If you are doing a job then you will hear about the Employee provident fund. But most people do not know how it works, how much amount should be deducted from your salary, or how to withdraw it online.
While you are joining in a company you were told that how much salary you will get from that company. But after that when you are getting the salary then you find that the salary is a little bit deducted. And you are told that that is for Epf (Employee Provident Fund ).
But you don’t know all the details about the EPF. So you need to know it first. Here we will discuss some very important things about EPF. If you read it then this topic will be very clear to you.
|1.What is EPF.?||2.How it works (with example).|
|3.Should you invest in EPF or not.||4.How much percentage you can get from here. ?|
|5. When you can withdraw it.?||6. How to withdraw it.?|
Now let’s discuss all the topics. Read carefully because it is an important thing to know.
What is Employee Provident Fund ( Employee provident fund )–
Hope you can understand the meaning of it the term Provident fund. It means a place or wallet where we are saving our money. But most people don’t that there are three other schemes in it.
1.Provident Fund scheme.
2.Employee deposit linked insurance scheme.
3.Employee pension scheme.
Now you need to know 12 percent of your basic salary will go into your pf account. And the employer also needs to give 12percent + 1 percent for you into your pf account. That is why your invested money in pf got doubled
. Now you need to where is this 24 percent going.?. Now, your 12 percent is going into the provident fund scheme. But the employer’s 12 percent got divided into two parts.
A small part of this 12 percent (like 3.67 percent ) is again going into your provident fund scheme. And the rest 8.3 percent is going into the pension scheme.
Except this, the rest 1 percent of the employer’s also got divided into two parts. 0.5 percent of that one percent goes into the insurance scheme.
And the rest 0.5 percent is for the overall administrative charges.
How it works (with Examples )–
If your basic salary is 10,000 rupees then 12 percent of this which is 1200 rupees will be deducted from your salary and your net take-home will be 8800 (let’s assume). Now the employer will also pay 1200 rupees for you. But this total of 2400 rupees will not go into your pf account.
Because 3.67 percent of the employer 1200 will go into your pf account and the rest 8.33 percent will go into the pension scheme. And the employer will also pay the extra 1 percent for the insurance scheme and the other admin charges.
Now you will get the interest against your pf account or pf balance. But you will not get any interest for your pension part. You need to remember that it is compulsory to go with the pf if your salary is within 15000.
After that it is optional.
Here you need to one more thing that is- after 2014, if your joining basic is rupees 15000 then you will not be a part of the pension scheme. That means that the employer’s 12 percent will also go into the pf account.
But if you did any job before or you are a member of the Pension scheme from that job then this will continue. That is only applicable with the Fresh candidates.
If you are getting more than 15000 as a basic salary then you can give a contribution of more than 12 percent if you want as an employee.
Should we invest in EPF or not—
There are many benefits of this. If you are investing in EPF then you should know this.
1.Many people who are earning a good amount of money invested their total basic salary into it. Because you will get the tax benefit ( 80 c) if you are investing here.
It is up to 1.5 lac rupees. As well as the total interest which you are getting from here that will also come under tax benefit. You will get the tax benefits for the pension balance also.
2. Generally the interest rate is far better than FD or something like this.
3. It is risk-free.
4.If you are getting a high salary, then it will be very profitable for you.
5.It is very flexible. You can withdraw your money after 2 months of your resignation.
6. If any kind of emergency comes like illness then you can withdraw your amount in advance from your EPF balance (not pension).
You can withdraw up to 90 percent amount from your EPF balance. It will take 10 to 15 days.
There you can find many emergency options to choose from. As well as after two months of your resignation you can withdraw all the amount from it (including pension ).
There are no as such any negative side of this. One thing can happen to you and that is many times the companies don’t put your exit date after your resignation also.
If that happens then you can’t withdraw your money. But now this is also possible. If you are contributing for the last two months then you can put your exit date on your own.
Here you need to remember one thing that if your contribution in the pension scheme has been completed for 10 years, in that case, you can’t withdraw that money whenever you want.
You will get that amount as pension after 58.
Sometimes you can start after 50 also. When you are starting to get the pension amount the maximum amount you can get is 7500 rupees monthly. But your wife will also get the pension after you.
Many companies have a very different kind of structure. Many times the company can say that the Employer’s 12 percent will also be deducted from your salary. This is a CTC base structure.
In that case, you can think over it that to invest or not. But where you are not getting these types of structures there you should go with the pf.
And if you are getting a salary which is just hand to mouth then also you can think over it that to invest or not at that time.
If you see then the negative thing is not that effective as the positive thing. So if you want then you can go with the pf. It will good for you. At least you will get more than the FD.
How much percentage of interest you can get from here (Employee provident fund )–
You can at least 8 to 9 percent in this scheme. It is a report of the last 10 to 12 years. Before that, it was 12 to 15 percent also. As well as it is completely risk-free. It is far better than FD or something like this.
When you can withdraw it ?–
It is very flexible. As we discussed before you can withdraw it after 2 months from your resignation. If you are not contributing for the last 2 months then also you can withdraw it. As well as you can take advance from here.
How to withdraw it.? ( Employee provident fund )–
First, just type EPFO on google. Then you need to select the UAN option there. After that put in your UAN number and password. After opening, you can see an option called manage there. Just check that your KYC is done or not.
If not then do it first. You need to give the bank account number, ADHAR number, and PAN number there.
It will take few days to update. After that, you need to go to the online service option there. There you can see an option claim (form 31, 19, and 10c) like this. If you are working and want to take advance then you need to select FORM 31.
When you are not working or contributing then you need to select FORM 19 to withdraw pf balance and form 10c to withdraw your pension balance. This will take some days to credit in your bank account.
1.How can I check my employee provident fund?
To check your EPF account balance on the EPFO portal you must have an active UAN. Then you need to search EPFO on google. Then you need to click on Member passbook. There you can check your balance.
2.How can I get UAN number?
Visit the official EPFO website epfoindia.gov.in and follow the link- our services> For Employees> Member UAN/online service> know your UAN (in the important links section). You need to have an Aadhaar number or PAN number.
3.How can I check my PF balance without a UAN number?
PF account holders can check their EPF balance without the UAN number by logging in at passbook.epfindia.gov.in.
You can also check the balance via SMS or missed call. The PF balance can be checked by sending an SMS– EPFOHO UAN to 7738299899 from the registered mobile number.
4.How can I activate the EPF UAN number?
Visit epfindia.gov.in. Then select activate UAN present on the right side of the screen under the important links option.
Enter your UAN number, name, date of birth, email id, mobile number.
After entering the details hit the “Get Authorization Pin” button.