Eligibility for Employee Provident Fund (EPF)

The Employees’ Provident Fund (EPF) is a savings scheme managed by the EPFO, designed to offer social security and retirement benefits. This quick guide will help you check your eligibility and understand how to apply.

To build a well-rounded portfolio and aim for better returns, you can combine tax-saving options with fixed deposits (FDs). While tax-saving schemes focus on long-term security, FDs bring in the benefit of guaranteed earnings.

Blending FDs with schemes like EPF helps you strike the right balance between growth and safety. Bajaj Finance FD offers assured returns of up to 7.30% p.a., adding more stability to your savings. Click here to book your FD now!

Opening an EPF account compulsory for employees earning a salary of Rs. 15,000 or above, although individuals at any income level can opt for it voluntarily. Employees are required to contribute a minimum of 12% of their salary, with the option to contribute more voluntarily.

Also Read: Meaning of Provident Fund 

Both the employee and employer contribute 12% of the monthly salary to the Employee Provident Fund (EPF). While employers are required to make this contribution, employees are not obligated to match it. However, under the PF rule, employees can voluntarily contribute more than 12% if they wish to increase their savings.

The employer contribution is calculated as 12% of total of the following components - (basic wages + dearness allowance + retaining allowance). An equal contribution is paid by the employee also. If your organization employs less than 20 employees (along with certain other pre-requisites as per the EPFO rules), the contribution rate from both employee and the employer is limited to 10%.

Out of employer’s contribution of 12% or 10% (as the situation stands), 8.33% is directed to Employees’ Pension Scheme. However, it is calculated on Rs. 15,000. So, for every employee receiving a basic pay equal to Rs. 15,000 or more, Rs. 1,250 each month is diverted into EPS. However, if the basic pay is less than Rs. 15,000 then 8.33% of that full amount is directed into EPS. The balance apart from this 8.33% is retained within the EPF scheme. Upon retirement, the employee receives his entire share plus the share retained to his credit in EPF account balance by the Employer.

To build a well-rounded financial future, consider supplementing your EPF savings with an FD that offers assured returns. With Bajaj Finance FD, you can earn up to 7.30% p.a., creating an additional retirement cushion without market-linked risks. Book your FD today

Employers with less than 20 employees or employee consent can be exempt from EPF registration, subject to conditions and formalities. EPF eligibility is determined by the number of employees and their consent. However, if an employee or group of employees receives Provident Fund benefits that are on par with or exceed statutory provisions, the employer can apply for exemption through Form 1.

If you are applying for a new EPF account, you will need to do so through your employer. You will have to provide all previous employment details, if any, through Form 11, and all family particulars or nomination details in Form 2.
 

If you are an employer with an organization that employs 20 people or more, it is mandatory for you to register under the EPF scheme. If your organization employs less than 20 people, you can still opt to register under the scheme. EPF registration requires you to submit details of your company, as well as details of each of the company’s owners. You can register for the EPF scheme on the official EPFO website.

EPF allows partial withdrawal for specific purposes after completing seven years of contributions. The reason for withdrawal must be clearly stated—such as marriage or education of self, siblings, or children. In such cases, you can withdraw up to 50% of the accumulated amount.

You can also withdraw from your EPF for other reasons like purchasing or constructing a house, buying land, renovating your home, or repaying a home loan. For purposes related to home loan repayment or site purchase, you must have completed at least five years of EPF contributions. In these cases, you can withdraw up to 90% of the corpus.

Before applying, ensure you meet the required EPF eligibility criteria based on your withdrawal reason. Understanding EPF eligibility beforehand helps avoid delays and ensures a smooth withdrawal process.

If you wish to renovate your house, you can avail this facility twice- one is five years from completion of the house and next you can avail 10 years later from the first withdrawal. The withdrawal amount is limited to 12 times your monthly salary.

EPF is especially flexible when it comes to withdrawal for medical reasons of self, spouse, children or parents with no condition for minimum number of years.

For home loan repayment you can withdraw your EPF only after 10 years of account operation completion.

For retirement – once you cross 57 years of age, you can withdraw 90% of the entire corpus.

An online transfer facility is available that allows an employee to transfer their provident fund (EPF) balance from a previous employer to a new one with ease. The transfer claim can be attested by either the old or the new employer, depending on the situation. The EPFO facilitates such transfers under specific protocols to ensure a smooth process.

Earlier, employees had to fill out Form 13, get it signed by the previous employer, and then submit it to the new employer. This process often led to delays, with issues like form misplacement and the need to constantly follow up with the HR departments of both companies.

These challenges contributed to a rise in unclaimed EPF amounts. To address this, a revised version of Form 13 was introduced. Now, it can be submitted to either employer—new or old—making the process more flexible. However, if the new employer operates through a trust (meaning it is EPF-exempt), the form must be submitted to the old employer only.

Your eligibility verification will take place once you enter your account using the UAN and fill in details of both the employers.

The EPF is a government-backed welfare scheme designed to help salaried individuals save for retirement. While some people may have private savings or investments, not everyone has the financial knowledge or resources to plan effectively for their future. That’s where the EPF proves useful.

All interest earned on the EPF is tax-free, and so are the withdrawals. However, a full withdrawal is only allowed once you turn 58 years old. That said, if you're nearing retirement and have been unemployed for 60 consecutive days, you can withdraw up to 90% of your EPF balance.

To boost take-home pay for women, the government has reduced the required monthly EPF contribution for female employees to 8%. Additionally, for any new employees and women employees hired before March 2019, the government has offered to cover the employer’s EPF contribution of 12% for a period of 3 years.

Since EPF helps build long-term savings and mandates employer contributions, it’s important to stay informed and track your EPF account regularly to secure your financial future.

EPF is a debt-based investment scheme which doesn’t have any exposure to equity. This means when inflation is high, you could be earning negative returns. Thus, you must look for ways to make your EPF savings grow, so you can secure your future with a higher corpus. You can consider investing your EPF money, which enables you to grow your retirement funds easily.

EPF withdrawals are generally tax-free, but specific circumstances may lead to taxation:

1. Taxation occurs if the employer contributes over Rs. 7.5 lakh annually.
2. Interest on excess employee contributions above Rs. 2.5 lakh is taxed.
3. Government employees' EPF interest is tax-free up to Rs. 5 lakh yearly.
4. Interest on dormant EPF accounts is taxable.

Early withdrawals within five years of employment face a 10% TDS on amounts over Rs. 50,000. Exceptions may apply for health issues, business closures, or unavoidable situations.

To safeguard your returns against inflation, you should look at high-paying fixed-income investments such as fixed deposits. Short tenor FDs particularly help you beat inflation and multiply your EPF corpus substantially.

Bajaj Finance FD allows you to earn higher interest rate in spite of cuts in Repo rates. It is currently offering one of the highest FD interest rates up to 7.30% p.a. for Senior Citizen Fixed Deposits. With such returns, you can beat the inflation much more than bank FDs and earn good returns that will allow you to meet your financial obligations.

While EPF investments are dependent on your employer contribution, investments in fixed deposits like Bajaj Finance FD can be multiplied with high interest rates depending on the tenor chosen by you. You can use the online FD interest calculator to know your returns. You can look out for non-cumulative payments from Bajaj Finance fixed deposits to pay you periodically – monthly, quarterly or half -yearly.

Calculate your expected investment returns with the help of our investment calculators