02 Apr 2021 | 5 min read
You must be contributing to EPF every month but you won’t know much about Employees’ Provident Fund or EPF. Therefore, today by means of this special blog, you’ll not get to know about the significant terms of EPF but also 10 vital things that you are required to know prior to making EPF withdrawal. Let’s get started with a brief of the EPF.
Employees’ Provident Fund or EPF is a scheme managed by the government of India that promotes savings for employees within the service sector. Under this scheme, the employee has got to pay a certain amount of cash towards the scheme. The employer also contributes a similar amount and thereby the interest is paid on both viz. Contribution of employee and the employer.
Now, let’s get started with the important terms that every employee should be aware of in general too as this will help them understand many things about their contribution towards EPF and several other aspects of EPF.
Universal Account Number (UAN) plays the most crucial role all across EPF. It is a 12-digit number that is provided to every member of the Employees’ Provided Fund Organisation (EPFO) using which s/he can manage his/her PF accounts.
This number is generated by the Ministry of Employment and Labour. It facilitates the person to get all the details associated with his/her Provident Fund (PF) in one place notwithstanding the company s/he's functions.
As a universal number, UAN helps a member to accumulate all the PF accounts linked with multiple IDs of various entities in one place. Using UAN, the employee can easily take out and carry out the transferring of funds.
The Employees’ Provided Fund Organisation (EPFO) has set provisions for its members to claim their money from PF accounts online. In accordance with the new rules, the organization has made it mandatory for all the members to apply for the claims by online medium when the withdrawal amount exceeds Rs. 10 Lakhs.
In case, the amount is up to Rs. 10 Lakhs, members are allowed to claim EPF balance by means of both the modes viz. Online and Offline.
To carry out EPF balance claim online, the member will have to get his/her KYC documents (Aadhaar and PAN) digitally signed by the respective authorities such as UIDAI and IT Department. A member can apply for EPF balance withdrawal by filling claim forms 31, 19 and 10C.
Both the worker and the employer contribute to the EPF scheme equally. The employee contributes 12% of his/her combined total of basic pay, dearness allowance and retaining allowance.
While the employer contributes 8.33% of the employer’s contribution is directed towards the Employees’ Pension Scheme. This amount is applicable for organisations possessing up to 20 employees. If the employee operates in a company possessing over 20 employees, the contribution for both parties is 10%.
When an employee switches his/her job, the new company opens a replacement PF account for him/her. The employee has got to then transfer the funds from his/her previous EPF account to the replacement one.
To carry out this, the member will have to fill in and submit the Form-13 Nevertheless, the Employees’ Provided Fund Organisation (EPFO) has established provisions by means of which the member is required to fill in a composite Form-11 for performing the transferring of the PF balance automatically into the new PF account.
The rate of interest offered by the EPFO to employees is currently 8.55%. The Ministry of Labour and Employment, Government of India has mitigated the interest rate for the present fiscal by 10 basis points.
Additionally, the ministry also analyses the scenario and determines the rate of interest rendered to members for the subsequent fiscal year. The interest is computed based on the monthly running balance of the worker.
EPFO has simplified the way of availing various services by EPF members. Members can simply log in to their EPF account using their UAN and enjoy a variety of services, i.e., EPF balance withdrawal, fund/account transfer, KYC updation, balance enquiry, etc.
The employee can register on the EPF member portal using his UAN and set up a password. S/he can then login to his/her account to avail of the available online facilities.
All the EPF online services don’t need to get any cost, therefore, the member can access them 24x7. Although, it is compulsory to submit PAN Card and Aadhaar Card prior to applying for the EPF balance claim or withdrawal online.
The primary objective of EPF is to supply a considerable amount of cash to the employees at their retirement. Nevertheless, EPFO also enables members to take out funds prior to retirement.
Such amount withdrawn is stated as EPF advances. Generally, the funds are often taken out for the following reasons – to buy a new house, to pay off the home loan, to meet medical requirements, and children’s wedding or education.
The cash quantum that can be disbursed depends on certain criteria such as the number of years in commission, etc. It is not compulsory to pay off the quantity taken out. If you have linked your Aadhaar Card and PAN Card with your UAN, you can fill the form online at the EPF member portal and apply for the claim of your PF balance without asking for approval from your employer.
The EPF interest rate is reviewed every year. For FY 2021-22, the EPF interest rate is 8.50%. When EPFO announces the interest rate for a financial year, it is computed for the month-by-month closing balance and then for the entire year.
Here are a few key points to remember about the EPF Interest Rate:
Here are the 10 key points that you bear in mind while withdrawing your EPF balance online or offline:
To conclude, every employee who is contributing towards the EPF should be aware of it. Aforementioned, terms are frequently used terms associated with EPF that not only employees but also employers should comprehend.
Besides, the above-stated 10 points have to be taken into consideration by the employees at the time of withdrawal. Besides, if you are willing to avail of a Personal Loan on an urgent basis, Afinoz is the perfect marketplace that allows you to compare multiple Personal Loan offers at one place and apply for the best-suited one as per your needs and circumstances instantly via its app and website.
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