Few frequently asked questions about Employees’ Provident Fund (EPF)

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When I wrote a post about the recent changes of EPF effective from 1st Sept 2014, I found that many employees not aware about the basic things about EPFO. Employers use this as a tool to modify the rules to their wish. Hence, thought to summarize the basic things in this post.

Note-We have deactivated the comment section for this post. Hence, if you have any doubt regarding EPF, you can raise thm in our BasuNivesh Forum.

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1) Which establishment or company eligible for this scheme?

This scheme applies to all companies or establishment, which employs 20 or more than that. Do remember that once the employees’ strength reaches to 20 or more then irrespective of employee strength (whether fall or rise) the company must continue with this scheme.  However, suppose company or establishment stopped its operation or continue without any employee then in that case this scheme not applicable. In addition, employee if considered as trainee or apprentice will not be covered under this act.

2) Which employees are excluded from this scheme?

  • An employee who was a member of this scheme and withdrawn all amounts of his contribution based on either retirement from service after attaining age of 55 years or who migrating abroad for permanent settlement.
  • An employee whose salary (BASIC+DA) at the time of entry into scheme more than Rs.15, 000.
  • If a member is considered as an apprentice then he will not come under EPF.

3) What do you mean by salary for this purpose?

Salary for this purpose is only BASIC+DA. Also remember that if your salary at the time of entry is Rs.15, 000 or less than that, but after a few years or a month if your salary revised then raised to more than Rs.15, 000, then in that case too member must continue with this scheme. So for example, this month your salary is Rs.14, 000 and you are a member of this scheme. But in March 2015 your salary revised and crossed the limit of Rs.15, 000 then too you need to continue with this scheme.

Only employees who are eligible to stay away from this scheme are those whose salary are more than Rs.15, 000 at the entry of employment.

4) What is the contribution percentage of employer and employee?

The detailed, recent changes are written in my earlier post. Please go through it and available in below link.

5) Whether one can mention nomination?

Yes, one needs to nominate for EPF. This helps to get the money in case of sudden demise of member. Usually if the member is married, then he should nominate to spouse or kids. If he is unmarried then he can nominate his parents. Brothers or sisters are not allowed for nomination. However, one can mention multiple nominations and must disclose the percentage of sharing. In addition, if member doesn’t have any family members then he can nominate anyone of his choice. Do remember that once the member acquire a family, then such nomination will become void.

6) What about arrears if one receives due to salary revision?

Salary revision is considered a normal hike. Therefore, any such arrears payable to the employee are subject to EPF deduction.

7) Whether an employee contributes more than 12% of his salary?

Yes, you have the option to contribute more. But the employer has no such obligation to match your contribution. Such contribution is called Voluntary Provident Fund (VPF). Interest benefit will be same as that of EPF.

8) Who is responsible to deposit to EPF Scheme?

Your employer has whole responsibility to deposit all amounts, which is deducted from the employee as well as an employer contribution.

9) My employer deducting his contribution from my salary, whether it is legal?

According to EPF rules, an employer can’t deduct it from employee salary. It is illegal. I found that after revising rules from 1st Sept 2014, few employers started to deduct their contribution from the employee. This is illegal.

10) Whether my employer can split salary components after 1st Sept 2014 to reduce his contribution towards EPF?

This was happening since the latest changes and many of the readers of my post mentioned this. But such activity is also considered as illegal. Please read below lines of rules, which by Fund Commissioner. I found this information HERE.

Any agreement entered into between the employer and its employees for splitting of the amount payable by the employer to its employees for the service rendered by them, cannot take away the power of the Commissioner under Section 7A of the Act to look into the nature of the contract entered into between the employer and its employees and decide that splitting up of the pay payable to the employees under several heads is only subterfuge to avoid payment of contribution by the employer to the provident fund. It was open to the Commissioner to lift the veil and read between the lines to find out the pay structure fixed by the employer to its employees and to decide the question whether the splitting up of the pay has been made only as a subterfuge to avoid its contribution to the provident fund.”

11) Whether I am eligible for withdrawal of EPF? What will be tax treatment on the same?

Both the questions are already answered in my earlier posts and links will be below.

12) Whether EPFO comes under RTI?

Yes. This being Govt. Organization, it will come under RTI Act.

13) Is it legal to withdraw EPF during job?

It is illegal if you withdraw your EPF during typical job change. One can withdraw EPF only if one has no job for 2 months. Otherwise withdrawing for any new job change is actually illegal. Rules allows only to transfer in case of job change.

14) How you can receive EPF withdrawals?

Currently any EPF withdrawal will be credited to beneficiary bank account directly. So no need to worry.

15) How is interest calculated on EPF Account?

You can view the detailed explanation about the same in below link.

Hope above few important questions resolve your doubts 🙂

Note-We have deactivated the comment section for this post. Hence, if you have any doubt regarding EPF, you can raise thm in our BasuNivesh Forum.

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