KNOW ABOUT EMPLOYEE PROVIDENT FUND (PF)

The Employees' Provident Fund Organization (EPFO) is a statutory body of the Government of India under the Ministry of Labour and Employment. 

It administers a compulsory contributory Provident Fund Scheme, Pension Scheme and an Insurance Scheme.

 It is one of the largest social security organizations in India.

Employees and Employer contribute 12% of basic towards EPF account.

Accordingly, the wage ceiling for an employee to be eligible for the PF Scheme has been increased from INR 6,500 per month to INR 15,000 per month w.e.f Sep 2015.

 

On 01 October 2014, Prime Minister of India Narendra Modi launched universal account number for Employee Provident Fund to enable PF number portability.

Key amendments- 

UAN is Universal Account Number

The UAN is a 12-digit number allotted to employee who is contributing to EPF will be generated for each of the PF member by EPFO. 

The UAN will act as an umbrella for the multiple Member Ids allotted to an individual by different establishments and also remains same through the lifetime of an employee.

It does not change with the change in jobs. 

 

EPFO has made UAN mandatory for all employers under its purview!!

EPFO has notified to make Universal Account Number (UAN) mandatory for all employers covered under the Employees Provident Funds and Miscellaneous Provisions Act 1952.

 Employees who are PF members will be able to apply online for transfer and withdrawal of their provident fund from July 1, a move aimed at speedy settlement of claims.

The deadline for completing the formalities is August 25'2015 after which action will be taken under the powers given to PF officials by the Employees Provident Funds Scheme, 1952, and other applicable laws for failure to comply with the order.

You can obtain UAN for your employees or do KYC for employees already having UAN. 

Another important thing for activating UAN of employees is compulsory registration of Digital Signature (DS) under EFP. 

For this purpose please ensure that Digital Signature of Authorised Signature has been obtained, registered on PF site and the DS has not expired. 

Hurry up!! Obtain your UAN and Upload your KYC details now!!

EPF withdrawal is taxable

The Finance Act, 2015 has inserted a new section 192A regarding the payment of accumulated provident fund balance due to an employee. The provision shall take effect from 1st June 2015.

As per the new section, Income Tax shall be deducted at source (TDS) if at the time of payment of the accumulated PF balance is more than or equal to Rs 30,000 with service less than 5 years. The TDS shall be deducted as follows:

Deduction of TDS on withdrawal from PF - Explanation

Instructions for deduction of TDS on withdrawal from PF (Amendment in Section 192A of the IT Act 1961)

a)    TDS will be deducted @ 10% provided PAN is submitted.

b)    TDS will be deducted @ maximum marginal rate (i.e. 34.608%), if employee fails to submit PAN.

However, in case Form 15G or 15H is submitted by the member, then no TDS shall be deducted. Form 15H is for senior citizens (60 years & above) and Form 15G is for individuals having no taxable income. Form 15G & 15H are self declarations and may be accepted as such in duplicate. (Form Nos. 15G and 15H cannot be accepted if amount of withdrawal is more than Rs. 250000/- and Rs. 300000/- respectively.)

Therefore, from now the following documents have to be submitted for withdrawal, if withdrawal is done before 5 years of membership:

1)  Form no. 19

2)  Form 15H or Form 15G as applicable (Attached)

3)  Pan Card Copy

Members must quote PAN in form no. 15G/15H and in form No. 19

No TDS shall be deducted in respect of the following case: -

·  Transfer of Pf from one account to another PF account.

·  Termination of service due to ill health of member/discontinuation of Business by employer/completion of project/other cause beyond the control of member.

· If employee withdraws PF after a period of five year.

· If PF payment is less than Rs 30000/- but the member has rendered service of less than 5 years.

·   If employee withdraws amount more than or equal to Rs. 30,000/- with service less than 5 years but submits Form 15G/15H along with their PAN.

Note:

 1)    TDS is deductible at the time of payment.

2)    Form Nos. 15G and 15H cannot be accepted if amount of withdrawal is more than Rs. 250000/- and Rs. 300000/- respectively.

2) You can even opt out of EPF

Yes, EPF is not mandatory for an employee. It is only mandatory for the employer to provide this option to the employees upon meeting certain criteria.

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