The Employees’ Provident Fund (EPF) is a savings scheme introduced under the Employees’ Provident Fund and Miscellaneous Act, 1952.
It is managed by the Central Board of Trustees (CBT) which is consists of representatives from three parties such as the government, the employers, and the employees. And the EPFO (Employee’s Provident Fund Organization) helps this board in its activities.
EPFO works under the direct jurisdiction of the government and is administered by the Ministry of Labour and Employment.
Under the scheme, any organization employing a minimum of 20 workers is liable to give EPF benefits to its workers.
Importance of Employee’s Provident Fund (EPF)
EPF is a collection of funds contributed by the employers and their employees every month.
Under the EPF both employer and employee are contributed 12% of the employee’s salary that includes basic salary and dearness allowance to the EPF.
The EPF scheme is promoting savings to be used post-retirement by various employees nationwide.
The amount received under EPF and interest accumulated on it is tax-free. Thus, employees and their nominees can withdraw amount without any worry.
Rate of Interest on Employee’s Provident Fund (EPF)
The interest rate for the FY 2019-20 is 8.50% that is directly transferred to the Employee’s Provident Fund Account with the total amount.
In also addition, the rate calculates on the fund is pre-decided by the Government of India with mutual consent of the Central Board of Trustees (CBT).
Registration process for Employee’s Provident Fund (EPF)
- Visit the government website EPFO.
- Then go to the ‘Establishment Registration’ section and after a click on the link a new page will be open with ‘Instruction Manual’. Then sign up and fill the required details followed by registration of DSC [Digital Signature Certificate] of the Employer which is a prerequisite for fresh application submission.
- After filling all required details then click accept ‘I have read the instruction manual’ tick box to proceed and fill in the details to register.
- Then an email e-link is sent to you which is to be activated and mobile PIN is also sent. You need to upload certain documents to register.
- Those who are already registered can log in using their Universal Account Number (UAN) via visit on member website of EPF.
Benefits of EPF Scheme
1. Tax-Free Savings: EPF Scheme provides certain interest on the deposits at a specific rate which is pre-decided by the organization. Both the amount of interest received on the deposits and the actual deposited amount is deemed to be tax-free by the Indian Government.
2. Long-Term Saving: Funds deposited in this account can’t be withdrawn easily and that, helps in ensuring savings.
3. Retirement Benefit: The fund under this scheme may be used at the time of retirement of the employee.
4. Future Uncertainties: The fund can be used by the employee in case of any kind of future uncertainties. The employees may choose to withdraw their funds prematurely.
5. Unemployment Situation: The funds help employees, where the employee loses their current job owing to any reason, then these funds may be used to meet expenses.
6. Death Benefit: In the case of an employee’s death, the deposited amount along with the interest is given to the employee’s nominee that secures the employee’s family after the employee.
7. Insurance Scheme: under the scheme, the employer is required to make certain contributions towards an employee’s Life Insurance where group insurance cover is not present. This scheme ensures that the employees are properly insured.