Employees’ Provident Fund (EPF) is a savings scheme which was started under the Employees’ Provident Fund and Miscellaneous Act, 1952.
New Delhi. We invest in many places like Bank FD, Recurring Deposit, Gold, Shares, Mutual Funds. But if we work in private or government undertakings, then PF is deducted there.
Today we will know about this PF deduction. PF is also a savings scheme, which is made keeping in view the future of the employee. In this, lumpsum amount is available on retirement as well as pension. Not only this, many savings schemes also provide more interest and insurance facility. Let us understand the complete ABCD of PF through simple questions and answers.
What is EPF?
Employees’ Provident Fund (EPF) is a savings scheme which was started under the Employees’ Provident Fund and Miscellaneous Act, 1952. It is administered and managed by the Central Board of Trustees which includes representatives of the government, employer/company and employees. The Employees’ Provident Fund Organization (EPFO) assists in the activities of this board.
What is the rule of PF?
The company and the employees make a certain contribution in the PF account. And EPFO pays interest on it annually. Along with this, the employees also get the facility of pension.
What is the interest rate of EPF in the year 2020-21?
The interest rate on PF is reviewed annually. The EPF interest rate for the financial year 2020-21 is 8.50%. Once the EPFO lists the interest rate for a financial year and the year ends, the interest rate is calculated month-wise on the closing balance amount and then for the entire year.
How is PF contribution calculated?
Generally, the contribution from both the employer and the employee to the EPF is 12-12 per cent of the basic salary + DA of the employee, i.e. 24 per cent in total. Out of 12 percent contribution of the employer, 8.33 percent goes to the Employee Pension Scheme (EPS, EPS) and the remaining 3.67 percent goes to the EPF. 10% EPF share is valid for organizations/companies having less than 20 employees. Or organizations/companies whose loss (at the end of the financial year) is equal to or more than their net worth and has been declared sick by the Industrial and Financial Resolution Board.
Is PF Mandatory on salary above Rs 15,000?
Yes. But if the employer and the employee want, then the PF contribution can be kept on the limit of salary of Rs 15000. At the same time, the employee can also increase his contribution of 12 percent if he wants. For this, there is an option of Voluntary Provident Fund (VPF), which is said to contribute above 12 percent. Under VPF, the employee can contribute up to 100% of his basic salary in PF.
What is the current PF limit for salary?
The PF limit is only 12 percent of the salary. But if the contribution is more than Rs 5 lakh per annum, then the interest income from this will be taxable. The employee can contribute as much of his salary as he wants by paying tax.
Is PF calculated on gross salary?
The salary which is made by adding basic pay and allowances without deducting tax is called gross salary. This includes bonus, overtime pay, holiday pay and other itemized allowances. PF is not calculated on this. PF is deducted on the basis of basic salary. Basic salary is the base income of an employee. It is fixed based on the level of all the employees. It varies according to the rank of the employee and the industry in which he is working. At present, PF is deducted on the sum of basic salary and dearness allowance.
Is there any insurance facility on PF account?
EPFO members get the facility of insurance cover under the Employee Deposit Linked Insurance Scheme (EDLI Insurance cover). In the scheme, a maximum of Rs 7 lakh can be paid to the nominee under the insurance cover (EPF Covid Claim).
How many employees are required for PF?
The organization / company in which at least 20 people are working, that organization is responsible for giving EPF benefits to the workers. The organization or firm in which the maximum number of workers is 19, then the contribution can be 10 percent.
Can 100% of PF amount be withdrawn?
EPF can be withdrawn only during retirement, unemployment or some unforeseen circumstances. Full withdrawal can be done only after retirement or after two months of continuous unemployment. According to the new rule, EPFO allows to withdraw 75% of the amount from the EPF fund after 1 month of unemployment. If you remain unemployed for 2 consecutive months, you can also withdraw the remaining 25% of the funds. Meanwhile, if a new job is found, the remaining 25% amount can be transferred to a new EPF account.
What is Form 31 in PF Rules?
EPF Form 31 is used to withdraw money from your account. However, pre-retirement withdrawal from PF account is allowed only under certain circumstances such as purchase/construction of house, repayment of home loan, medical emergency, marriage of children/or education of child/brother.
