EPF and EPS in India

Employees’ Provident Fund Scheme
(1952)
Prepared By
Ashi Anjum

accelerate your ambition
Under EPF Scheme 1956
11th April 2014

accelerate your ambition 3
A compulsory, government-managed retirement benefit scheme available to all salaried
employees.
It is mandatory for every employee drawing a basic pay of up to Rs. 6,500 per month to
make contribution towards EPF & EPS. However, employees drawing basic salary
over Rs. 6,501per month have an option to get PF deducted from their salary.
Both employees and the employer contribute to PF at the ‘rate of 12%’ of the basic wages
and dearness allowance (if any) per month. Thus, the total contribution to PF is 24% per
month.
What is Employee Provident Fund???

The entire 12% of employee’s contribution is added towards EPF, while 8.33% out of the
total 12% of the employer’s contribution is diverted to the EPS or pension scheme and the
balance 3.67% is invested in EPF.
However, if the basic pay of an employee exceeds Rs. 6,500 per month, the contribution
towards pension scheme is restricted to 8.33% of Rs. 6,500 (i.e. Rs. 541 per month) and the
balance of employer’s contribution goes into EPF.
Thus, the employer contributes only up to Rs. 541 per month (8.33% of Rs. 6,500 in the
employee’s pension scheme account
Contribution – Employer & Employee

Contribution Matrix
Scheme Employee’s contribution of
basic pay
Employer’s
contribution
EPF 12% 3.67%
EPS — 8.33%
Subject to Maximum
541 Rs. PM Balance will
go to Employer’s PF
Contribution

Contribution Calculation
Year
Monthly basic
(Rs.)
Employee’s Monthly PF
Contribution @ 12% of
Basic
Employer’s Monthly
PF Contribution
Employer Monthly
EPS Contribution
(Rs.) @ 8.33%
(Subject to max. 541
PM)
1 6500 780 239 541 541
2 8000 960 419 541 569
3 10,000 1,200 659 541 597
4 13,000 1,560 1,019 541 627
5 15,000 1,800 1,259 541 658

An option wherein a person can contribute more than the normal compulsory deduction of
12% of your basic salary. Where you are allowed to contribute 100% of your basic salary in
VPF.
This additional amount enjoys all the benefits of PF except that the employer is not liable to
contribute any extra amount apart from 12%. An added advantage is that the interest rate is
equal to the interest rate of PF and the withdrawal is tax free.
You just need to fill a Joint declaration form and submit the same to your HR.
Voluntary Provident Fund (VPF)

Interest on EPF
The EPF interest rate is decided by the central government with the consultation of Central
Board of Trustees.
The EPF interest rate notification is available on the official website of EPF India on an annual
basis.
For FY13-14, the interest calculated on EPF is 8.75%.

As soon as you join your new organization you are allotted a new PF account number, which
is an alphanumeric digit.
For Example – MH / BAN / 43447 / 1112
The first two letters indicate the state code, Like MH stands for Maharashtra. Which is in
charge of your account.
The next three letters indicates the regional PF office code, Like BAN stands for Bandra.
The next five digits are the employer’s code, followed by the employee’s code.
How the process starts…

Someone whom you want to be the recipient of benefits after
y your Death.
Nomination

In the case of a male member – His wife, his children whether married or unmarried, his
dependent parents and his deceased son’s widow or children.
In the case of a female member – Her husband, her children whether married or unmarried,
her dependent parents her husband’s dependent parents and her deceased sons’ widow or
children.
If any of the above relations is in existence then the employee can not make anybody
else his nominee for his Provident Fund. But if none of them exists then He can
nominate anyone whom he wants to.
Definition of the “FAMILY” for the purpose of Employees’ P F Scheme.
Nomination

*Wife in the case of male member;
*Husband in the case of a female member;
*Sons (Up to 18 Years of Age) and Unmarried daughters (Up to 25 Years of Age) of a
member.
Bachelor and childless widower can nominate their dependent parents only. However, upon
getting married, he will make a fresh nomination in form 2.
(For Pension - Only spouse & children if married, & Parents if Unmarried)
Definition of the “FAMILY” for the purpose of Employees’ Pension Scheme.

Advances / Withdrawals While in Service
EPF withdrawal is not permitted if you are still working.
But Like any other financial product, you can withdraw balance
from your EPF account upon emergency.
Advance/ Withdrawals may be availed for the following purposes :
1- Marriage / Education
2- Treatment
3- Purchase or construction of Dwelling house
4- Repayment of Housing Loan
5- Purchase of Plot
6- Addition/Alteration of House
7- Repair of House
8- Lockout
9- Withdrawal Prior to Retirement

For Marriage / Education
Type of Advance Purpose Eligibility
Maximum Admissible
Amount**
Proof/ documents
required
Under Para 68-k of the
Scheme
For the marriage of:
1. Self
2. Son, Daughter
3. Brother, Sister
For education of :
o Self
o Son,
o Daughter
Should complete
at least 7 years of
service.
3 times in the entire
service
50% of Employee share
at the time of tendering
the application
Apply in Form-31
through the Employer
Bonafide Certificate duly
indicating the fees
payable from the
educational institution
Marriage invitation card
along with the
application should be
submitted through the
employer

For Treatment
Type of Advance For the treatment of Eligibility
Maximum Admissible
Amount**
Proof/ documents
required
Under Para 68-j of the
Scheme
Whenever required for
treatment
1- Self
2- Family
(spouse, son, daughter,
dependent father, mother)
Major surgical
operation in a
hospital
Suffering from TB,
leprosy, paralysis,
cancer, Mental
derangement or heart
ailment
and having been
granted leave by his
employer for the
treatment of said
illness
No minimum service
required.
6 times of Wages
OR
Full of Employee share
(whichever is less)
Form-31 through the
Employer.
Certificate from ESI or from
Employer that the ESI facility
is not available to the
member.
A doctor (or registered
medical practitioner) of the
hospital certifies that a
surgical operation or
hospitalization for 1 month or
more is/was necessary.
In case of TB, leprosy ...etc.,
a specialist doctor should
certify

For The Construction/ purchase of (House/ Flat)
Maximum Admissible
Amount**
Proof/ documents
required
Under Para 68-B of the
Scheme
Only Once (either
'construction or
purchase of house' or
'repayment of housing
loan)
For the construction/
purchase of dwelling unit
(house/ flat)
Should complete 5 Years
of service
Only once in service
Property should be in the
name of self or spouse
or jointly
Should not be a joint
property owned by other
than the spouse
36 times of Wages Declaration in the
Proforma obtained along
with application signed
by Member
Apply in Form-31
through Employer

Repayment of Housing Loan
Maximum Admissible
Amount**
Proof/ documents
required
Under Para 68-BB of
the Scheme
Only Once (either
'construction or
purchase of house' or
'repayment of housing
loan)
Repayment of housing
loan
Should complete 10
Years of service
name of self or spouse or
jointly
than spouse
36 times of Wages Declaration in the
Proforma obtained with
approval and signed by
the Member
Apply in Form-31 through
the Employer

For The Purchase of Site/ Plot
Maximum Admissible
Amount**
Proof/ documents
required
Under Para 68-B of the
Scheme
For the purchase of site/
plot
of service
property should be
registered in the name of
self or jointly with
spouse
should not be a joint
than spouse
24 times of Wages Filled-up
Declaration(from the
Employee in the
prescribed form and
enclosed with the
application.
Copy of the Purchase
Agreement
the Employer

Addition/Alteration of House
Maximum Admissible
Amount**
Proof/ documents required
Under Para 68-B(7) of the
Scheme
Addition/alteration of
house
(same type of advance
can be availed for repair
of house)
after construction
name of self or spouse or
jointly
than spouse
12 times of Wages Certificates of proof
the Employer
Annexure III
(construction /
completion certificate/
utilization certificate)
should be submitted

Withdrawal Prior to Retirement
Maximum Admissible
Amount**
Proof/ documents
required
Under Para 68-NN of
the Scheme
Only once
Withdrawal prior to
retirement
No minimum service
At least 54 years of age
1 year before retirement
(54)
90% of total of both
shares
Certificate from the
employer showing the
date of retirement
Apply in Form-31

*As Advance facility is not a “LOAN”, employee do not have to refund the
said amount back to the PF Department and do not have to pay any
interest on the same.

PF Withdrawal on Change of Job

PF Withdrawal Process.
2 Months Waiting Period - The rules are that an employee should not be in employment for two months
after resigning if he has to withdraw his P.F amount.
Form 19 (for EPF withdrawal) http://www.epfindia.gov.in/downloads_forms.html
Form 10c (for EPS withdrawal) http://www.epfindia.gov.in/downloads_forms.html
A blank cancelled cheque (this is required to verify accuracy of MICR Code Number). The
cheque should be of you as a single account holder and not a joint account.
Form is submitted to the regional PF office after which the said amount along with interest
would be deposited in your bank account within a period of 90 days.

Know Your Claim Status Online.
http://www.EPFIndia.com/ClaimStatus_New.html
Step 1 - First you will see a page having title “Claim Status Information”, from where you have to Select
PF Office State for example "DELHI".
Step 2 - Just after select Delhi as state you will see three offices namely Delhi North, Delhi South etc.
Step 3 - If you know the EPF Office from where your claim has to be settled, select the same from the list.
Step 4 - On selection of office, the mandatory Region Code and Office Code will get populated
automatically in the respective boxes.
Step 5 - Enter the Establishment Code in the third box – which can be of maximum 7 digits.
Step 6 - In case the Establishment Code has an extension / sub-code, enter the same in the forth box. It
can be a digit or letter as the case may be and can be of maximum 3 characters in size. Leave this field
blank, if there is no extension /sub-code to the Establishment Code.
Step 7 - Enter your account number in the fifth box which can be of maximum 7 digits.
Step 8 - Click on submit to get the status.

PF Transfer

1. While you need to wait for two months to withdraw the money, the transfer takes place immediately.
2. EPF is currently offering 8.75% of interest, which is not taxable. Hence, it is best to stay invested in.
3. According to the new rules, after year 2011, after 3 years of inactivity, your PF account will stop earning
any interest income.
Why to transfer PF Account.

PF Transfer Process.
1. Fill up PF withdrawal form (Form 13) with the details of your previous organization, including your
previous PF number, previous employer and regional provident fund office details.
2. Sign and hand over the Form ‘13’ in triplicate to your present employer/HR Department.
3. HR will fill in the details of your current organization and attested it by the authorized signatory (of the
new employer).
4. HR then submit it to the regional PF office for transfer.
5. The regional PF office then gets in touch with your previous employer / regional PF office to affect the
transfer.
Ideally, the process should take around 30 days.

EPFO introduces a
new system to
facilitate online
submission of transfer
claims by Members
with an objective to
make the transfer
process transparent,
efficient and
comfortable for you.
http://epfindia.nic.in/Employee_OTCP.html

http://www.epfindia.com/MembBal.html
Instead of providing hard copy of the Annual PF slips, EPFO has launched the e-passbook
facility for EPF subscribers—which will include their updated PF account status online.
Can be downloaded multiple times in a month.
Link to register for e-Passbook.
http://members.epfoservices.in/index.php
After 3 working days you’ll be able to download your e-passbook.
Check your EPF Balance

Employee Pension Scheme 1995

Employee Pension Scheme.
Employees contributing to EPF Scheme automatically become member of Employees’ Pension Scheme
without contributing single penny and can enjoy all the benefits available under the Employees’ Pension
Scheme.
Monthly Pension facility is available on completion of age of superannuation for the employees
completing 10 years of membership towards EPS
In case of death of the member, nominee can claim the entire funds lying in the account of the deceased
together with interest.
EPS being a pension scheme, interest is not applicable. Hence, no interest is earned on the
amount accumulated in EPS.

Maximum Pension
Under EPS, the monthly pension is decided on the basis of ‘pensionable service’ and ‘pensionable
salary’.
The formula to calculate pension is:
Monthly pension = (Pensionable salary X Pensionable service) ÷ 70
Employer shows your salary as Rs. 6,500 for EPS, so the pension is calculated on a monthly salary
of Rs. 6,500. So if you have worked for say 35 years, your monthly pension will come to Rs. 3250
According to the formula - [(Rs. 6,500 X 35 years)] ÷ 70
Thus, the maximum pension per month is subject to maximum of Rs. 3,250 per month.

Receiving Pension
If you have attained the age of 50 years or more and
If you have completed a total service of 10 years or more and
If you are not getting any other EPF Pension.
However, no pension is payable before the age of 50 years. Early pension—that is an employee receiving
after completing 50 years of age but before 58 years—is subject to reducing factor @ 4% (from
September 2008) for every year falling short of 58 years. In case of death / disablement, the above
restriction is not applicable.
The pension amount is payable to the eligible subscriber till he survives. On the death of the employee,
members of his family—whom he has nominated—are entitled for the pension.

EPS Withdrawal Benefit
Return of contribution on exit from the
employment
Year of service
Proportion of wages at
Exit
1 1.02
2 1.99
3 2.98
4 3.99
5 5.02
6 6.07
7 7.13
8 8.22
9 9.33
For Example:
An employee exits from employment
after four years of service his wage
on exit is Rs. 6500
(Return of contribution will
be Rs. 6500 x 3.99 of wages on exit)
i.e.,Rs. 25935.
“To withdraw from EPS, an employee
needs to contribute at least for six
months”

Gratuity – Reward Money
Gratuity shall be payable to an “employee” on the termination of his employment after he has rendered
continuous service for not less than five years.
a. On his superannuation.
b. On his retirement or resignation.
c. On his death or disablement due to accident or disease.
NOTE: However, the condition of five years of continuous service is not necessary if service is terminated
due to death or disablement.

Calculation - Gratuity
* Salary = basic + DA
*Completed year of service means:
*Full time service of more than 240 days in a year is considered as 1 completed year of service.
*Here, number of days in a month is considered as 26.
*Gratuity is calculated at the rate of 15 days salary (means basic salary + DA, if any) for every completed year of service
Therefore, 15 days’ salary is arrived as = salary * 15/26
Gratuity = Monthly Salary x 15 x No. of years of service
26
Here is a link where you can calculate your Gratuity online
http://easycalculation.com/finance/gratuity-calculation-india.php

Calculation - Gratuity
Employer contribute at a rate of 4.81% from the basic salary of the employee.
Since receivable Gratuity = 15/26*( Nor. of Years of Service)
Rate of Gratuity per month = 15/26*1/12 % = 4.81%
Example :
If an employee is drawing 54000 Rs of Basic formula would be-
54000 x 15 x 1 Year = 31154
26 OR 54000 x 4.81% = 31164

Facts
Calculating completed years of service , if an employee worked for more than 6 months , it will be
considered as full year .
Example : Employee worked for 14 years and 7 month , then completed years of service = 15 years
Example: Employee worked for 14 years and 5 months ,then completed years of service = 14 years
Example: Employee worked for 14 years and 6 months, then completed years of service = 14 years
In case gratuity is received from more than one employer during the previous year, maximum
exemption allowed is up to Rs 10,00,000.
Maximum Amount of Gratuity
The amount of gratuity cannot exceed Rs 10,00,000 (10 lacs) . Even if it exceeds , maximum amount
payable by employer shall be Rs 10,00,000

EPF and EPS in India

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