EPF

22 Sep 2022

The Employees' Provident Fund came into existence with the promulgation of the Employees' Provident Funds Ordinance on the 15th November, 1951. It was replaced by the Employees' Provident Funds Act, 1952. The Act is now referred to as the Employees' Provident Funds & Miscellaneous Provisions Act, 1952 which extends to the whole of India. The Act and Schemes framed there under are administered by a tri-partite Board known as the Central Board of Trustees, Employees' Provident Fund, consisting of representatives of Government (Both Central and State), Employers, and Employees.

Every worker wants security and maintenance for old age. The Employees Provident Fund Act is a beneficial piece of legislation, described as a social security statute to ensure the employer's better future on his retirement and of his dependents on his death.

REGISTRATION IN EPF:

Every employer to whom the above act is applicable registers his employee on EPFO portal and creates Employee’s Provident Fund Account. No need to create another EPF account while employees leave the Company or Firm and join the other. Employees can easily access their EPF account. Employers deposited a certain amount into the EPF account from the part of the salary of employees per month. Employers also contribute a certain amount to employees provident fund account where is applicable but restricted to employee’s contribution. Only salaried individuals can register in EPF.

BENEFITS OF EPF:

  • Employee can claim deductions from his total income upto the contribution to the EPF or Rs 150000, whichever is lower u/s 80C of Income Tax Act, 1961 while filing the ITR.

  • All amounts received from EPF at the time of Retirement and if withdrawal after 5 years from the date of deposit is tax free.

  • Pre-fixed interest on the deposit held with the EPF India. Additionally, rewards extended at maturity further ensure growth in the employees’ funds and accelerate capital appreciation.

  • In the long run, the sum deposited towards the employee’s provident fund helps to build a healthy retirement corpus.

  • Uncertainties are a part of life. Therefore everyone should financially prepare to face such unwarranted situations. Employees can easily withdraw the fund from EPF when they require funds in some emergency situations.

WITHDRAWAL PROTOCOLS OF EPF:

Individuals may opt for either partial or complete withdrawals of EPF. But such withdrawals can be made only under specific circumstances. Here is a list of a few such circumstances under which individuals can withdraw EPF Completely:

  • On retirement.

  • If their unemployment period extends more than 2 months.

  • While switching from one profession to another or in between jobs. But the duration without a job should be more than 2 months.

Here is a list of few such circumstances under which individuals can withdraw EPF partially:

  • For weddings.

  • For higher education.

  • For purchasing land or constructing a house.

  • Repayment of home loan.

  • Renovating a housing property.

TAXABILITY ON WITHDRAWALS OF EPF:

  • If an employee withdraws from EPF before completing five years of continuous service, then TDS (tax deducted at source) is deducted. If the amount is less than Rs 50,000, no TDS is deducted, however, if the individual falls under the tax bracket, he or she has to offer such EPF withdrawal in his return of income. If the amount is more than Rs 50,000, then 10 percent TDS is deducted if PAN is not furnished. No TDS is deducted if forms 15H and 15G are furnished and the same rules of offering the amount in the income tax returns are applicable.


  • An EPF which is not approved by the Commissioner of Income Tax is considered an unrecognized provident fund. If your EPF is recognized by any authority other than the Commissioner of Income Tax, like if you are a member of URPF, your withdrawals are taxed, even after completing five years of continuous service.


Employee’s Provident Fund - FAQs

Q1) Is it possible for an employee to contribute to EPF after leaving a job?

An) No, an employee who has left the job can not pay his or her EPF.


Q2) Can employers contribute to EPF more than employees contribution?

An) No, the employer's contribution must be mathched with the employee’s contribution.


Q3) In which head of income premature withdrawal should be taxed?

An) It is taxable under the salary head.


Q4) Can employees increase their contribution to EPF?

An) Yes

Faizahmed Solkar