EPF is a social security initiative or a scheme governed by the Employees’ Provident Funds and Miscellaneous Provisions Act of 1952. It is managed by the Employees’ Provident Fund Organization (EPFO), a statutory body under the Ministry of Labour and Employment, Government of India.
A Provident Fund (PF) refers to a retirement savings scheme in which employees and employers contribute to building a financial reserve for employees’ retirement. The combined contribution rate is 24% of the employee’s basic wages and dearness allowance.
The contributions made to the Provident Fund accumulate over time, and employees receive a lump sum amount, including interest, upon retirement or withdrawal. The primary objective of a Provident Fund is to provide financial security and support to employees after their working years.
The EPF applies to all corporate firms with twenty employees or more individuals. Certain categories of establishments with fewer than 20 employees can also voluntarily opt for EPF. The rules and regulations related to the EPF may be subject to amendments and vary for certain categories of employees or establishments.
FAQ
EPF is mandatory for employees working in organisations with 20 or more employees. However, certain establishments and employees may be exempted or eligible for voluntary participation.
Employers play a crucial role in EPF by deducting the employee's contribution from their salary and contributing the employer's share to the EPF account. They are also responsible for submitting these contributions to the EPFO (Employee Provident Fund Organization).
The interest on EPF is calculated annually based on the balance in the employee's account. The rate of interest is set by the government and is compounded on a yearly basis. The interest rates are subject to periodic revisions.
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