The Employees’ Provident Fund (EPF) is a social security scheme in India that provides financial security and retirement benefits to employees. It is regulated and managed by the Employees’ Provident Fund Organization (EPFO), which operates under the Ministry of Labour and Employment.
Under the EPF scheme, both the employer and the employee contribute a certain percentage of the employee’s salary towards the fund. The current contribution rate is 12% of the employee’s basic salary plus dearness allowance. The employer deducts the employee’s share from their salary and contributes the total amount to the EPF.
The EPF scheme offers several benefits to employees, including the following:
Retirement Benefits: The primary objective of EPF is to provide a retirement corpus to employees. The accumulated funds in the EPF account, along with interest, can be withdrawn by the employee upon retirement or reaching the age of 58.
Employee Pension Scheme (EPS): A portion of the employer’s contribution is directed towards the EPS, which provides a pension to the employee upon retirement or in the event of their death.
Withdrawals: EPF allows partial withdrawals for specific purposes such as medical emergencies, marriage, education, housing, etc., subject to certain conditions and limitations.
Tax Benefits: EPF contributions are eligible for tax deductions under Section 80C of the Income Tax Act, subject to specific limits and rules.
Insurance Coverage: EPF provides life insurance coverage to employees through the Employees’ Deposit Linked Insurance (EDLI) scheme. In the unfortunate event of the employee’s death while in service, the nominated beneficiaries receive a lump sum amount.
EPF contributions and related processes are managed through the EPFO’s online portal, where employees can view their account details, download statements, and apply for withdrawals. The EPFO periodically declares the interest rate for EPF deposits, which is typically higher than bank savings rates.
