EPF Rules on Withdrawal
EPF (Employee Provident Fund) is a small saving scheme that is offered to Indians working in private firms and administered by EPFO (Employee Provident Fund Organization, a statutory body under the labour ministry, ministry of finance, Govt. of India). EPF Rules help employees to save a small fraction of their remuneration on monthly basis and that results in a huge amount at the time of retirement. The scheme of EPFO allows accumulation of Fund on monthly basis and an accrual of interest as well on the accumulated fund. The accumulated funds are collected by the contribution made by employee as well as the employer. The corpus made by the monthly remuneration is tax exempted which helps the employee in the old age of their lives.
The EPF amount can be withdrawn anytime to meet the major requirements like wedding, treatment, home renovation, purchasing new homes etc. But there are certain rules of EPF withdrawal.
EPF Rules and Regulation
EPF Rules have undergone many changes in the last few years. The EPF rules have been altered regarding withdrawal procedure, contribution rules, inclusion and exclusion of employees to EPFO.
As per the latest changes of EPFO, India these are some most important EPF rules of EPFO that must be summarized:
Revision of minimum salary limits – Earlier to this amendment the minimum salary for mandatory contribution was INR 6500 per month but this limit has been revised to INR 15000. As of now employee having monthly salary of INR 15000 or less must have to contribute to EPFO.
Changes to pension amount – The pension amount now will be calculated as per the average of last 60 months salary rather than that of last 12 Months. The minimum monthly pension has been set to INR 1000 which will be given to the widow of the EPF member. The minimum monthly pension for the children and orphans of EPF member has also been revised and set to minimum INR 250 and INR 750 respectively.
Insurance Coverage – The amount of insurance coverage under EPF has also been revised from INR 1,56,000 to 3,00,000 per member.
Employer Contribution towards EPS –The contribution to the EPF has been revised and fixed to INR 1250 per month irrespective of the salary of the EPFO member. This alteration has been done because of the changes made in the minimum salary limit. This fixed amount is applicable only for the members having salary less than or equal to INR 15,000.
Change in threshold limit –A change has also been made to the threshold limit and even the firm or organisation having group size of 10 employees will be considered eligible for the EPF contribution. The previous threshold limit was of 20 employees.
Withdrawals- As per the EPFO withdrawals can be cited in the situation of Financing insurance policy, medical treatment, marriage, buying and building a new house and some other important situations as well.
Withdrawal can be made only via claiming forms like Form 19, Form 31, Form 13 etc. So you can know your PF claim status.
Employee Provident fund (EPF) Contribution Rules
As per EPF Rules the contribution to the EPF account of an employee is done by both the employee and the employer. The rule which is followed for the monthly contribution is as follow.
12 % of the basic pay (including D.A and other allowances) of an employee is deducted towards contribution to the EPF account of that employee. And the same amount that is 12% of Employee’s salary is also contributed by the employer on monthly basis. Out of those 12% from employer’s contribution, 8.33% is deposited to the employee Pension Scheme (EPS) whereas 3.67% is deposited to the EPF account of the employee.
The rate of interest given by the EPFO, India to the final accumulation on yearly basis is 8.6% for the financial year of 2016-17. The rate of interest is revised every year and is announced every year by the EPFO India.
EPF account withdrawal Procedure
If you want to withdraw your EPF amount then you have to submit Form 19 along with resignation letter and cancelled cheque to the EPFO office. The submitted Form 19 should be duly signed by the ex-employer and must also be attested by the gazetted officer or president of your Gram Panchayat. After your submission of form 19 with all the required formalities, your EPF amount withdrawal procedure is initiated.
But it must be kept in mind that as per the new amendment in EPF Rules which is made effective from 10th Feb 2016 includes:
Total EPF amount can’t be withdrawn before attaining the retirement age of the member.
Even after changing the job the employee can continue with the same EPF Membership.
Maximum of 90% of the total accumulation can be withdrawn before retirement.
Members are entitled to partial withdrawal after resignation.
Retirement age of Members has also been increased.