The Employees’ Provident Fund (EPF) is a savings scheme introduced under the Employees’ Provident Fund and Miscellaneous Act,1952. It is administered and managed by the Central Board of Trustees that consists of representatives from three parties, namely, the government, the employers, and the employees. The Employees ‘ Provident Fund Organization (EPFO) assists this board in its activities. It works under the direct jurisdiction of the government and is managed through the Ministry of Labour and Employment.
Eligibility
Any organization employing a minimum of 20 workers is liable to give EPF benefits to its workers. Employees of such an organization become directly eligible for availing Provident Fund, insurance benefits as well as pension benefits since the day they join the organization.
Benefits of EPF
There are multiple benefits of having a PF account. Some of them are :
- Tax Benefits: Not only an employee ‘s contribution towards an EPF account is eligible for tax exemption under Section 80C, but the interest earned is also exempt from income tax.
- Pension Benefits: While employers and employees both contribute 12% of wages in EPF, 8.33% of employer’s share goes towards the Employees’ Pension Scheme (EPS). Ten years of contributory membership ensures lifelong membership under Employees ‘ Pension Scheme,1995.
- Premature Withdrawal: The EPFO allows its members to make partial withdrawals after 5 -10 years of service for meeting specific needs like repayment of home loan, medical treatment and unemployment.
- Insurance Benefits: Under the Employees Deposit Linked Insurance (EDLI) Scheme, which is an insurance cover provided by EPFO, the registered nominee receives a lump- sum payment in the event of the death of the insured person.
- Higher Returns: The EPFO utilizes its investible funds in different schemes like exchange-traded funds (ETFs), government securities, debt instruments, money market instruments and infrastructure trusts.