Employees Provident Fund or EPF is a scheme run to ensure every working member in the country has one long-term investment. Run by the Employees Provident Fund Organization or EPFO, every company having over 20 members, or in some cases even less, is covered by this scheme. What you see in your salary slip under PF or Provident Fund head is a contribution towards EPF. There is equal contribution made by both you and your employer towards EPF. Upon retirement, all money is yours to have along with the interest on both parts of the contribution. Recently, the Indian government allowed withdrawal of PF money before retirement in certain cases only. That said, here are three things to know about EPF.
Three Things To Know About EPF
First off, both the employer and employee have to contribute equally towards the latter’s EPF. However, the employer’s share is deducted from the employee’s salary too. That said, you can always opt to contribute more towards EPF voluntarily. The statutory rate for EPF contribution is 12 per cent. Many people feel this much is not enough. So, instead of opting for a PPF account, you can contribute more towards EPF and still get all the associated tax benefits with it.
#2: Universal Account Number
Something people have now started to become aware about is the UAN. But what is UAN? It is a number to help the EPFO recognize that there can be several EPF accounts for one user. Using this number, you can link all your EPF accounts in various companies. All you need to do is create this one-time account number. When you change jobs, you can ask for New Form 11 to furnish the existing UAN. Alternatively, you an provide the previous PF no and the last working date at your previous employer. Having a UAN helps you with not just linking your PF accounts but also withdrawing PF money. Count this as perhaps the most important one out of the three things to know about EPF mentioned here.
Let’s say you landed a job. In such a case, you need to get your PF money transferred from one account to another within 60 days of joining the new place. Alternatively, you can withdraw the PF money. However, if you withdraw it, the PF money will be taxable. If you want your PF withdrawals to not be taxable, you need to have five years of continuous service record. This does not mean that you cannot change your job. However, if you change your job, you need to transfer your PF money from previous employer to new employer. Transferring PF money from one account to another is also counted as continuous service. After you are done with five years of service, you can withdraw your money and not pay tax on it too.
So, these are the three things to know about EPF that will benefit you. They will help you reduce time spent on understanding how the EPF system works. For more such stories, log on to FinGyan.