimed under section 80C on your contribution will be added to income for the year. Interest earned on your contribution is also taxable.

Tax is deducted at source (TDS) for premature withdrawals of EPF. Advances

Advances

You need not wait till your retirement to withdraw the EPF amount. You can make withdrawals after a minimum of 5 years of service.

It can be withdrawn for purchasing a house or residential plot, repaying loan from a government organisation or nationalised bank, for child's marriage or education, medical treatment of a family member hospitalised for more than a month, etc. Please note that the employee should have completed 7 years of service for child's marriage/education advance.

The amount withdrawn is limited to conditions laid by the EPFO. You need not pay any interest on this withdraw and choose not to repay the balance.

House Loans and EMIs

The EPFO allows members to use upto 90% of their accumulated contribution to make down payments in purchase of the house or to pay EMIs of home loans.

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