The following penalties should be charged if the Challan payment is not made on time as required by Section 14B:
- 5% annual interest for a delay of up to two months
- 10% annual interest for a two to four-month delay
- 15% annual interest for a four to six-month wait
- 25% interest is charged annually for delays longer than six months.
EPF Objectives
The Ministry of Labor established the Employee Provident Fund with the following goals:
- The fund's primary goal is to administer the provident funds of public, private, and government employees to assist them financially when they retire.
- Employers and employees must contribute to the fund, which mobilizes savings.
- The Employee Provident Fund seeks to maximize profits on investment while favoring its members.
- The fund allows its members to engage in research projects and investigate specific welfare programs.
- EPF focuses on carrying out the tasks that ultimately provide social security to the fund's participants.
Eligibility
To get EPF benefits, the following qualifying requirements must be fulfilled:
- Employee must actively participate in the program.
- Suppose a registered company employs a person. In that case, they can receive insurance and retirement benefits as soon as they start working there. The company must have at least 20 employees.
- It should be noted that the program does not benefit workers in J&K.
Benefits of EPF Fund
Tax Benefits: For starters, the contribution from your salary to the EPF fund is deductible under Section 80C, under which you can save tax in the current year. Also, the interest accumulated from the fund over the years is tax-free. Until you have completed your five years, the EPF accumulated will not be payable.
Lifelong Pension: From the 12% contribution from employees and employers, 8.33% goes to EPS, a national pension scheme under the Employee's Pension Scheme 1995. It guarantees a lifetime pension if you contribute it continuously for at least 10 years, ensuring a smooth retirement.
EPFO Insurance: You can also avail of the EPFO's EDLI scheme, where the nominee can get certain payments in case of death.
Unemployment : If employees lose their current work, these funds may be utilized to cover expenses.
Resignation/Quitting Job : After resigning, an employee can withdraw 75% of their EPF funds after one month and the remaining 25% after two months of being out of work.
Death : If an employee passes away, their nominee will be handed the money collected plus interest, which will assist the family gets through the terrible times.
Employee disability : If workers can no longer work, they may use this money to help them get through a trying time.
EPF Fund Interest Rate:
Every year, the EPF interest rate is reviewed. For FY 2021–2022, the EPF interest rate is 8.10%. The interest rate is determined for the month-by-month closing balance and the entire year once EPFO announces the interest rate for a financial year and the year concludes.
The financial year, which runs from the year beginning on April 1 to the year ending on March 31 of the following year, is the one in which the new interest rates are released.
e-Nomination for EPF
The EPFO has made submitting nomination information for EPF members necessary. To ensure that, in the tragic event of the member's passing, the family receives the sufficient savings that the person had amassed during employment. Online and offline options are available for this. UAN members won't be able to access their passbooks online if they haven't submitted their e-nominations.
To submit an e-nomination, an EPFO member must include their Aadhaar, name, DOB, sex, relationship, correspondence address, bank information, & photograph. The e-Sign process must then be used to confirm the submitted information.
COVID Emergency
For COVID-19 emergencies, EPFO permits members to withdraw funds from their EPF accounts twice.
The EPFO member login page now allows EPF members to withdraw twice from their EPF accounts to cover emergency costs brought on by the Coronavirus epidemic, according to a statement from the labor ministry. Members may take a non-refundable withdrawal of up to 75% of the funds in their EPF accounts or, if that amount is less, three months' worth of their basic salaries and dearness allowance. Additionally, EPFO has established an automatic claim procedure for members whose KYC is fully compliant and is set to settle such withdrawal claims in 3 days.
Online PF Withdrawal
It is possible to withdraw partially from your EPF account to pay for things like a house, a wedding, or medical bills. The amount that can be withdrawn depends on the reason for the withdrawal.
It's important to remember that partial withdrawals have a lock-in time that varies based on the withdrawal's cause. The entire PF balance may be withdrawn in specific instances. A few instances are reaching retirement age, leaving due to a total and permanent mental or physical incapacity, moving permanently to another country, or passing away.
Here are a few justifications why EPF shouldn't be withdrawn before five years of service:
- Benefits under Section 80C of the IT Act are not available; if someone does so and withdraws money from their PF account, the interest earned on the employee contribution will have to be taxed.
- Suppose a withdrawal from a PF account is made within the first 5 years of employment. In that case, the amount is added to taxable income. If the withdrawal is made within 5 years and the amount is over Rs. 50,000, the tax is reduced by 10%. Individuals are exempt from paying this amount by submitting Forms 15G and 15H to the IT Department.
New Rules
Up until 2020, EPF deposits and interest were tax-exempt. However, the government stated in Budget 2021 that beginning in FY22, interest was received on deposits made to EPF and VPF (Voluntary Provident Fund) that exceed Rs. 2.5 lakh in a financial year will be subject to taxation. The interest component would be exempt up to the deposit of Rs. 5 Lakh in the given financial year if there is no employer contribution to the EPF account.
Two separate PF accounts must be kept for this purpose, one for taxable contributions & the other for non-taxable contributions starting with the current fiscal year 2021–2022, according to the CBDT (Central Board of Direct Taxes).
It means that starting on April 1, 2022, PF contributions that exceed the threshold will be put in a taxable account, where interest will be taxed. Additionally, this change has been implemented to rationalize the tax exemptions offered to high-income earners.
Conclusion
The EPFO administers the EPF retirement benefits program. The employee and the employer monthly contribute 12% of the base income and dearness allowance to the EPF plan.
EPF is a tax-saving tool that provides investments with substantially higher interest rates. The Employees' Pension Scheme receives a portion of the employer's contribution (8.33% of 12%).
Frequently Asked Questions (FAQs):
Q. How to pay my EPF online?
You should have your ECR number before trying to pay your EPF online. Go to the EPFO website for your EPF online payment.
Q. How do I check the balance of my EPF online?
You can check your EPF balance through the Umang App, EPFO Member e-Sewa online, SMS, or a missed call, among other services. To check the provident fund balance if your EPF is run by an exempted organization (such as a Trust), get in touch with your employer.
Q. What is an EPF salary?
Employers and employees each contribute 12% of the fund's basic and dearness allowance to the EPF (Employee Provident Fund), a retirement saving plan (DA). It makes up a total of 24% of the contribution. Before retiring, you can withdraw a portion of this deposit.
Q. Can we make online deposits to our EPF accounts?
Employers can make online PF payments via the EPFO website or authorized bank websites (if the bank permits direct payments through their websites and the employer has an account and net banking with that bank).
Q. When may I take a PF withdrawal?
Although early retirement is not permitted until the person is 55 years old, the EPF corpus can only be taken after retirement. 90% of the EPF corpus may be withdrawn by an employee up to one year before retirement, providing they are at least 54 years old.
Q. Is the Aadhaar and EPF link still required for members to use online services? Is it possible to unlink Aadhaar from UAN if not?
The UIDAI has stated that EPFO may continue to use Aadhaar-based authentication services for EPF programs following the most current circular issued by the EPFO. So, if you delink your Aadhaar from your UAN for the time being, you won't be able to use your EPF online services.
The further circular states that the PRO will support Aadhaar seeding on-site so that a member can submit an EPF claim online if they visit the EPFO office to submit an offline claim using Aadhaar KYC.
Q. In light of the Covid-19 problems, which EPF regulations have been modified?
The following are a few changes the finance ministry made to lessen the negative consequences of the nation's COVID-19 outage. To address their liquidity issues, employees will be permitted to withdraw either 75% of their PF balance or three months' worth of income, whichever is less.
For a set period, the Indian government paid the EPF contribution, which amounted to 24% of the employee's pay (base wages plus deferred compensation plus retaining allowance), on behalf of the employer and the employee. It only applied to the first three months of the lockdown. However, only enterprises with fewer than 100 employees, with 90% making less than INR 15,000 per month, will be subject to taxes.
Q. How is the PF amount determined?
Add both company and employee contributions to determine your provident fund contribution. The employee contributes 3.67% of the PF balance, compared to the employer's 12% contribution. The employer contributes 12% of the PF balance based on the employee's basic salary.
Q. Is PF required for salaries over INR 21,000?
While the EPF benefit is only voluntarily offered to employees making more than 15,000, many employers do so voluntarily.
Q. What happens if I don't take my PF money out for a while?
However, the account won't be considered inactive if you leave a job and don't ask for an EPF withdrawal or transfer within 36 months. According to a 2016 change to the EPF program, it will continue to accrue interest for 3 years after you reach retirement age or until you are 58.
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F&O – Learning
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Upstox Securities Pvt. Ltd.: SEBI Registration No. INZ000315837 | NSE TM Code: 13942 | BSE TM Code: 6155 | CDSL Reg No.: IN-DP-761-2024 | CIN: U65100DL2021PTC376860 | Compliance Officer: Mr. Kapil Jaikalyani. Tel No.: (022) 24229920. Email ID: compliance@upstox.com | Registered Address: 809, New Delhi House, Barakhamba Road, Connaught Place, New Delhi - 110001 | RKSV Commodities India Pvt. Ltd.: SEBI Registration No.: INZ000015837 | MCX TM Code: 46510 | CIN: U74900DL2009PTC189166 | Compliance Officer: Mr. Amit Lalan. Tel No.: (022) 24229920. Email ID: compliance@rksv.in | Registered Address: 807, New Delhi House, Barakhamba Road, Connaught Place, New Delhi - 110001. Correspondence Address: 30th Floor, Sunshine Tower, Senapati Bapat Marg, Dadar (West), Mumbai - 400013. | For any complaints, email at complaints@upstox.com and complaints.mcx@upstox.com.
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Upstox Securities Private Limited is a wholly owned subsidiary of RKSV Securities India Private Limited and RKSV Commodities India Private Limited is an associate of RKSV Securities India Private Limited.
Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing.
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Risk disclosures on derivatives -
- 9 out of 10 individual traders in equity Futures and Options Segment, incurred net losses.
- On an average, loss makers registered net trading loss close to ₹ 50,000
- Over and above the net trading losses incurred, loss makers expended an additional 28% of net trading losses as transaction costs.
- Those making net trading profits, incurred between 15% to 50% of such profits as transaction cost.
Attention Investors: As per NSE circular dated July 6, 2022, BSE circular dated July 6, 2022, MCX circular dated July 11, 2022 investors are cautioned to abstain them from dealing in any schemes of unauthorised collective investments/portfolio management, indicative/ guaranteed/fixed returns / payments etc. Investors are further cautioned to avoid practices like: a) Sharing i) trading credentials – login id & passwords including OTP’s., ii) trading strategies, iii) position details. b) Trading in leveraged products /derivatives like Options without proper understanding, which could lead to losses. c) Writing/ selling options or trading in option strategies based on tips, without basic knowledge & understanding of the product and its risks d) Dealing in unsolicited tips through like Whatsapp, Telegram, Instagram, YouTube, Facebook, SMS, calls, etc. e) Trading / Trading in “Options” based on recommendations from unauthorised / unregistered investment advisors and influencers.
Kindly, read the Advisory Guidelines For Investors as prescribed by the Exchange with reference to their circular dated 27th August, 2021 regarding investor awareness and safeguarding client's assets : Advisory Guidelines For Investors
Kindly, read the advisory as prescribed by the Exchange with reference to their circular dated January 14, 2022 regarding Updation of mandatory KYC fields by March 31, 2022: KYC Updation
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