: For Finance Professionals & Students

Employee’s Provident Fund Scheme-One should opt or not!

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Any Employee whole join his/her first job and employer ask him to join EPF Scheme, She/he First though that enter in this scheme will cut off his in hand salary and it is not good because less salary will effect on his monthly expenditures. And they argue not to enter this scheme.Before recently amendment was done the limit to enter the scheme was limited to the person those earning through salary was Rs. 6500/- Per Month But after amendment more person covers in this scheme as the present limit is now 15000/- w.e.f.from 01.09.2014

Now the question again in front of the employees that they should opt the scheme or not because some of the question are certainly in their mind which can we summarized below.

Decision to enter the scheme must be taken at the starting from your first job as once you opt out as a member of EPF you cannot allow to leave it.

Opting the scheme will decrease you in hand salary just because of your contribution of EPF but it increases you CTC to the extent of employer’s contribution in this scheme. So I strongly in favor to avail this scheme as this is a force saving.

First Important question which can come in their mind that is the contribution to EPF is Mandatory?

Yes, contribution to EPF is mandatory for the employees who have a Total salary including basic and allowances are Rs.15, 000 (earlier this limit was Rs.6, 500). And it is optional whose salary is above Fifteen Thousand Only.

Second Question are any Tax-Benefits is available to EPF contribution?

Yes. The contribution made towards EPF is an eligible deduction under section 80C.

Third one: Is any Break-up of EPF Contribution?

As per EPF Act, 1952, the monthly contribution of employee and employer would be divided in the following way:

If your Total Salary including allowance there on  is Rs.11,000 than the contribution would go in this way:

Scheme         Employee

Contribution  Employer


Employee Provident Fund Rs.1, 320       Rs.403.70

Employees’ Pension Scheme       0          Rs.916.30

Employee Deposit Linked Insurance       Rs.55

  1. What is the current interest rate on EPF?
  2. The current rate of interest is 8.75% p.a. The interest is compounded yearly.

The point to note in the interest calculation is done only on the part of EPF not on EPS. So if your contribution towards EPS is Rs.1, 320 (12%) and your employer

Contribution towards EPF is Rs.403.70 (3.67%) and Rs. 916.30 (8.67%) towards EPS, than the interest of 8.75% would be calculated on the amount of Rs.1724.00.

  1. Which one is better – Employee Provident Fund or Public Provident Fund?
  2. Generally EPFF is for salaried person and PPF is for self-employed person. Salaried person can enjoy benefit of both EPF as well as PPF while self-employed person can only take benefit of PPF.
  3. How to Check my EPF Balance Online?
  4. Members of EPF can check their EPF Balances and download their EPF passbook through their UAN numbers from EPF department website.

  How and when can EPF member withdraw money?

  1. A Member can withdraw EPF money for various reasons by fulfilling certain conditions, Penal interest provision applicable in case of non-compliance.

 Can a Member contribute more than 12% of total salary towards EPF?As per EPF Act, 1952, the minimum contribution of employee towards EPF account should be at least 12% but can contribute up to 20% of salary As EPF. But in this Case Employer does not bound to contribute more than 12%

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