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The Government of India will pay the employer and employee contribution to EPF account of employees for another three months from June to August 2020. The benefit is for establishments with up to 100 employees and where 90% of those employees draw a salary of less than Rs 15,000 per month. The contribution to EPF is reduced to 10% from 12% for non-government organisations.
EPF (Employees’ Provident Fund), also referred to as PF (Provident Fund), is a mandatory savings cum retirement scheme for employees of an eligible organisation. This fund is intended to be a corpus on which the employees can fall back on in their retired life. As per the EPF norm, the employees must contribute 12% of their basic pay every month. A matching amount is contributed by the employer as well. The amount deposited in EPF accounts earns interest on an annual basis. Employees can withdraw the entire sum accumulated in their EPF once they retire. However, premature withdrawals can be made on meeting certain conditions which are explained in this article.
Read our other articles on PF Claim Status , PF Balance Check, PF Transfer & PF Payment, Budget 2019. Here, it would be relevant to mention that Employees’ Provident Fund Organisation has allocated UAN, i.e. the Universal Account Number compulsory for all the employees covered under the PF Act. The UAN would be linked to the employee’s EPF account. The UAN remains portable throughout the lifetime of an employee, and there is no need to apply for EPF transfer at the time of changing jobs.
The interest rate applicable to the EPF contributions is 8.5% for FY 2020-21.
Union Budget 2021 Outcome:
In case the employee’s PF contribution was deducted but not deposited by the employer, it will not be allowed as a deduction for the employer.
One may choose to withdraw EPF entirely or partially.
EPF can be completely withdrawn under any of the following circumstances:
Individuals are not allowed to make a complete withdrawal of EPF balance while switching employers if they don’t remain unemployed for two months or more (i.e. the interim period between changing jobs).
Partial withdrawal of EPF balance can be made only under certain circumstances. They are explained in the table below.
|Sl. No.||Particulars of reasons for withdrawal||Limit for withdrawal||No. of years of service required||Other conditions|
|1||Medical purposes||Six times the monthly basic salary or the total employee’s share plus interest, whichever is lower||No criteria||Medical treatment of self, spouse, children, or parents|
|2||Marriage||Up to 50% of employee’s share of contribution to EPF||7 years||For the marriage of self, son/daughter, and brother/sister|
|3||Education||Up to 50% of employee’s share of contribution to EPF||7 years||Either for account holder’s education or child’s education (post matriculation)|
|4||Purchase of land or purchase/construction of a house||For land – Up to 24 times of monthly basic salary plus dearness allowanceFor house – Up to 36 times of monthly basic salary plus dearness allowance,Above limits are restricted to the total cost||5 years||i. The asset, i.e. land or the house should be in the name of the employee or jointly with the spouse.|
ii. It can be withdrawn just once for this purpose during the entire service.
iii. The construction should begin within 6 months and must be completed within 12 months from the last withdrawn instalment.
|5||Home loan repayment||Least of below: Up to 36 times of monthly basic salary plus dearness allowanceTotal corpus consisting of employer and employee’s contribution with interest.Total outstanding principal and interest on housing loan||10 years >||i. The property should be registered in the name of the employee or spouse or jointly with the spouse.|
ii. Withdrawal permitted subject to furnishing of requisite documents as stated by the EPFO relating to the housing loan availed.
iii. The accumulation in the member’s PF account (or together with the spouse), including the interest, has to be more than Rs 20,000.
|6||House renovation||Least of the below:Up to 12 times the monthly wages and dearness allowance, orEmployees contribution with interest, or Total cost||5 years||i. The property should be registered in the name of the employee or spouse or jointly held with the spouse.|
ii. The facility can be availed twice:
a. After 5 years of the completion of the house
b. After the 10 years of the completion of the house
|7||Partial withdrawal before retirement||Up to 90% of accumulated balance with interest||Once the employee reaches 54 years and withdrawal should be before one year of retirement/superannuation|
Broadly, the withdrawal of EPF can be made either by submitting:
Download the new Composite Claim Form (Aadhaar)/Composite Claim Form (Non-Aadhaar) to withdraw EPF balance.
One may also note that in case of partial withdrawal of EPF amount by an employee for various circumstances as discussed in the above table, very recently, the requirement to furnish various certificates has been alleviated and the option of self-certification has been introduced for the EPF subscribers. (For details, you can refer order dated 20.02.2017 of the EPFO)
The EPFO has come up with the online withdrawal facility, which has made the entire process more comfortable and less time-consuming.
To apply for the withdrawal of EPF online through the EPF portal, make sure that the following conditions are met:
If the above conditions are met, then there is no need for the previous employer to attest your withdrawal application.
Step 1: Visit the UAN portal.
Step 2: Log in with your UAN and password. Enter the captcha.
Step 3: Click on the ‘Manage’ tab and select ‘KYC’ to check whether your KYC details such as Aadhaar, PAN and the bank details are verified or not.
Step 4: Once the KYC details are verified, go to the ‘Online Services’ tab and select the option ‘Claim (Form-31, 19 & 10C)’ from the drop-down menu.
Step 5: The following screen will display the member details, KYC details and other service details. Enter your bank account number and click on ‘Verify’.
Step 6: Click on ‘Yes’ to sign the certificate of the undertaking and then proceed
Step 7: Now, click on ‘Proceed for Online Claim’.
Step 8: In the claim form, select the claim you require, i.e. full EPF settlement, EPF part withdrawal (loan/advance) or pension withdrawal, under the tab ‘I Want To Apply For’. If the member is not eligible for any of the services like PF withdrawal or pension withdrawal, due to the service criteria, then that option will not be shown in the drop-down menu.
Step 9: Then, select ‘PF Advance (Form 31)’ to withdraw your fund. Further, provide the purpose of such advance, the amount required and the employee’s address.
Step 10: Click on the certificate and submit your application. You may be asked to submit scanned documents for the purpose you have filled the form. The employer will have to approve the withdrawal request and then only you will receive money in your bank account. It usually takes 15-20 days to get the money credited to the bank account.
You can follow the procedure given below to apply for a home loan based on your EPF account balance.
Apply for a home loan through the housing society and send the application to the EPF Commissioner in the format specified in Annexure 1. The EPF Commissioner will issue a certificate stating the monthly contribution to your EPF account over the last three months.
Alternatively, you can take a printed copy of your EPF passbook to show the last three months’ contribution and submit it to the housing society to get an estimate of the loan amount you can get from the EPF balance.
You can borrow up to 36 times your last monthly contribution to purchase a home. If you are purchasing a land, you can borrow up to 24 times your last monthly contribution. You must be in service for five consecutive years to avail of the loan.
Step 1: Log into the UAN Member e-Sewa portal.
Step 2: Select ‘Online Services’ tab and click on ‘Claim (Form-31, 19 & 10C)’ option.
Step 3: Member details will be displayed. Enter your bank account number registered with EPF and click ‘Verify’.
Step 4: Select ‘Yes’ to sign the certificate.
Step 5: Select the ‘Proceed for Online Claim’ option and provide the reason for requesting an advance next to ‘I Want to Apply For’. The corresponding options will only be displayed if you are eligible from the years of service perspective.
Step 6: Select ‘PF Advance (Form 31)’ to withdraw your funds as an advance or loan. Also, enter the amount you would like to avail of and the employee’s address.
Step 7: Click on the certificate and submit the application. If prompted, you may be required to upload relevant documents.
Step 8: EPFO processes your application. On approval, EPFO makes the payment to the housing society directly.
Yes, EPF contributions are tax-deductible under Section 80C of the Income Tax Act, 1961.
Yes, you can increase your EPF contributions and contribute up to 100% of your basic pay. This is called VPF.
No, the employer’s contribution will still remain the bare minimum regardless of you opting for VPF.
The new amendments have meant that the employer’s permission is not needed to make the EPF withdrawals.
Yes, on meeting certain conditions, you are allowed to make premature withdrawals, and you need to produce documentary evidence for the same.
Once you quit the job or leave a company and join elsewhere, the EPF account will no longer receive any monthly contributions. However, it does not mean that the account will become inactive.
When you join another company, the new employer will create a new EPF account for you under the same UAN. You can then request EPFO to merge the previous EPF account with the new one.
In case you do not join a new employer, your EPF account will continue to earn interest on the available balance until you attain the age of 55 years. An additional grace period of three years will be provided for you to withdraw your EPF balance in full. If you fail to do so, your EPF account will be declared inactive. You may have to go through complex procedures to get access to this money.