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The current rate of interest allowed on PF contributions is 9.5% p.a.
No, interest earned by an employee on his Provident Fund balance is not taxable to Income Tax.
Yes. A statement will be issued every year from the trust showing the contributions and interest credited along with other details like transfers received, loans availed etc.
In case you leave your present employer, you can either transfer your accumulated balance with the present employer to the new employer or you can withdraw the funds.
In case your present and past employers are with the PF Organisation, you can transfer your PF accumulations from another trust / RPFC to trust / RPFC by submitting Form 13.
In case you are not planning to take up another job, you can also withdraw the accumulated balance in your account. Such withdrawals are however, subject to certain tax deductions.
As an employee, you can contribute voluntarily over and above the stipulated rate of contribution. However, the contribution to VPF will have to be a fixed % of wages and not a fixed amount. Once an employee decides to contribute a certain percentage to his PF account, he must continue to do so till end of the financial year. The Employer does not have to make matching contribution.
Voluntary contributions are also available for Tax rebates. Interest on Voluntary contributions is also exempt from income tax.
You can change your voluntary Contribution only at the start of the financial year.
Voluntary contributions alone cannot be withdrawn.
Under the Provident Fund Scheme, you can avail of Refundable and Non-refundable Loans for specific purposes by making an application in this regard. You can only do this one year before the age of Superannuation.
Depending upon the purpose of the loan, you can get two types of Loans against your PF accumulated balance – Non-refundable Loans and Refundable Loans. Refundable loans have to be repaid via monthly instalments.
Non-refundable Loans are like withdrawals. These loans are not to be paid back.
4 types of Housing Loans are given for this purpose:-
Purchase of Site for Construction of House
Loan Value is the least of:
(i) 24 months value of member’s last drawn basic and DA
(ii) Amount standing to the credit of the Member’s Contribution Account
(iii) Actual Cost of site
However, for this the person must have been a member of the fund for at least 5 years prior to the loan, the site must be free from all encumbrances and the site should be in name of the member or spouse and no third person.
The documents to be submitted are:
Original sale deed from the seller.
Agreement for sale
Latest non-encumbrance certificate.
Layout approval from the relevant authority
Purchase of a built-up house / Construction of House / Flat
Loan Value is the least of:
(i) 36 months value of member’s last drawn basic and DA
(ii) Amount standing to the credit of the Member’s Contribution Account
(iii) Actual Cost of acquisition or cost of construction
However, for this the person must have been a member of the fund for at least 5 years prior to the loan, the site must be free from all encumbrances and the site should be in name of the member or spouse and no third person.
The documents to be submitted are:
Original sale deed from the seller.
Agreement for sale
Latest non-encumbrance certificate.
Layout approval from the relevant authority
Estimated cost certified by an Architect or Civil Engineer
Additionally, the construction should commence within 6 months of first withdrawal and it should be completed within 12 months of the final withdrawal. Purchase of the house / flat should be completed within 6 months of withdrawal of the amount.
Additions or Modifications to the house
Loan Value is the least of:
(i) 12 months value of member’s last drawn basic and DA
(ii) Amount standing to the credit of the Member’s Account for his own Contribution and Interest thereon
(iii) Actual Cost of alteration
This additional withdrawal is allowed only after five years from date of completion of dwelling house.
Repayment of loan taken by member from a State Government, Co-operative society, NHB or Municipal Corporation or any other Financial Institution.
Loan Value is the least of:
(i) 36 months value of member’s last drawn basic and DA
(ii) Amount standing to the credit of the Member’s Account for his own Contribution and Interest thereon
(iii) Amount of loan to be repaid.
However, you must have completed at least 10 years as a member of PF. Member will have to submit latest statement of account by the concerned FI confirming the outstanding Loan Balance (Loan + Interest). The payment is made directly to the agency whose loan is being repaid.
Loan amount restricted to 50% of his own share of Contribution, with interest thereon.
For being eligible for this loan, the person must have been a member of the fund for 7 years; the balance of his own contribution in his account should be more than Rs 1000/-. Not more than 3 advances shall be admissible in lifetime.
Hospitalisation lasting for one month or more; or a major surgical operation in a hospital or person suffering from TB, Leprosy, Paralysis, Cancer, Mental Derangement or Heart ailment and having been granted leave by employer for the said illness.
Loan amount shall be the lower of 6 months member's pay (Basic + DA) or credit balance in his own share of contribution account.
However, to be eligible for such loan, benefits under Employee State Insurance Scheme should not be available to the member. The member will have to submit a Medical Certificate from a Doctor or specialist.
Loan amount is lesser of 3 months member's pay (Basic + DA); or 50% of his own contribution standing to his credit in the fund.
Member has to submit Medical Certificate – from a medical officer authorised by the company; or from the Employees State Insurance (ESI) Doctor where the ESI Scheme exists. This proof has to be submitted 1 month in advance to prove rightful use of advance.
Performance of Marriage or Last Rites that member is incumbent to perform
Loan amount shall not exceed 6 months member's pay; 50% of his own contribution standing to his credit in the fund
For this purpose, the minimum membership period of the fund should be at least 1 year.
Expenses for Legal Proceeding connected with employment
Loan amount shall not exceed 3 months member's pay; 50% of his own contribution standing to his credit in the fund
For this purpose, the minimum membership period of the fund should be at least 1 year.
Such members can draw loans for their treatment or purchase of equipment for their betterment.
This loan is limited to six months (Basic + DA) or the members own contribution + interest or cost of equipment, whichever is less.
Certificate from medical practitioner needs to be submitted. No second advance permitted for a period of 3 years from date of last advance.
In case the employer establishment is closed or more than 15 days or when the member does not receive wages for a continuous period of 2 months, the member can draw amount standing to the credit of the employees' portion of the contribution including interest.
In case the employer establishment is closed for more than 6 months and the member is unlikely to get employment and receive compensation, the member can draw the entire amount as a recoverable loan. The amount is repayable in maximum of 36 instalments from the start of first salary of new employment. In case the establishment remains closed for more than 5 years, the refundable loan can be converted to non-refundable loan.
The amount of advance shall not exceed 50% of his own contribution standing to his credit in the fund. This amount can be disbursed in one or more non-recoverable Loan.
Refundable loans are advances given to members. Members have to pay interest on these loans at rate of interest that is 1% more than the rate that is payable by PF on members contribution. The repayment of these loans is to be made in a maximum of 24 instalments starting from the month succeeding the month of loan. Such loans can be given only if the minimum balance of his own contribution in the Fund account is Rs. 1,000/-.
Settlement can be done only after a waiting period of two months from the date of resignation but in cases of members leaving abroad, settlements can be done immediately and settlements are immediate in case of female members who resign from the services for the purpose of getting married.
In case the employee has filed a nomination form, settlement is made according to the last filed nomination form on record.
In case no nomination has been filed, the accumulated balance is divided equally among the following family members in equal shares
1. Sons who have not attained majority.
2. Sons of a deceased son who have attained not majority.
3. Married daughters, whose husbands are not alive.
4. Married daughters of a deceased son, whose husbands are not alive.
An Exempted trust shall consist of not less than two and not more than six representatives each from employer and employees.
Yes, an employer can contribute more than statutory rate. However, the Employer would not get any tax benefits for the same.
An Exempted trust cannot credit interest less than the statutory rate of interest stipulated by the PF authorites even if the trust is not able to earn the minimum interest.In case of shortfall, the Company has to make good the deficit.However, An Excluded Employees' trust / Private trust can declare interest based on the earnings of the trust.
An employee can withdraw the contributions made towards Employees' Pension Scheme, 1995, on leaving service before becoming eligible for members pension, by submitting Form 10-C only, if he has NOT completed 10 years of service.
If an employee brings in a transfer from another approved Provident Fund trust or RPFC then the service rendered with such ex-employer is counted.
Settlement can be done only after a waiting period of two months from the date of resignation but in cases of members leaving abroad, settlements can be done immediately and settlements are immediate in case of female members who resign from the services for the purpose of getting married.
There is no tax deduction if the member has put in five years of continuous service with the employer (includes period of past membership with previous employer/s if there is a transfer recd). Otherwise, the member is liable for deduction of tax.
After being covered under the provisions of PF Act and if it is a profit making Company with 200 employees it may pass a Board Resolution and apply to the IT Dept for recognition of a trust and thereafter file for exemption with the RPFC. On receipt of the approval from RPFC the trust can comply as Exempt.
Every member employed, as regular staff (other than excluded employee) will become a member of the fund from the date of joining the establishment and will continue to remain a member till he withdraws his PF accumulations from the fund. An excluded employee shall, on ceasing to be such an employee, be entitled to and required to become a member of the fund from the date he ceases to be such an employee.
Out of 12% of Employer's contribution, 8.33% (on capped wages up to Rs.6500/-) transferred to EPS A/c
EDLI @ 0.5% (on capped wages upto Rs.6500/-)
EDLI Administration charges @ 0.01% of Basic and D.A(^ 6500/-)
PF Inspection charges @ 0.18% of Basic and D.A.
No, the EPS deduction of 8.33% can be made only from the employer's contribution of 12% of Basic and D.A. and it is capped at Rs.6500/-.
No, the employer's contribution cannot be deducted from the employee's wages and is shown as cost in the company's books.
A member may, by an application made to the Board, finance the annual premium due on his own Life Insurance Policy through his Provident Fund account, subject to an adequate balance together with interest thereon available to the credit in his members contribution account. And where the payment is to be made on the first premium, the balance should be sufficient to pay the premium for two years. However, this can be done only if the policy is assigned to the trust by the member.
An Application as per the prescribed format needs to be made to the Board and the same shall be sanctioned as per the trust Rules.
Purpose:
Purchase of site for Construction of House.
Quantum:
24 months member's basic & DA.
Credit in Member's Contribution Account with interest thereon.
Actual Acquisition Cost of the Site; whichever is least.
Eligibility:
Member should have completed 5 years membership in the Fund.
Credit in Member's Contribution Account with interest thereon shall not be less than Rs.1000.
The dwelling site or house/flat is free from encumbrances.
Site should be purchased in the name of the Member or spouse or jointly in the name of the member and the spouse only.
Documentation:
Original sale deed from the seller.
Agreement for sale.
Latest non-encumbrance certificate.
Layout approval.
Other Details:
Where the purchase is through an agency, withdrawals in one or two instalments payable directly to the agency.
Purpose:
Purchase of a ready built house/flat or construction of a house/flat.
Quantum:
36 months member's pay (Basic+DA);or
Credit in Member's Contribution Account with interest thereon;
Cost of acquisition of property or cost of construction, whichever is least.
Eligibility:
Member should have completed 5 yrs membership of the Fund.
Credit in Member's Contribution Account with interest thereon shall not be less than Rs.1000.
The dwelling site or house/flat is free from encumbrances.
Property should be in the name of the member or spouse or jointly in the name of the member and the spouse.
Documentation:
Agreement for sale.
Latest non-encumbrance certificate.
Layout approval.
Estimated cost certified by an Arc/Civil Engineer.
Conditions:
In case of construction of a dwelling house, the construction shall commence within 6 months of first withdrawal and shall be completed within 12 months of final instalment.
In case of purchase of a dwelling house/flat or acquisition of a dwelling site, the same shall be completed within 6 months of withdrawal of the amount.
Other Details:
No of instalments sanctioned as per the trustees- If purchase is made on an ownership basis from a promoter, then withdrawals paid in one or two instalments to member as per the Promoter's requirement.
Purpose:
Additions/Alterations/Improvements to the dwelling house owned by the member or their spouse or jointly owned by both.
Quantum:
12 months basic wage + DA,
members' own share of contribution with Interest thereon
Cost of alteration whichever is less.
Eligibility:
Additional withdrawal admissible only after a period of five years from date of completion of dwelling house.
Purpose:
Repayment of loan by any member taken from a State Government, Co-operative society, NHB or Municipal Corporation or any other Financial Institution.
Quantum:
36 months' pay
Credit in members' contribution Account with Interest thereon
Outstanding principal and Interest, whichever is least.
Eligibility:
10 years PF membership.
Members balance + interest thereon is equal to or in excess of Rs. 1000/-
Documentation: Latest statement of accounts by the concerned FI confirming the outstanding Loan Balance (Loan + Interest).
Other Details:
The payment shall be made directly to the agency only, on receipt of proper authorization.
Purpose:
Grant of advance when the establishment is closed for more than 15 days or when the member does not receive wages for a continuous period of two months.
Quantum:
Advance to be paid out of the amount standing to the credit of the employees' portion of the contribution including interest.
Purpose:
Grant of advance when the establishment is closed for more than 6 months or when the member is still unemployed and unlikely to receive compensation.
Quantum:
100% of Company's Contribution in one or more recoverable loans.
Other Details:
Interest Free Loan.
Repayable in maximum of 36 instalments payable from the first salary paid after restart of the Company and as per trustees' discretion.
Provision If the Company remains closed for more than 5 yrs, refundable loans can be converted to non-refundable loans on application to the trustees.
Purpose:
The cost of legal proceedings instituted by the employee against the Company for discharge or dismissal or retrenchment.
Quantum:
Shall not exceed 50% of his own contribution standing to his credit in the fund paid in one or more non-recoverable Loan.
Purpose:
Advance from the fund for marriages / post-matriculation education of children.
Quantum:
Non-Refubdable loan not exceeding 50% of his own share of Contribution, with interest thereon.
Conditions: Member has 7 years' of membership in the fund
Amount of his own share of contribution is more than Rs 1000/-
Not more than 3 advances shall be admissible.
Purpose:
Advance for illness of the member or his family in case of the following
Hospitalization lasting for one month or more or
Major surgical operation in a hospital or
Sufferings from TB, Leprosy, Paralysis, Cancer, Mental Derangement or Heart ailment and having been granted leave by employer for the said illness.
Quantum:
Shall not exceed 6 months member's pay or credit balance in his own share of contribution account, whichever is lower.
Conditions:
Benefits under Employee State Insurance Scheme not available or ceased to be available.
Medical Certificate from a Doctor or specialist.
Purpose:
Grant of advance under abnormal circumstances- destruction of member's property due to floods, cyclone, earthquakes or other convulsion of nature or riots.
Quantum:
Rs. 5000/- or 50% of members contribution including interest standing to his credit on the account, whichever is less.
Documentation & Conditions:
Declaration that the calamity has affected the general public.
Certificate of damages caused by such calamity from appropriate authority.
And the application for the advance is made within a period of 4 months from the date of declaration.
Purpose:
Grant of Advance when member is affected by cut in the supply of Electricity.
Quantum:
The amount of wages or Rs.300 or amt standing to the credit of employee's own contribution account and interest thereon, whichever is less.
Eligibility:
Total wages for any one month commencing from the month of January 1973 is ¾ th. or less than ¾ th. of wages for a month.
Documentation & Conditions:
Certificate from the State Government that electricity supply cut was in an area in which the establishment was located and the fall in member's pay was due to such cuts.
Other Details:
Only one advance is admissible under this rule.
Purpose:
Grant of advance to members who are physically handicapped.
Quantum:
Six months (Basic+DA) or the members own contribution + interest or cost of equipment, whichever is least.
Documentation & Conditions:
Certificate from medical practitioner. No second advance permitted for a period of 3 years from date of payment of such advance.
Purpose:
Illness of a member or member of his family or for passage of a member.
Quantum:
Shall not exceed 3 months member's pay; or
50% of his own contribution standing to his credit in the fund.
Eligibility:
Member is employed with the established for atleast one year.
And, has a minimum of Rs.1000 in his own share of the contribution account.
Documentation:
Medical Certificate -from a medical officer authorised by the company ;or from the Employees State Insurance (ESI) Doctor where the ESI Scheme exists.
Conditions:
Member shall indicate the date of event for advance is applied for and furnish in one-month proof or certificate showing the rightful usage of such advance.
Other Details:
Interest at the rate of one percent above that payable for the time being on the member's balance shall be chargeable on such loans
Repayment in 24 instalments form the wages of the month succeeding the month in which the advance is granted; or in case of a member on leave without pay, form the month succeeding the month in which he returns.
Purpose:
Expenses pertaining to Marriages, Funerals or Funeral ceremonies which by religion the incumbent is bound to perform.
Quantum:
Shall not exceed 6 months member's pay.
50% of his own contribution standing to his credit in the fund.
Eligibility:
Member is employed with the established for atleast one year.
And, has a minimum of Rs.1000 in his own share of the contribution account.
Conditions:
ConditionsMember shall indicate the date of event for advance is applied for and furnish in one-month proof or certificate showing the rightful usage of such advance.
Other Details:
Interest at the rate of one percent above that payable for the time being on the member's balance shall be chargeable on such loans.
Purpose:
The cost of legal proceedings instituted by the employee for vindicating his position in regard to allegations made against him in respect of any act done while discharging his official duties.
Quantum:
Shall not exceed 3 months member's pay; or
50% of his own contribution standing to his credit in the fund.
Eligibility:
Member is employed with the established for atleast one year.
And, has a minimum of Rs.1000 in his own share of the contribution account.
Conditions:
Employee should not institute proceedings in any court of law either in respect of
Any matter unconnected with his official duties; or
Against the employer in respect of any conditions of service.
or penalty imposed on him.
Other Details:
Interest at the rate of one percent above that payable for the time being on the member's balance shall be chargeable on such loans
Repayment in 24 instalments form the wages of the month succeeding the month in which the advance is granted; or in case of a member on leave without pay, form the month succeeding the month in which he returns.
Purpose:
Second and subsequent loan.
Quantum:
50% of his own contribution standing to his credit in the fund.
Eligibility:
Member is employed with the established for atleast one year.
And, has a minimum of Rs.1000 in his own share of the contribution account.
Also,- Advance earlier drawn is fully repaid(Non-refundable loans taken, if any, disregarded and not accounted for this purpose)
Other Details:
Interest at the rate of one percent above that payable for the time being on the member's balance shall be chargeable on such loans
Repayment in 24 instalments form the wages of the month succeeding the month in which the advance is granted; or in case of a member on leave without pay, form the month succeeding the month in which he returns.
On retirement from services after attaining the age of Superannuation or if he attains the age of Superannuation before the payment is authorized.
On retirement on account of permanent and total incapacity for work due to bodily or mental infirmity duly certified by a Medical Practitioner.
On migration from India for permanent settlement abroad or on taking employment abroad.
On termination of employment under a voluntary scheme or retirement by mutual consent of the member and the Employer.
On termination of employment in case of mass or individual retrenchment.
Yes, On application to the trustees, 90% of the accumulations can be withdrawn at any time after attainment of the age of 54 years by the member or within one year before his actual retirement on Superannuation whichever is later.
Payment of accumulations standing to the credit of the member to be made in accordance to the nomination form submitted by the member. -In the absence of any nomination relating to a part or whole of the accumulations of the member, such part is to be divided among the members of his family in equal shares. Sons who have not attained majority.
Sons of a deceased son who have attained not majority.
Married daughters, whose husbands are not alive.
Married daughters of a deceased son, whose husbands are not alive.
An Excluded Employees' trust is one, which does not come under the purview of the PF Department, but its policies are framed based on the PF Act. The regulatory Authorities are the Income Tax department.
An "Excluded Employee" shall mean an employee of the Company to whom both of the following two conditions apply at the time of the coverage of the Company under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 or at the time of his joining the services of the Company, whichever is later. i His pay at the relevant time as above is more than Rs 6500/- per month. ii Does not have any current PF Balance.
He should be an Excluded Employee within the meaning of the Act.
Employee and Employer contributes 12% of his Basic + DA. An employee has the option to voluntarily contribute a higher percentage towards PF without any matching contributions from the employer. There are no contributions towards EDLI or EPS. Employer and Employee contribution can be technically lower than the statutory rate as well.
On retirement from services after attaining the age of Superannuation or if he attains the age of Superannuation before the payment is authorised. On retirement on account of permanent and total incapacity for work due to bodily or mental infirmity duly certified by a Medical Practitioner. On migration from India for permanent settlement abroad or on taking employment abroad. On termination of employment under a voluntary scheme or retirement by mutual consent of the member and the Employer. On termination of employment in case of mass or individual retrenchment.
Payment of accumulations standing to the credit of the member to be made in accordance to the nomination form submitted by the member. In the absence of any nomination relating to a part or whole of the accumulations of the member, such part is to be divided among the members of his family in equal shares i Sons who have not attained majority. ii Sons of a deceased son who have attained not majority. iii Married daughters, whose husbands are not alive. iv Married daughters of a deceased son, whose husbands are not alive.
The regulatory authority is the Income Tax Department. And policies framed based on the PF Act. This trust includes all employees with Salary (Basic and DA) exceeding Rs.5000 at the time of initial appointment and who do not have any prior PF balance (either with the Govt. or any other trust). And included in the purview are Apprentice (as per the Apprenticeship Act) The employer and employee make the matching contributions at the rate of 12% into the trust. There are no contributions towards EPS or EDLI.
Once the Company crosses the 20 employees' mark, it is covered under the Act and has to apply to the RPFC for Allotment of Code Number .And should remit the PF contributions from the date of coverage.
The Company has to apply for Coverage and code number in the prescribed proforma provided by the PF department along with the ownership return (Form 5A).
Employee contribution of 12% of Basic, D.A , Leave Encashment and cash value of food concession, if any, Employer contribution of 12% of Basic, D.A , Leave Encashment and cash value of food concession if any, out of which 8.33% with a cap of Rs.5000/- to be paid towards EPS a/c. EDLI @ 0.5% (on capped wages at Rs.6500/-) EDLI Administration charges @ 0.01% of Basic and D.A. PF Administration charges @ 1.1% of Basic and D.A. All Voluntary Contributions.