Every Salary slip or form no. 16 has the term PF (Provident fund) and you must be wondering why is it deducted from my salary?
What is a provident fund or epf?
How do I find the PF Balance or where do I make PF Online Payment?
Well, you have chosen the right article. Here, I will be explaining all the answers to your questions.
EPF contribution is mainly of 2 types:
1. Your Contribution from your Monthly Salary
- If you are a man, you are allowed to contribute either 10% or 12% of your basic salary amount. (Crosscheck your monthly salary slip to know exact basic pay)
- If you are a female, your contribution will be 8% of your basic salary for initial 3 years and then later it becomes 10% or 12%, whichever option you want to choose.
2. Contribution of Your Employer
Your employer contributes an amount equal to your contribution
Hence, total Employee Provident Fund: Double of your contribution.
Example: See below for the month of August 2017, here is my salary slip:
In above example
- Basic Pay = Rs 71,667
- Provident Fund @12% = 12% of Rs 71,667 ie Rs 8,600
This means company has paid Rs 8,600 Rs as Provident Fund.
This can be confirmed by viewing PF Passbook from EPFO. See below:
You can see here the employer’s contribution (Rs 8,600) and my own contribution (Rs 8,600) has been credited in my PF Account.
Further when you read this article, you will know how you can get assistance for the facility of claiming your PF or can view your amount by EPFO Member Passbook, exact amounts in EPF Pension bracket and current PF rates in this detailed article.
Let me begin with letting you know what is PF. PF is nothing but an abbreviation for Provident Fund, which is also known as EPF (Employees Provident Fund).
New PF Rules by Government during CORONAVIRUS Pandemic
There only a few changes that have taken place in the PF rules, let us have a look at it:
- Under the Atmanirbhar Bharat Package, our finance minister Nirmala Sitaraman has reduced the statutory provident contribution of both employer and employee to 10% from an existing rate of 12%. These are the PF deductions during Corona Pandemic. There are other many waivers and relief, know more at PF Rules for Covid.
- This reduced interest rates will benefit all the employers in India and will relieve them of some expenses.
- This statutory change in rates will be applicable for the months of May, June, and July of 2020.
- This change in interest rates is applicable to all companies and organizations. However, it isn’t applicable to the central and state public sector businesses or any other businesses under the same.
The Provident Fund has proven to be very beneficial and noteworthy for all the people in India since its inception from 1952.
To know more about the new rules, check this latest article – PF New Withdrawal Rules due to Coronavirus.
Calculate Your PF
EPFO Employee Provident Fund
The concept or system of the provident fund came into existence in 1951 and later went on to become a legislative act, which is currently known as the Employees Provident Fund Act, 1952.
The said scheme is managed under the Employees Provident Fund Organization (EPFO).
The scheme is put in motion by the government to imbibe the ability to save for the future after retirement and also to provide helping aid to achieve saving goals of Indian citizens.
Also Read: Latest NSC Interest Rates
The PF laws are applicable to all the companies that have greater or equal to more than 20 employees and are mandated to register with the EPFO.
This scheme works by saving a small amount of your salary every month. So you need not worry about your salary getting deducted for PF.
There are various rates declared by the Income Tax Office, thereby maintaining uniformity. To ease up the matter, this scheme has three types of provident funds.
The EPF calculators provided online take into account all the aspects of interest rates and Income Tax deductions too.
This makes the PF calculator more reliable and beneficial as they give you the calculation real time.
Also Read: Latest SBI FD Rates
Types of EPF Provident Funds
- Statutory Provident Funds (SPF)
The Statutory Provident Fund is maintained for the government employees by the central and the state government. Here government employee means, semi-government employees, university employees, railway employees, railway authorities, and employees of the institution that fall under a statute or other specified institution. This contribution is made by both employee and the employer and is declared to be exempt from tax. The employee provident fund can be claimed as a deduction under section 80 C of the Income Tax. Moreover, the redemption amount received after retirement too is exempt from tax deductions.
- Recognized Provident Fund (RPF)
The Recognized Provident Fund (RPF) is generally applicable to companies or institutions that have minimum 20 employees at any point of time in the financial year. RPF is one of the most popular types of PF chosen by the employees. Any income contributed to the RPF in excess of 12% is completely taxable. So this means if an employee contributes around 15% to the RPF, 3% ie, 15%-12%=3%, is chargeable under the income from the salary head. The interest amount received in excess of 9.5% is also taxable. At the end of the employment, if the employee withdraws all the PF amount then it is completely exempted only if the employee has worked for 5 years or more.
- Unrecognized Provident Fund (UPF)
This type of PF is not usually recognized by the Income Tax Commissioner. The employer’s contribution to the PF is not considered as income in the year it was contributed and hence considered tax free. However, the employee does not get the privilege of deduction under section 80C. Just like the employer’s contribution, the interest earned is also not considered as income in the year it was earned thereby making it non-taxable. But, the catch here is that the final amount of UPF when withdrawn is chargeable to tax under the head ‘income from salary’ except for the employee’s contribution to the same.
- Public Provident Fund
This particular provident type was declared by the Central Government wherein anyone, salaried or self employed can open a PF account with any of the nationalized banks. The person who opens this provident fund account can deposit any amount between rupees 500 and 1,50,000 during every year. This amount is fixed in the amount that will incur interest on the same and it is repayable after 15 years only.
Also Read: How to register your own GST Number?
How to login to the EPFO India website?
The provident services are now made online with the help of the Member e-Sewa portal set up by the Employee Provident Fund Organization. Anyone who visits the portal will know that there are si=ome services that are made online for the benefits of the account holder.
Services like downloading the EPF passbook, viewing the same, application to withdraw money, view the current balance, etc.
To make the most out of these services, all you have to do is register on the Member e-Sewa Portal by following these steps :
- Visit the Member e-Sewa website to register, the link for the same is: https://unifiedportal-mem.epfindia.gov.in/memberinterface/
- Once the portal is open, on the right-hand side you’ll see a button “Activate UAN”, click on that button to register on the portal.
- The UAN link will redirect you to the next page where you’d be asked to fill in the details like UAN or Adhar Card number, PAN, Name, Date of birth, Mobile No, Email address, etc. Make sure you fill the information correctly.
- After filling up all the information find the ‘Get Authorization Pin’ and click on the same. On the next page, the portal will ask you to re-check the information that you had filled earlier.
- the portal will send an OTP to the mobile number that you mentioned earlier. Put in the OTP and click on ‘Validate OTP and Activate UAN’.
Once you complete these steps, the EPFO account will be generated and you can log in using the relevant credential and avail the services.
Step 1 :
Step 2 :
How to check PF Balance?
To check balance, there are four different ways one can check their EPF balance.
Let me quickly share these 5 ways to check EPF Balance with you:
- Through Umang application
The Umang application is made available on all platforms including Google play store and iOS. It was introduced by the government for the employees to view all the details regarding their EPF accounts. You can use all of these services only after you follow the above steps to register the same using your permanent mobile number.
- Through an SMS
For the ease of the employees and saving time in visiting EPFO offices, sending SMS is one of the easiest and fastest ways to check the EPF balance. All you have to do is, after the one-time registration you have to send it on 7738299899 with a message that says “ EPFOHO UAN ENG”.
This is the fastest and easiest way one can check EPF balance and other details at the same time.
- Through a missed call
A person cannot check his/her EPF balance if the person has not registered on the EPFO website earlier. Hence, before checking your monthly PF balance through a miss call. Thereby, after you have registered through the Member e-Sewa Portal, you can fetch your account details by giving a missed call on 011-22901406.
- Through the EPFO portal
To check the balance through the EPF portal click on the Member e-Sewa Portal link. Enter your UAN and the password that you had entered while the registration process. If the UAN is not activated by the employer you may not be able to avail the passbook services in that case.
EPFO Online Website
The EPFO website is easily accessible on the internet. It will direct you to the EPFO website where the organization has made sure that you get all the necessary information as much as possible.
EPFO has made the registration process online for employees as well as for employers. You can check the available balance, transfer your funds online, make payments, check the status, stay updated with the latest changes, and many more.
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You can also receive the new rules and regulations that have been declared by the government. This will keep you up to date with the world and you don’t have to worry about being ignorant of useful information.
PF Online Payments
The online payment for PF is made easier with the activation of the Member e-Sewa portal that lets you log into your account.
The following steps will guide you through the process of PF online payments:
- The foremost thing that you gotta do is that you have to visit the official EPFO website. Make sure that you have the ECR i.e the Electronic Challan cum Return. The ECR has all the employer details like the organization ID, exemption status, name, address, etc.
- This ECR is to be uploaded on the website to further check the balance, hence upload it through the Payments option.
- Once you select the ECR upload option, select the relevant ‘wage month’ and other credentials accordingly.
- After filling up the relevant appropriate option, upload the ECR file to get the message that says ‘File Validation Successful’. In case there is any isse=ue regarding verification of ECR, it will show error and you might have to check the information you had given to it and resubmit the same.
- Once the ECR file is submitted and verified, a TRRN will be shown on the screen. After viewing the TRRN click on verify and move to the next step.
- The next is about preparing the challan, therefore when the new page appears, click on the ‘Prepare Challan’ option to get an ECR summary sheet. After that step, fill in the Admin/Inspection Charges and then Generate Challan will appear, click on the same.
- Now all you have to do is click on the ‘Finalize’ button.
- The last step is about paying for the challan generated, click on Pay for the appropriate TRRN.
Once you have completed all the above steps you will get an SMS saying that your payment is successful.
Also Read: Know RD Interest Rates 2020
PF Interest Rates 2020
The following table will explain the interest rates applicable to all types of Provident Fund accounts.
|Particulars||Recognized Provident Fund||Unrecognized Provident Fund||Statutory Provident Fund||Public Provident Fund|
|Employer’s Contribution||Contribution upto 12% of the salary is exempt||Not taxable||Not taxable||Not taxable|
|Employee’s Contribution||Section 80C deduction||No deduction under section 80C||Section 80C deduction||Section 80C deduction|
|Interest Rates||Interest rates upto 9.5% is exempt||Not taxable||Exempt||Exempt|
|Amount withdrawn at the time of retirement||Exempt subject to certain conditions||Both employer’s contribution and employee’s contribution is not taxable except for interest on employee’s contribution is taxable as ‘Income from other sources’.||Exempt||Exempt|
The EPF pension is something that a person receives after the end of his/her service period in an organization that has to be 10 or more than 10 years.
The contribution to the employee’s provident pension scheme is contributed by the employer only. The employer has to make a contribution of 8.5% of the employee’s salary to the PF account.
Here the employee’s pay is considered to be the basic salary plus dearness allowance.
The employer has to make a contribution to the PF account within 15 days from the end of the previous month. The age or retirement limit kept on the provident fund is 58 years.
The minimum period of 6 months is given to be benefitted from the provident fund amount subject to 2 months of unemployment.
Know more about Monthly PF Calculator SBI
The Public Provident Fund is a scheme offered by the government and SBI is one of the banks that offer this scheme to its customers as well as its non-customers.
For the ease of the people to calculate monthly PF deductions SBI has come up with the SBI PPF calculator. These calculators are very accurate and fast so that it gives the result on the spot.
The PF calculator provided by SBI allows you to check the total invested amount, total tenure period, the total interest earned, the remaining maturity period, etc.
After entering the appropriate amounts and figures, the SBI PF Calculator will help you know the amount that you will receive on maturity.
If in the near future there are any changes then the calculator will automatically adjust the same.
It is quite straightforward and simple that any layman can use the same.
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EPF Passbook Download
In the above sections, we have mentioned the steps to register and login into your EPF account, follow the given steps to login into the EPFO portal.
Thereafter, click on the e-passbook option made available on the right side. Click on the same and then you will be directed to the login page, login using the suitable credentials.
Later on download the EPF passbook from the download menu and view it as PDF files.
Benefits of PF Calculator 2020
- The PF calculator working calculations otherwise take up a lot of time and involvement. However, due to the online PF calculators, the process has become very easy and just does not need much of a time.
- The PF calculator in 2020 is more robust and provides real-time results with speedy processing.
- The monthly PF calculator just requires some correct input data to display the PF calculations with the help of proprietary technology that fetches the input data for calculations.
- Unlike professional accountants, these PF deduction calculators are available at your service 24*7, making it easier to access in your leisure time.
- The EPF calculator also accounts for the change of interest rates or contribution ratios, so you need not worry about such variations too.
- It is less likely that these monthly pf calculators do not make mistakes in determining the EPf interest rates.
Frequently Asked Questions
⭐How is the PF calculated?
The Provident Fund is calculated for the contribution of both employer and employee.
It is calculated on the basic salary plus dearness allowance.
The interest rate here is considered to be at 12% by the employer.
The interest rate is just 10% for the establishment that has less than 20 employees or sick units or units that are considered by EPFO to be exempted.
⭐How much PF amount I will get?
After retirement, the amount in your provident fund account will be dependent on the interest rates over the period of employment and the basic salary plus dearness allowance.
For the calculation, you can be dependent on the PF Calculators and the PF interest rates that will give you the accurate amount to be received after retirement.
⭐How much PF is deducted from salary?
The total amount to be deducted from PF is dependent on the current interest rate for PF, and the current interest rate is 12%. Therefore the amount deducted from your salary will be 12% of the basic plus dearness allowance and also retaining allowance. The employee’s contribution to the PF is always equal to the employer’s contribution.
⭐Is PF mandatory for a salary above 15000?
No, the PF is not mandatory for people bearing a salary above 15000 rupees.
However, if the employees still want to be benefitted from this scheme, then the employee and the employer must submit a joint declaration to the Regional Provident Fund Commissioner.
⭐What is the basic salary?
The amount received by an employee before the addition of other allowances and perquisites and before deducting any amount is called a basic salary.
⭐Can I withdraw the full PF amount?
The PF can be withdrawn completely only after the 58 years of age, or if you are unemployed consecutively for two months or an unexpected death before retirement.
⭐Is PF calculated on gross salary?
No, the PF is calculated on the basic salary plus dearness allowance and the retaining allowance only.
⭐Why is PF deducted from salary?
The PF is deducted from your salary because it is a provision made by the government to save funds for your retirement so that you face no difficulty or hardship.
⭐How much PF can I withdraw?
A person can withdraw 90% of his provident fund at the age of 54.
And after leaving the job, one can withdraw 75% upon unemployment in the 1st month and the remaining 25% after the 2nd month of unemployment.