Employee Provident Fund (EPF) - Know Everything

Any employee in India gets the salary after the employer deducts a specific amount of cash as of PF (Provident Fund). One may feel that they can't use their own money. Be that as it may, when an individual needs to resign from his jobs, Employee Provident Fund EPF is one of the most important contributions helpful for their living. The Ministry of Labor controls EPF schemes in India. 

What is an Employee Provident Fund? 

Employee Provident Fund EPF is one of the well known investment funds schemes which are launched under the management of the Government of India. The Ministry of Labor manages EPF schemes in India. It is the fundamental plan under the Employee Provident Fund and Miscellaneous Provisions Act, 1952. Employee Provident Fund Organisation (EPFO) deals with this saving scheme. 

This plan intends to assemble an adequate retirement corpus for a person. It teaches the propensity for setting aside cash for the salaried class employee. The fund incorporates financial contributions from both employer and employee. Every one of them needs to contribute 12% of the employee's fundamental salary (Basic + Dearness recompense) towards this fund each month. When an individual resigns, they get the whole contribution (of both employee and employer) as a singular amount with intrigue. The pace of return earned is fixed, which is set by EPFO. Additionally, the intrigue collected is tax-exempt. 

The government of India has ordered contribution in this plan. Accordingly, as the government oversees it, it is viewed as a generally safe venture. 

Month to month Contribution – Employer and Employee 

As referenced above, both employer and employee have an equivalent contribution towards the employee provident fund. The genuine amount to EPF contribution is determined dependent on the employee's essential salary and dearness remittance. For most employees, the PF contribution is 12% of the essential salary. The underneath is the given subtleties of employee and employer contribution towards EPF: 

Employee's contribution towards EPF 

The employer deducts 12% of the employee's salary (essential + dearness stipend) straightforwardly consistently for a contribution towards EPF. This whole contribution goes to the EPF record of the employee. 

Employer's contribution towards EPF 

Thus, the employer additionally contributes 12% of the employee's salary towards EPF. Yet, the employer's contribution has the accompanying classifications. 

In any case, in specific conditions, EPF contribution can be 10%. For example, this can infer in the accompanying cases – 

• In the event that an organization has under 20 employees 
• The organization brings about misfortunes that are more than its whole total assets 
• In the event that an organization is related with beedi, jute, block (brick), guar gum or coir industry 

The contribution can likewise shift on account of ladies employees. In the association spending plan 2018-2019, new ladies employees can make an EPF contribution of 8% rather than 12%. This benefit is just for the for first three years of work. The essential purpose behind this correction was: 

• To empower ladies for higher salary 
• To urge organizations to recruit more ladies to reduce the gap

Despite the fact that a lady employee contributes 8% towards EPF, the employer needs to keep up its EPF contribution at 12%. All things considered, an employee can likewise include over 12% towards EPF. This is the Voluntary Provident Fund (VPF). 

It is essential to take note of that EPF will keep on being dynamic as long as you are a salaried employee. On the off chance that you switch occupations, it is paramount to refresh your EPF data with your new employer to proceed with their contribution. 

Employee Provident Fund Interest Rate 

The current loan rates for EPF for the budgetary year 2020-2021 is 8.50%. This loan cost is determined each month and afterward moved to the Employee Provident Fund accounts each year on 31st March. The premium earned on EPF is excluded from charge. 

This rate is pre-chosen by the Government of India (GOI) alongside the Central Board of Trustees (CBT). CBT manages the Act. The loan cost which is reported by GOI remains substantial for a budgetary year, for example beginning from first April of one year to 31st walk year finishing of one year from now. 

In the event that there is no contribution in the EPF account sequentially for a very long time, at that point the record gets latent or inactive. Indeed, even in such cases, the interest is paid on the EPF account until the employee resigns. Notwithstanding, for resigned employees, the intrigue isn't paid on defective records. The premium earned on broken records is available according to the employee's assessment section rate. 

In this manner, the employer's offer contributed towards the Employee Pension Scheme (EPS) doesn't collect intrigue. Be that as it may, a part is qualified to get its annuity simply after the age of 58.