What is EPFO? | Meaning & Definition | Akrivia HCM

What is EPFO?

A social security establishment for the employees run by the government of India to contribute a certain amount as savings is known as Employee’s Provident Fund Organization(EPFO). It is one of the largest government-supported organizations in our country. It mandates Employee Provident Fund(EPF)for the employees who earn more than 15000 rupees a month and encourages them to save some money which they can use in any emergency or after retirement.

What is EPF Scheme?

EPF is a savings benefit scheme present for salaried employees, and it is managed by the EPFO. For this, the employee and employer made a specific contribution every month as per the mentioned percentage by the government. If the registered companies have 20+ employees, then it is mandatory for them to register in EPFO.

EPFO has three types of schemes, EPFO Scheme 1952, Pension Scheme 1995(EPS), and Insurance Scheme 1976(EDLI).

EPFO Scheme 1952 Pension Scheme 1995(EPS) Insurance Scheme 1976(EDLI)
Collection with interest after retirement Benefitted monthly if the employee gets disabled. Their kids and widow can get benefits if the employee dies. It can be given only in the case of the death of the member
The member can withdraw it partially for marriage, education, house, and illness. Physically challenged children will receive pension amounts until their death. Employees can get the maximum benefit of up to 6 lakh, 20 times the salary

Functions of an EPFO.

It manages the provident fund scheme, insurance scheme, and pension scheme for the registered companies under the government of India. It is also responsible for bilateral social security agreements with various countries. The decision of EPFO is taken by the Central Board of Trustees. The EPFO makes the process of EPF easier for employees and employers by upgrading its system. It manages and is responsible for how to implement the Act to make it appropriate for the people.

Significant functions of EPFO:

  1. Executing the scheme all over India except J&K.
  2. Managing the registered accounts of employees.
  3. Settling the claims.
  4. Ensure the retired people gets a pension.
  5. Investing the funds.
  6. Record updation.

Types of EPF forms.

EPFO has three forms for withdrawing money, Form 10C, Form 31, and Form 19. Every EPF member is eligible for withdrawing money, but they must have done KYC, for example, seeding the PAN number and bank account. Let’s take you to the broader view of every EPF form.

Form 10C: It is used for withdrawing pension. The registered members have to fill out Form 10C with all the required details. If you want to withdraw pension and PF one at a time, then you have to fill out two individual forms.

Form 31: It is used to withdraw partial and advance money from your PF savings. You have to first activate your UAN on the EPFO official website and fill it out after downloading. Also, mention the reason for the money withdrawal. After submitting Form 31, your money will be credited within a week or 2.

Form 19: It is used for the full and final settlement during retirement. It ensures the smooth running exit from your current company, and you can fill that if you are of 58 years. In Form 19, you have to mention your personal and employment details.

Services offered by EPFO.

EPFO offers these major services:

  1. UAN: It is a unique 12-digit number for the registered member which links to their different employments. The members must activate it to access their accounts and get the online services provided by EPFO.
  2. E-Sewa for registered employees: This portal enables people to register and activate their UAN. It allows people to update KYC, download UAN cards, get all the details, link their accounts, transfer or withdraw money, etc.
  3. Online helpdesk: It assists members and solves their queries about handling their EPF accounts online. With it, they can track their PF accounts, transfer accounts, etc.
  4. Online EPF transfer: With online EPF transfer, you just need to fill in the details and get it transferrable quickly. There is no need to go to a physical EPFO center; you can do it from anywhere and anytime.
  5. Online withdrawal: To withdraw your PF savings, you have to fill the form online after 60 days of leaving the company, but your Aadhar Card must have linked with the UAN.
  6. Online PF payments: It is compulsory for all companies to do online EPF payments & is easy to keep track of your PF dues with online payments.
  7. Online member/company registration: With the latest updation in the system, now companies must have registered on the EPFO portal. The details of the PF code will be available online.
  8. Grievance redressal: The employees or the companies can complain online regarding the withdrawal, transfer, pension, etc. The grievance redressal is treated as the priority.

What are the tax benefits of EPFO?

The Indian Government backs the employee provident fund (EPF), and the interest earned is tax-free. The EPF enjoys a special tax status under Indian law known as EEE (exempt-exempt-exempt). Under this status, the employee’s contribution to the fund is tax-deductible under Section 80C of the Income Tax Act. Therefore, the money invested and the interest earned are exempt from income tax when withdrawn after a 5-year term.

How is the Interest on EPF calculated?

To calculate interest on employee savings, the government and the Central Board of Trustees determine the compound interest. At the beginning of every year, an opening balance exists in an employee’s account.

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