GUIDELINES AND PERFORMANCE OF EPFO

& PF

EMPLOYEES PROVIDENT FUND ORGANISATION (EPFO)

• The Employees Provident Fund Organisation (EPFO) is a statutory body under the Ministry of Labour and Employment, Government of India which administers social security schemes framed under the Employees' Provident Funds & Miscellaneous Provisions Act, 1952 namely Provident Fund, Pension and Insurance to industrial employees. The PF account benefits are extended to all the establishments which employ 20 or more persons.

• 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) - 15 representatives

• Employers, - 10 representatives

• Employees - 10 representatives

• The Board administers a contributory provident fund, The Employees' Provident Funds Scheme 1952 (EPF) , pension scheme The Employees' Pension Scheme 1995 (EPS) and an insurance scheme The Employees' Deposit Linked Insurance Scheme 1976 (EDLI) for the workforce engaged in the organized sector in India.

ONLINE EPFO SERVICESFor Employees:• The EPFO offers many online services through its portal to members. This way the services are delivered transparently, efficiently and

comfortably to everyone.

• Account Transfer Claim Portal - facilitates members transfer their PF account online from one organization to the other.

• Balance Enquiry and Claim - Employees can check the status of their claims online - Know Your Claim Status. Members can check their PF account balance online.

• Online Passbook - A member can also register himself/herself on the Member and download his/her e-passbook having transaction wise details in PF Account.

For Employers:

• E-Return Tool - for preparation of Returns by the Employers for filing with EPFO

• Know the Designated SBI Branch for EPF Remittances - For accepting EPF remittances from Employees/ Establishments, SBI has designated specific branches. Online Transfer Claim Portal for Employers

• FAQ for Employers

• Establishment Search - (You can also view Remittances and member name)

EMPLOYEES' PROVIDENT FUND IN INDIA• The EPF is one of the main platforms of savings for all employees working in Government, Public or Private sector

Organizations.

• It 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. It is now referred as the Employees' Provident Funds & Miscellaneous Provisions Act, 1952 which extends to the whole of Indian except Jammu and Kashmir. Since its enactment in 1952, the Act has been amended 15 times till now.

• A provident fund is created with a purpose of providing financial security and stability to employees. A person starts his contribution in the PF fund once he joins a company as an employee. The contributions are made on a regular basis. The primary purpose of PF fund is to help employees save a fraction of their salary every month so that he can use the same in an event that the employee is temporarily or no longer fit to work or at retirement.

• Employers and employees both contribute @12% of wages in contribution accounts. Further, the employers also contribute towards administration of the benefits under the EPF & MP Act.

• Employee provident fund is one of the most efficient tax saving investment products. For individuals maintaining an EPF account for more than five years, the withdrawals are tax free while qualifying for tax deductions under section 80 c of the income tax act. What’s more, one does not have to be working under the same employer for this five year period as the EPF account will be linked using UAN. The interest rate for EPF investments is calculated by the central government at the end of each financial year. The rate of interest of EPF accounts is usually at par with most debt investment instruments.

SOME EPF RULES• There is also “nomination” facility in EPF. The nominee will be contacted at the time of death of the person and handed over the money from the

provided fund.

• Employee Pension Scheme- The 12% contribution made by you from your salary goes into your EPF fully, but the 12% contribution which your employer makes, out of that 8.33% actually goes in EPS (subject to maximum of Rs 541) and the rest goes into EPF.

• One is liable for pension only if one has completed the age of 58.

• One is liable for pension only if he has completed 10 yrs of service (in case of more than one companies, the EPF should have been transferred, not withdrawn)

• The maximum Pension per month is subject to maximum of Rs 3,250 per month.

• Lifelong pension is available to the member and upon his death members of the family are entitled for the pension.

• You can always invest more than 12% of your basic salary in Employee Provident Fund which is called VPF (Voluntary Provident Fund). In this case the excess amount will be invested in PF and you will keep on getting the interest, but the employer is not suppose to match your contribution

• You can only withdraw your Employee provident fund money, only if you have no job at the time of withdrawing your money and if 2 months have passed. Withdrawing of EPF amount at job change is illegal

• Following is a list of events when you can withdraw the Provident Fund amount:

1. Marriage or education of self, children or siblings

2. Medical treatment for Self or family (spouse, children, dependent parents)

3. Repay a housing loan for a house in the name of self, spouse or owned jointly

4. Alterations/repairs to an existing home for house in the name of self, spouse or jointly

5. Construction or purchase of house or flat/site or plot for self or spouse or joint ownership

BENEFITS TO EMPLOYEES UNDER EPF SCHEME

• Important investment for the necessities of employees’ future. The tax free interest and the maturity award ensure a very good growth to money.

• If the PF money continued for a very long period of time, it can help in meeting employee's requirements including his retirement goals.

• We often fall short of funds during emergencies and at those moments borrowing is the only option left. At this time the EPF can be very helpful because the kinds of benefits it provides no other investment can offer the similar remunerations

• Funds for equipment purchase in case of differently-abled and natural calamity damages, etc. which an employee can use at the time of need.

• A member also has an option to nominate family members to receive funds after his demise and should be aware that withdrawing funds after job change is legal only when you are jobless for at least two months.

• The PF can be used for multiple purposes at different moments as it guarantees benefits such as: Accumulation plus interest upon retirement, resignation and death

Partial withdrawals allowed for specific expenses such as house construction, higher education, marriage, illness etc.

• The primary goal of EPF is long term investment and it should be used only when it is the last option available for an employee.

PUBLIC PROVIDENT FUND (PPF)

• It is a scheme of the Central Government, framed under the PPF Act of 1968.

• It is a government backed, long term small savings scheme, to provide retirement security to self employed individuals and workers in the unorganized sector.

• At present it is considered as the best tax saving scheme across all sections of the people who needs to invest to save some tax.

WHO CAN OPEN A PPF ACCOUNT?• Individuals who are residents of India can open an account under the scheme.

• Only one PPF account can be maintained by an Individual, except an account that is opened on behalf of a minor.

• PPF account can also be opened by either parent under the name of a minor.

• Mother and Father both cannot open Public Provident Fund (PPF) accounts on behalf of the same minor.

• Non-resident Indians (NRIs) are NOT eligible to open an account.

• A resident who becomes an NRI during the tenure prescribed under Public Provident Fund Scheme, may continue to subscribe to the fund until its maturity on a non-repatriation basis.

• Funds can be transferred via CASH or NRO Account. Funds can be transferred via Internet banking.

• Such an account will not be eligible for extension of five years at the time of maturity.

• Since 13th May, 2005, Hindu Undivided Family can NOT open an account under the scheme. However, accounts opened prior to that date may continue subscription to their account till maturity. They also can not extend the account any further.

WHERE CAN ONE OPEN A PPF ACCOUNT?

• Branches of State Bank of India and it subsidiaries• Select branches of designated nationalised banks• Select Post Offices across India

PPF GUIDELINES• It is a 15 years scheme. Thus, as per normal rules, Public Provident Fund (PPF) account gets matured after the completion of

15 years from the end of the year in which the account was opened. However, on maturity this period can be extended any number of times for a block of 5 years each time.

• No premature closure of the account is allowed. Only in the case of the death of a customer, their nominee /legal heir can close the account by submitting the required documents as guided by the Ministry of Finance.

• At any point in your life, you are allowed to have only one PPF account in your name. (If at any time it is found that you have more than one account in your own name, the second account will be immediately deactivated, and you will be eligible to get only principal amount).

• You can open have an account in the name of a minor child of whom you are the parent / guardian. However that will be the child’s account, you will simply be the guardian. You can never have a joint account.

• You are not allowed to an account for a minor. If you open an account with a minor (say jointly) , it is considered to be your PPF account.

• A minimum yearly deposit of Rs.500 is required to open and maintain a PPF account

PPF GUIDELINES• A maximum deposit of Rs.150000/ can be made in a PPF account in any given financial year. As per PPF

rules, you are just not allowed to invest more than Rs.1.5 lac in your own PPF account or any other PPF account where you are guardian. Thus, if you have two children and you have also opened PPF account in their names, you should deposit maximum of Rs.1.5 lac in all three accounts together.

• The investments can be made in multiples of Rs.500, either as a whole sum, or in instalments (maximum instalments can be 12 in a year, though more than one deposit can be made in a month).

• The credit to the PPF account is made on the date of clearance of the cheque, not on the date of its presentation.

• The entire balance can be withdrawn on maturity. Interest received is tax free

• Deposit to PPF is tax deductible for individual in India u/s 80C of Income Tax Act, 1961.

BENEFITS OF PPF ACCOUNTS

• Deposits up to Rs.1,50,000 p.a. into your PPF account are deductible under Section 80c of Income Tax Act. Contributions to PPF accounts of even the spouse and / or children are also eligible for tax deduction.

• Even the interest earned in the PPF accounts i.e. on the full balance in your PPF account is completely exempt from tax. In other words, your returns on investment in PPF are tax free.

• Above all, the balance in PPF account cannot be attached to any claim in case of debt or liability. Thus the money is yours for life or even after death it is available for your family.

PPF SCHEME• Drawback : It is a long term investment, and thus people who are ready to block the funds for longer tenure should opt for this

scheme. Although part withdrawals and loans are allowed, yet these are available only as a small percentage of the total balance.

• PPF current interest rate is 8.70% (upto March 2015)

• Loan eligibility - Customers can avail of the loan facility between third financial year to sixth financial year ie. from third financial year upto end of fifth financial year.

• The loan amount will be limited to 25% of the balance outstanding to the subscriber's credit at the end of the second year immediately preceding the financial year in which the loan is requested.

• Repayment of Loan Amount : • The loan repayment is required to be made in one lump sum or in two or more monthly installments within 36 month period.

• After the principal amount of the loan is fully repaid, the subscriber shall pay the interest amount in not more than two monthly installments.

• Interest is calculated at 2% above on the principal amount for the period commencing from the first day of the month following the month in which the loan is availed upto the last day of the month in which the last installment of the loan is repaid.

PPF SCHEME

• Withdrawal from PPF : The first withdrawal can be done after the expiry of 5 full financial years from the end of the year in which your initial subscription was made.

• The amount of withdrawal will be limited to 50% of the balance at credit at the end of the fourth year immediately preceding the year in which the amount is to be withdrawn, or the balance at the end of the preceding year, whichever is lower.

• In case you fail to deposit the minimum amount of Rs.500/ in a financial year, your PPF account is marked as de-activated account.

• A subscriber of de-activated account will not be entitled to obtain a loan or make a partial withdrawal unless the account is revived. Account can be revived by paying a penalty of Rs.50 plus the defaulted minimum subscription per year Rs.500.

RULES OF NOMINATION OF PPF ACCOUNTS

• PPF Scheme allows nomination of one or more persons to receive the amount standing to the subscriber's credit in case of death. However, no nomination is possible in case of minor account. Subscriber is even allowed to change the previous nomination (s) by applying fresh on nomination form F.

LATEST UPDATES..• Universal PF account number - Portable throughout the working career of an employee.

• The bank account numbers with IFSC codes will be linked to the Universal PF Account Number (UAN). This will help in portability of PF accounts and easy transfer of money.

• Increase in Minimum Salary Ceiling: Salary limit for maintaining a PF account raised to Rs.15,000 from Rs.6,500 per month.

12% of employees basic pay + 12% of basic pay by employer ( 8.33% EPS + 3.67% EPF)

• Stipulation of Minimum Pension: Minimum monthly pension distributed raised to Rs.1,000 per month for the financial year 2014-2015.

• Insurance limit hiked: Maximum sum assured under Employee Deposit Linked Scheme has been hiked to Rs.3 lakhs plus 20% ad hoc benefit over the prescribed amount. ( Rs.3.6 lakhs from Rs.1.56 lakhs)

• EPF withdrawal is taxable for withdrawals made before rendering 5 years of continuous service.

• PF interest rate: For the year 2014-15, the interest rate on provident fund deposits has been retained at 8.75%.

• Introduction of UAN: The new EPFO guidelines have introduced a new universal account number or UAN which is an exclusive identification number for each individual. Under the universal account number, all provident fund transactions would be linked to the UAN making it simpler for people to track their provident fund accounts in case of multiple employers or job changes.

• With this facility one can download online passbook, update their profile, transfer account or view previous details

• The main purpose of this unique number is to provide access to employees to have a view of his/her profile and access the services like viewing profile, changing profile, download online passbook, or request for transfer.

The advantages of creating Login to UAN

• You can download or print your latest passbook.

• Download or print your UAN card.

• Check your member IDs under your UAN.

• File and view transfer claims.

• You can update your profile, which sometimes wrongly entered by your employer.

• You can update your mobile number, email id and can submit the documents required for KYC.

Thank You