Employee Provident Fund Eligibility: Everything You Need to Know

Being employed by an organisation comes with numerous perks. One such perk is the EPF. Short for Employees’ Provident Fund, EPF is a retirement savings scheme administered by the Employees’ Provident Fund Organisation (EPFO). Various organisations are required to abide by the EPFO regulations. You and your employer contribute a fixed percentage of your basic wages and dearness allowance towards an interest-generating fund. You can get information on eligibility for EPF for employees below.

EPF, or Employees’ Provident Fund, is an interest-earning fund administered by the EPFO. Establishments covered under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, are required to provide EPF benefits to eligible employees. You and your employer contribute a predetermined percentage of your basic wages and dearness allowance to EPF. The employer’s contribution is further divided between EPF and the Employees’ Pension Scheme (EPS).

Organisations with 20 or more employees are generally required to register with EPFO and comply with the applicable EPF provisions. The employee and employer generally contribute 12% each of the employee’s basic wages and dearness allowance. Out of the employer’s 12% contribution, 8.33% of wages, subject to the applicable wage ceiling, is directed towards EPS, while the remaining amount is credited to EPF.

A reduced contribution rate of 10% may apply to certain establishments and categories specified under the applicable EPF rules. It does not automatically apply to every organisation with fewer than 20 employees. The contributions earn interest at the rate declared for the relevant financial year.

మీరు ఈ క్రింది ప్రమాణాలను నెరవేర్చినట్లయితే మీరు ఇపిఎఫ్ కోసం అర్హత కలిగి ఉంటారు:

• You work at an organisation that has 20 or more employees. The company must be registered with the EPFO. An establishment with fewer than 20 employees may also opt for voluntary EPF coverage, subject to the applicable conditions. 

• If your basic wages and dearness allowance are ₹15,000 or less per month when you join an EPF-covered establishment, EPF membership is generally mandatory. Employees earning more than ₹15,000 per month at the time of joining may become members voluntarily with the consent of the employer and the applicable EPFO authority. 

• If you are already an EPF member and your wages later increase above ₹15,000 per month, you generally continue to remain an EPF member.

Your employer is required to register with EPFO if the establishment falls within the scope of the EPF & MP Act and employs 20 or more individuals. Establishments with fewer than 20 employees may apply for voluntary coverage, subject to the applicable conditions.

An establishment cannot simply opt out of EPF coverage because its employee count later falls below 20. Exemption from EPF provisions is subject to specific statutory requirements and approval from the appropriate authority.

ఇపిఎఫ్ అర్హత ఎలా పనిచేస్తుందో అర్థం చేసుకుందాం:

Let us assume you work at an organisation that is registered with EPFO. Your employer enrols you in EPF if you meet the applicable eligibility criteria. You generally contribute 12% of your basic wages and dearness allowance to the EPF account every month. A reduced contribution rate of 10% may apply in specified cases.

Additionally, your employer generally contributes an amount equal to 12% of your basic wages and dearness allowance. Of the employer’s contribution, 8.33% of wages, subject to the applicable wage ceiling, is directed towards EPS, while the remaining amount is credited to EPF. Your entire contribution is credited to your EPF account.

Together, the employee and employer generally contribute an amount equivalent to 24% of basic wages and dearness allowance. However, the entire amount is not credited to EPF, as a portion of the employer’s contribution is allocated to EPS. 

Moreover, you get access to the Employees’ Deposit Linked Insurance (EDLI) Scheme, which provides insurance benefits to the nominee or eligible beneficiary if an EPF member passes away while in service. The benefit is calculated according to the applicable EDLI Scheme provisions.

EPF and EPS contributions are subject to the applicable wage ceilings and scheme provisions. Employees may also choose to contribute more than the statutory rate through the Voluntary Provident Fund (VPF); however, the employer is generally not required to match the additional contribution. 

A reduced contribution rate of 10% may apply to certain establishments specified under the applicable rules, including:

• Any sick industrial company declared as such by the competent authority under the applicable provisions.

• Any company that has accumulated losses equal to or exceeding its entire net worth. 

• Certain establishments in specified industries, subject to the applicable EPFO rules.

Applications for EPF are made through respective employers. All you need to do is submit Form 11 provided by your employer. You must also submit the applicable nomination details for EPF, EPS, and EDLI benefits.

You will receive a Universal Account Number (UAN). When you switch jobs, your UAN remains constant while the member ID changes. You need to mention your UAN when you join a new organisation so that your EPF membership can be linked to the same UAN. An individual should generally have only one UAN throughout their employment.

ఒక ఇపిఎఫ్ అకౌంట్‌తో, మీరు ఈ క్రింది ప్రయోజనాలను పొందవచ్చు:

రిటైర్‌మెంట్ కోసం కార్పస్‌ను ఏర్పాటు చేయడం

Out of your employer’s 12% contribution, 8.33% of wages, subject to the applicable wage ceiling, is directed towards EPS. The remaining employer contribution is credited to EPF.

Your EPF balance earns interest at the rate declared for the relevant financial year. Since the interest rate is reviewed periodically, avoid referring to 8.50% as the current or permanent EPF interest rate. The accumulated funds can support your financial needs after retirement.

Financial Support During Medical Emergencies

EPF members may make eligible partial withdrawals for medical treatment under the applicable EPF rules. Such withdrawals may be used for the treatment of the member or eligible family members, subject to the prescribed conditions and withdrawal limits.

The amount available for an eligible medical advance is generally limited to six months’ basic wages and dearness allowance or the employee’s share of contributions with interest, whichever is lower.

Access to Partial Withdrawals

The Employees’ Provident Fund Scheme provides for partial withdrawals under specified conditions. Eligible members may access a portion of their EPF savings for purposes such as housing, marriage, education, medical treatment, and other permitted circumstances, subject to the applicable service requirements, limits, and conditions.

పన్ను ప్రయోజనాలు

Investing in EPF allows you to save tax. Eligible employee contributions to EPF may qualify for a deduction under Section 80C of the Income Tax Act under the old tax regime, within the overall limit of ₹1.5 lakh in a financial year.

The tax treatment of EPF interest and withdrawals depends on the applicable tax laws and prescribed conditions. Therefore, EPF should not be described as entirely tax-exempt in every situation.

Under the Employees’ Provident Funds Scheme, 1952 the following are the PF rules when it comes to withdrawal eligibility:

• Para 68B – Purchase or Construction of a House: You may withdraw funds to purchase a house or plot or construct a house after completing at least five years of EPF membership, subject to the prescribed limits and property-related conditions.

• Para 68BB – Repayment of a Housing Loan: You may use your EPF savings to repay an eligible housing loan after completing at least 10 years of EPF membership. The loan must have been taken from an approved agency, and other applicable conditions must be met.

• Para 68H – Closure of Establishment or Non-payment of Wages: You may be eligible for an EPF advance if your establishment remains closed for more than 15 days and you are not receiving wages. A withdrawal may also be permitted if wages have not been paid for at least two consecutive months, subject to the scheme conditions.

• Para 68J – Medical Treatment: For eligible medical treatment for yourself or specified family members, you may withdraw the lower of six months’ basic wages and dearness allowance or your own EPF contribution with interest.

• Para 68K – Marriage or Education: After completing at least seven years of EPF membership, you may withdraw up to 50% of your own contribution with interest for eligible marriage or post-matriculation education expenses.

• Para 68N – Equipment for a Physical Disability: A member with a physical disability may withdraw funds to purchase eligible equipment that helps reduce hardship arising from the disability. The withdrawal is subject to the prescribed amount limits and conditions.

• Para 69 – Final EPF Settlement: You may withdraw your full EPF balance upon retirement after attaining 55 years of age or in other circumstances permitted under the EPF Scheme.

These provisions are part of the Employees’ Provident Funds Scheme, 1952. Members should check the latest EPFO rules before applying, as withdrawal provisions and operational requirements may be revised.

EPF is primarily designed to help eligible employees build long-term retirement savings through regular contributions. If you are looking for an additional investment option that allows you to choose the investment amount and tenure, you may also consider a Fixed Deposit (FD).

With FDs, you can invest your preferred amount for a flexible tenure. Premature withdrawal may be available, subject to the applicable terms, conditions, and penalties.

You can transfer money between your Savings Account or Current Account and your FDs with HDFC Bank’s Sweep-in facility. Explore HDFC Bank’s Fixed Deposit offerings to find an option that aligns with your financial goals. Click here to get started.

Learning about EPF eligibility can help employees make the most of the retirement benefits available to them. While establishments with 20 or more employees are generally required to register with EPFO, an employee’s eligibility also depends on factors such as wages at the time of joining and previous EPF membership.

*డిస్‌క్లెయిమర్: నిబంధనలు మరియు షరతులు వర్తిస్తాయి. ఈ ఆర్టికల్‌లో అందించబడిన సమాచారం సాధారణమైనది మరియు సమాచార ప్రయోజనాల కోసం మాత్రమే. ఇది మీ స్వంత పరిస్థితులలో నిర్దిష్ట సలహాకు ప్రత్యామ్నాయం కాదు.