START BUSINESS BUSINESS FORMATION SERVICESTAX AND MANAGEMENT SERVICES
MANAGE BUSINESS COMPANY CHANGESLLP CHANGESTAX RECORD CHANGES
Employees provident Fund (EPF) is a profitable retirement scheme which is available for employees earning their income through salaries. The Employees Provident Fund Organisation of India (EPFO) who maintains and supervises Provident Funds states that every company that has more than 20 employees must register with EPFO.
EPF is a savings policy which allows an employee to save a percentage of his/her salary every month. The funds accumulated from EPF saving can later be used on events when an individual is unable to work due to unavoidable reasons or upon retirement.
PF Deduction is defined as a saving policy where 12% of the Basic Salary of an employee and an additional 12% of Basic Salary contributed from the employer’s side are deposited in the employee’s PF account. The whole of your 12% contribution goes into the EPF account, with that 3.67% of the employer’s contribution also goes into EPF account and the remaining balance i.e. 8.33% goes into your EPS (Employee’s Pension Scheme). PF funds also generate an interest of 8% - 12%, depending on the rate assigned as per the government and the Central Board of Trustees.
When an employee joins a new company then it is important that the employee provides his/her EPF number to the new employer and make sure that EPF details are updated as per the new company’s credentials.
The government and the Central Board of Trustees decide upon a rate of compound interest which is paid every year on the 1st of April and credited to the provident fund of the employee.
EPF contributions from employee’s salary are made monthly, but the interest is calculated on a yearly basis. For instance; At the beginning of every year an employee will have an opening balance (the total PF balance collected till that point) and the opening balance for the next year would be calculated as such; opening balance + total monthly contributions + interest (old opening balance + contribution).
The interest will, however, be earned only from an employee’s EPF balance and not from the EPS which is the Employee Pension Scheme (8.33% of the total 12% contribution made from employer’s end).
The part of the employer’s contribution to your EPF is tax-free while a percentage of tax is deductible from an employee’s PF contribution, under Section 80C of the Income Tax Act. The interest earned and the withdrawn money upon attaining the mandatory specified period of 5 years are exempted from Income Taxation.
EPF withdrawals are generally not permitted unless the individual has resigned from the company. Only after 2 months from the date of resignation, an individual can apply for PF withdrawal.
Forms required for EPF withdrawal
After filing all the required documentation, the applicant must courier the contents and address it to the Headquarter Office of his/her former employer. The forms are then verified and transferred to the EPFO where the final authorization for the EPF withdrawal proceeds.
Before the introduction of EPFO’s member portal and UAN, members could check their EPF balance to verify contributions made and their outstanding balance only once every year. Now, through EPFO, checking one’s PF balance can be easily done online.
Steps to check EPF balance on EPFO’s member portal
The Economic Times Wealth: Vikas Dahiya, founder and chief of tax compliance platform, All India ITR announced a free of cost tax returns solution for members of the Indian Armed Forces. Due to their disciplined schedules, annual tax returns become a hectic chore for servicemen. They need to repaid for their services to millions of citizens and this initiative will go a long way to alleviate the stresses in their service conditions.
18th July 2017
THE ECONOMIC TIMES
Gadgets Now: Technology firms are gearing up to meet tax compliance deadlines with great fervour. All India ITR, an online tax compliance firm launched its e-filing app that works on both Android and iOS.
14th June 2017