EPF stands for Employees’ Provident Fund and over the past decade there has been an exponential increase in the variety of financial instruments available to investors, including hybrid and complex investment products that have significantly expanded. Some Epf investors believe traditional investments offer greater returns, opting for the time-tested route rather than exploring more cutting-edge methods of investing.

Employees’ Provident Fund

The Employees’ Provident Fund Organisation of India created this savings scheme designed to promote savings habits among salaried employees while building up retirement funds. The Fund aims at encouraging savings among salaried employees as a means to build substantial retirement funds and enable savings habits among them.

Under this scheme, both employer and employee contribute towards an investment fund, earning interest annually on their contributions. When they retire or depart employment under certain conditions, this corpus becomes available to them upon retirement or exit from employment – the benefits even extend to workers from countries with bilateral agreements signed. Should an employee pass away before receiving these benefits?

What Is EPF, Employees’ Provident Fund

Employees’ Provident Fund is a savings scheme established and overseen by the Employees’ Provident Fund Organisation of India under supervision from the Ministry of Labour and Employment, Government of India. It aims to promote savings habits among salaried employees as well as build up retirement savings funds for each participant. The EPF scheme was first established in 1951 and currently serves over fifty million individuals. As a welfare scheme governed by The Employees’ Provident Scheme Act 1952, Employees’ Direct Linked Insurance Scheme Act 1976 and Employees’ Pension Scheme Act 1995 it provides essential benefits.

Primary objectives of EPFO

* Ensuring all organizations abide by the EPF regulations.

* Digitizing services provided by provident funds and improving user experiences.

* Simplifying compliance processes to encourage voluntary compliance.

* Protect investors’ rights and reduce claim settlement timeframe to three days.

* Ensure each employee holds only one EPF account with online access for each one; UAN and

KYC Details Clearance

Employees’ UAN remains constant regardless of any changes in employment. When switching jobs, their member ID changes; EPFO then links this new ID number with their existing UAN.

However, for online services to work effectively and employees needing them must activate their UAN. Your employer can give you this number. UAN provides convenient access to provident fund accounts and withdrawal requests at any time, and allows your employer to easily contribute funds into them as well as authorize withdrawal requests. Furthermore, both of you can manage a record of your account through an online portal; UAN enables easy accessibility online with all KYC details in one central place and facilitates provident fund contributions at the same time.

Employee Contribution

Employers and employees both need to decide how they’re going to divide up an employee’s basic salary, dearness allowance and retaining allowance. Employee contributions are deducted automatically from employee provident funds each month and deposited into EPF accounts; however, employees can contribute additional amounts at their discretion.

Employer Contribution

Employer contributions on salaries up to Rs 15000 require mandatory employer contributions towards two categories.

1. Employee Provident Fund (EPF) at 3.67%
2. Employee Pension Scheme (8.33%)
3. Employees’ Deposit Linked Insurance Scheme – 0.50% Its
4. EPF Administration Charges – 1.10% 5 Eligibility Requirements For Joining EPF (ETP Admin Charges + EDLIS Administrative Charges).

Steps involved in EPF Clearance

Organizations employing less than 20 employees may voluntarily join the Employee Provident Fund Organisation scheme. EPFO Services EPFO has made great efforts to digitalise its services in order to maximize operational efficiency and achieve excellence, offering a variety of services such as the following.

1. Online Registration: The EPFO portal facilitates online registration of establishments (OLRE). Additionally, an allotment letter for each establishment can be found there as well as improving employee experiences overall.
2. Contributions: Organizations must contribute online; certain public and private banks currently have agreements with EPFO to collect dues from organizations.
3. PF Withdrawal: Online PF withdrawal can be accomplished easily using UAN. However, employees need to link their Aadhaar number and bank details before withdrawing their money from an EPF account. Those unemployed for more than two months are eligible to withdraw funds.
4. Claim Status: Employees may check the status of claims filed via the portal and use their UAN to download an EPF passbook.
5. EPF Transfer: EPF transfers can be completed seamlessly online using UANs to ensure an effortless experience for employees.
6. Exempted Organizations: Exempted establishments can file their monthly returns using an IT tool provided by EPFO to do so online.
7. International Employees: EPF members employed abroad may create their Certificate of Coverage using an online centralized software provided by EPFO.
8. Unified Mobile Application: UMANG App is a mobile app released by EPFO that enables employees to utilize services such as EPF passbooks and profile updates with just their UAN and password.

EPF Calculation

An EPF calculator is an online simulation designed to estimate the value of your EPF investment upon retirement. This lump-sum figure includes your contribution, employer contributions and any accrued interest from investments held within EPFs. The EPF calculator requires information such as your age, monthly remuneration, dearness allowance, EPF contributions and retirement age as inputs. You may also provide any current balance you may have available within your EPF account if available; using a predefined formula the calculator returns a future value estimate for that investment.

EPF Interest

Any earnings generated on investments made with EPF accounts are tax-free. This form of interest accrues on the accounts belonging to employees who are about to retire; however, any interest earned beyond retirement age will be taxed according to each employee member’s tax slab. Note that amounts paid into EPF don’t accrue interest at an accrual rate; rather, members can qualify for their pension at age 58. for further EPF Benefits Information. The calculator’s purpose is to aid employees with financial and retirement planning. Furthermore, you can experiment with various permutations and combinations until achieving your desired retirement EPF fund balance.

Conclusion

EPF deposits were exempt from taxes until 2020. But following Budget 2021, new rules were announced which went into effect beginning with FY22 when deposits exceeded Rs 2.5 lakhs each financial year in both VPF and EPF accounts combined; any interest earned above 2.5 lakhs became taxable; provided there were no contributions made, up to Rs 5 lakh was tax-exempt in total per financial year; thus CBDT stated two separate PF accounts must be maintained. To  know more about EPF check out 5paisa.