Employee Provident Fund (EPF) is a retirement savings scheme established by the government of India. It is aimed at providing financial security to employees after they retire. The scheme is mandatory for most employees in India and is managed by the Employees’ Provident Fund Organisation (EPFO). In this blog post, we will discuss how EPF works, its benefits, and how to check your EPF balance.
What is EPF?
EPF is a retirement savings scheme that is available to all employees in India, including those who work for the government. The scheme is aimed at providing financial security to employees after they retire. Under the scheme, both the employer and the employee contribute a fixed percentage of the employee’s salary to the EPF account. The contributions are then invested in various instruments such as bonds, equities, and government securities.
Benefits of EPF
EPF offers a number of benefits to employees, including the following:
- Retirement savings: EPF helps employees save for their retirement, ensuring financial security in their old age.
- Tax benefits: Both the employee and the employer contributions are eligible for tax deductions under section 80C of the Income Tax Act.
- Interest rate: The EPF scheme offers an attractive interest rate, which is revised every year. For the financial year 2021-22, the interest rate is 8.5%.
- Loan facility: Employees can also avail of a loan against their EPF balance for various purposes such as house purchase, marriage, medical treatment, etc.
How does EPF work?
EPF is a contributory scheme, which means that both the employee and the employer contribute to the EPF account. The contributions are calculated as a percentage of the employee’s basic salary plus dearness allowance. The current contribution rate is 12% for both the employee and the employer. However, for certain industries, the contribution rate may be lower.
The contributions are made monthly and are deposited into the employee’s EPF account. The employer is responsible for deducting the employee’s contribution from their salary and depositing it into their EPF account.
The EPF contributions are invested in various instruments such as bonds, equities, and government securities. The EPFO manages the investments and ensures that the investments are safe and provide a good return.
Also know about: What is the procedure of epf registration?
EPF Withdrawal
Employees can withdraw their EPF balance under certain circumstances such as retirement, resignation, or termination of employment. In case of retirement, the employee can withdraw the entire EPF balance. However, in case of resignation or termination, the employee can withdraw the EPF balance only after a waiting period of two months.
In case of an emergency such as a medical emergency, marriage, or education of children, employees can also withdraw a portion of their EPF balance. The withdrawal amount is subject to certain conditions and is limited to a certain percentage of the EPF balance.
EPF Balance Check
Employees can check their EPF balance by visiting the EPFO website or by sending an SMS to the EPFO. To check the EPF balance online, employees need to enter their UAN (Universal Account Number) and password on the EPFO website. Once logged in, they can view their EPF balance and other details such as the contribution history and interest earned.
Conclusion
EPF is a retirement savings scheme that is mandatory for most employees in India. It offers a number of benefits such as tax deductions, attractive interest rates, and a loan facility. EPF contributions are made by both the employee and the employer and are invested in various instruments such as bonds, equities, and government securities. Employees can withdraw their EPF balance under certain circumstances such as retirement, resignation, or termination of employment.
Read more,
- Who Is Eligible to Register With the PF?
- Pf withdrawal proofs what do you need
- 12 Provident Fund Lessons I Learnt: Everything You Need to Know