OVERVIEW

EPF is a crucial retirement savings scheme benefiting both employees and employers. It provides financial security, tax savings, insurance, and pension benefits, making it a must-have for salaried employees and registered organizations.

DEFINITION

Employees Provident Fund (EPF) is a retirement savings scheme managed by the Employees' Provident Fund Organization (EPFO) in India. It is mandatory for companies with 20 or more employees to register under EPF. Both the employer and employee contribute 12% of the employee's basic salary and dearness allowance to the EPF account.

BENEFITS OF EPF REGISTRATION

FOR EMPLOYEES :

• Retirement Savings:
• The accumulated amount ensures financial stability post-retirement.
• Tax Benefits:
• Contributions to EPF qualify for tax deductions under Section 80C of the Income Tax Act.
• Interest earned is tax-free if withdrawn after 5 years of continuous service.
• Emergency Fund:
• Partial withdrawals are allowed for emergencies like medical expenses, higher education, or home purchase.
• Pension Benefits (EPS):
• A portion of the employer’s contribution goes towards the Employees' Pension Scheme (EPS), ensuring a pension after retirement.
• Insurance Coverage (EDLI):
• Employees are covered under the Employees Deposit Linked Insurance (EDLI) scheme, providing life insurance to nominees.
• Easy Transfer of Funds:
• With a Universal Account Number (UAN), employees can transfer their EPF balance when switching jobs.

FOR EMPLOYERS :

• Legal Compliance:
• Helps employers comply with government labor laws, avoiding penalties.
• Tax Benefits:
• Employer contributions to EPF are considered business expenses and are tax-deductible.
• Employee Retention & Satisfaction:
• Offering EPF enhances job security, improving employee retention and morale.
• Enhanced Brand Reputation:
• Companies with EPF compliance gain trust and credibility in the industry.