look news india
It has now become more important than ever for crores of organized sector employees covered under the Employees’ Provident Fund Organization (EPFO) to monitor their Provident Fund (PF) account. A fixed portion of the hard-earned money of the working class is deposited in the PF account every month, which not only acts as a financial security cover after retirement but also provides financial support in emergency situations. In recent times, EPFO has made the rules more transparent and accessible while promoting Digital India and Ease of Living. The emphasis is on automation to eliminate the complexities of the claims process for employees in various industrial hubs across the country such as Delhi-NCR, Mumbai, Bengaluru, Lucknow, Hyderabad, Pune and Chennai. If you are also a salaried employee in any private or public sector institution, then you should have accurate information about all these 8 major provisions of EPFO so that the claim does not get rejected if needed.
EPFO has started auto mode settlement by upgrading the IT system. Whereas earlier it used to take weeks for the claim to be approved, now with the computer software based auto-mode this work is completed in just two to three days. The limit of this facility, which was started for situations like medical emergency, treatment of serious illness, higher education of children and marriage, has been increased to Rs 1 lakh. This process does not require human intervention of any field officer. The software auto-verifies your e-KYC, Aadhaar link, bank account details and service period and funds are transferred directly to your bank account.
Often employees face such a situation when due to some reason they lose their job or the company is closed. To ensure that employees do not face cash crunch in such adverse circumstances, EPFO has given permission to withdraw up to 75 percent of funds. According to the rule, if an employee remains unemployed for more than a month, he can withdraw up to 75 percent of his total deposited PF balance as advance. The biggest advantage of this rule is that the employee’s PF account is not closed and his membership remains intact. If the person does not get a new job in the next few months and the unemployment period completes two months, then he can withdraw the remaining 25 percent balance and close the account completely.
Earlier, when leaving one company and going to another company, the employees had to fill Form 13 and go through lengthy paperwork to transfer the old PF balance to the new account. In this process, transfers often got stuck for months due to delay in verification of digital signature by the employer. EPFO has implemented auto transfer system based on Universal Account Number (UAN). As soon as the new employer registers your joining information on the portal and the PF contribution is deducted from your first salary, the PF balance of the old company is automatically transferred to the new account. All that is required for this is that your UAN is active and the bank account verified with Aadhaar is linked.
It is very important to understand the rules related to tax at the time of withdrawal from PF account. Under the Income Tax Act, if an employee withdraws the amount from the PF account after completing 5 years of continuous service, then no tax or TDS is deducted on it. If withdrawal is made after less than 5 years of service and the total amount is more than Rs 50 thousand, TDS is deducted at the rate of 10 per cent if PAN card is linked. In case the PAN card is not linked, this deduction can be made at the maximum tax slab rate. If the employee has changed several companies within 5 years but has transferred the PF amount each time, then the total service period of all those companies is calculated by adding 5 years.
EPFO has issued instructions for all account holders to compulsorily complete the process of e-nomination. In case of untimely death of the member without nomination, the family or legal heirs have to go through court and legal procedures to claim the funds and pension. By visiting the Member Seva Portal, members can complete e-nomination in a few minutes by uploading the Aadhaar details and photograph of their spouse, children or parents. By registering the nomination, future claim settlement is completed at a very fast pace and without any legal dispute.
Both employee and employer contribute 12-12 percent in the PF account. Of the 12 percent employer’s share, 8.33 percent is deposited in the Employees’ Pension Scheme (EPS-95), while 3.67 percent goes into the PF account. An employee becomes entitled to receive monthly pension after completing the age of 58 years and completing at least 10 years of regular contributory service. Additionally, under the Employee Deposit Linked Insurance Scheme (EDLI), the account holder gets a free life insurance cover of up to Rs 7 lakh in case of death during service, for which the employee does not have to pay any additional premium from his own pocket.
Partial withdrawal (non-refundable advance) has been allowed from PF for buying a house, construction of a house, repayment of home loan, higher education of children or marriage in the family. In these cases a minimum period of service is prescribed; For example, at least 7 years of service is required for marriage or education and 5 years of service is required for house construction. Complete details of all these transactions and interest credits can be viewed anytime through EPFO’s digital passbook portal or UMANG mobile app. It is important for every conscious account holder to regularly monitor whether the compound interest received at the end of every financial year is being updated in the account on time or not.