It refers to the retirement savings scheme managed by the government, which helps in providing financial security to the employees for their retirement. It is a salary distribution format in which the employer or the company deducts a small portion of the employee’s salary and submits it to the government. This eventually gets into an employee’s account, which they can withdraw.
At the time when the salaried employee retires, the provident funds offer a fixed monthly amount which they have earlier contributed from their salary before retirement.
Eligibility Criteria For Provident Fund
- The employee must be employed under the Employee Provident Fund and Miscellaneous Provision Act, 1952.
- The employee must receive wages directly from the employers
- The employee must have a salary of 15000 above
- The employee must be between the age of 18-60
- The size of the organisation must be more than 20 employees
Exceptions for PF
Large companies and public organisations manage their provident fund trust.
Withdrawal conditions include an emergency like medical treatment, marriage, or education.
If the contribution exceeds ₹ 2.5 lakhs with the employer or ₹ 5 lakhs without the employer in a year, they are liable to pay tax on the exceeding interest rate.
Different types of Provident Fund
- Employee’s provident fund: applies to companies having more the 20 employees
- Recognised Provident Fund: specialised for private companies having 20 employees
- Statutory provident fund: Applicable for government employees, educational institutes and recognised companies
- Unrecognised Provident Fund: Such a provident fund scheme is not approved by the Commissioner of Income Tax.
How to withdraw Provident Fund
There are two significant types through which you can withdraw Provident Funds: online and offline.
Online
Step 1: Log in to the EPFO Member e-Sewa portal using your UAN and password.
Step 2: Go to ‘Online Services’ and select ‘Claim (Form-31, 19 & 10C)’.
Step 3: Verify your bank details, Aadhaar, and personal information.
Step 4: Select the withdrawal type, fill in details, upload documents, and submit with Aadhaar OTP.
Step 5: Track the claim status under the ‘Track Claim Status’ option.
Offline
Step 1: Download the Composite Claim Form
- Aadhaar-based: Use if Aadhaar and bank details are linked to UAN and UAN is activated. Submit directly to the EPFO office without employer attestation.
- Non-Aadhaar-based: If Aadhaar or bank details are not linked. Submit with employer attestation to the EPFO office.
Step 2: Submit the Form. For partial withdrawals, self-certification is allowed instead of additional certificates (as per EPFO order dated 20.02.2017)
Advantages of Provident Fund
- Retirement benefits: the core objective of a provident fund is to offer you financial security for a long-term
- Tax benefits: contribution in PF also helps in enhancing the chances of tax deductions
- Higher interest rate: the interest rate of PF is generally higher than other savings accounts
- Pension: It offers a monthly pension at the time of retirement of an employee
- Better emergency management: at the time of emergency, the employer can withdraw this amount, which is a significant benefit of PF.
