Who Is Eligible For Provident Fund? PF, EPF & PPF Eligibility & Rules

The Provident Fund is a retirement savings scheme managed by India’s Employees’ Provident Fund Organisation (EPFO). Both employees and employers contribute to the fund, which can be used as a source of income during retirement.

So, who is eligible for these different provident fund schemes? Read on to find out.

What is the Provident Fund?

The Provident Fund (PF) is a retirement savings scheme managed by the Employees’ Provident Fund Organisation (EPFO). It is a mandatory contribution from both the employer and the employee and is typically a percentage of the employee’s salary. The PF corpus can buy annuity products or be withdrawn as a lump sum at retirement.

India started the EPF plan in 1952 and is now the world’s largest social security organisation. It has over 50 million members and assets valued at more than Rs 10 trillion.

The Employees’ Provident Funds and Miscellaneous Provisions Act of 1952 says that anyone who gets a salary can join the EPF scheme. This act covers people who work in both the public and private sectors.

Most of the time, an employee’s EPF balance contribution is 12% of their salary, with 8.33% going to their PF account and 3.67% going to their pension scheme account. Employers also put the same amount into the PF accounts of their workers.

Types of Provident Funds in India

The Provident Fund (PF) scheme in India is divided into several types: Employee’s Provident Fund (EPF) and Public Provident Fund (PPF).

Employee’s Provident Fund (EPF): The EPF is a retirement savings scheme that is mandatory for all salaried employees in India. It is managed by the Employees’ Provident Fund Organisation (EPFO).

The employee contributes 12% of their monthly salary towards the EPF, while the employer contributes an additional 3%. The employee’s contribution is tax-free, while the employer’s contribution is taxable.

Public Provident Fund (PPF): A Public Provident Fund (PPF) account is a long-term investment option offered by the Indian government. It offers several benefits, including tax-free returns and the safety of your investment.

The PPF account can be opened at any designated bank or post office in India. The minimum amount you can deposit into your PPF account is Rs. 500 per year, and the maximum amount is Rs. 1,50,000 per year. Your deposits earn interest at a fixed rate of 7.9% per year.

PF, EPF, and PPF Eligibility and Rules in India

In India, the Employees’ Provident Fund Organisation (EPFO) regulates the employees’ Provident Fund (PF). Both public and private sector employees must contribute 12% of their basic salary towards PF. The contribution is divided equally between the employee and employer.

The EPF can be used for various purposes, including retirement planning, medical expenses, and home loans. Employees can withdraw from their PF account after completing five years of service. However, certain rules and regulations must be followed when withdrawing from the PF account.

• If a worker has less than five years of service, they can only take out up to 50% of their PF balance.
• Employees can only withdraw up to 75% of their accumulated PF balance if they have more than five but less than 10 years of service.
• If a worker has worked for the company for more than 10 years, they can take out up to 100% of their PF balance.
• Withdrawals from the PF account are subject to income tax.
• Withdrawals from the PF account are also subject to a 10% withdrawal charge if the employee is younger than 60 years old.

PF, EPF, and PPF Eligibility

The Employees Provident Fund (EPF) and Public Provident Fund (PPF) are some of India’s most popular savings schemes.

These schemes offer several benefits to employees and self-employed individuals, depending on their eligibility.

Eligibility for Provident Fund (PF)

To be eligible to join a provident fund, an employee must:

• Be a resident of India.
• Employed by a company that offers PF as a benefits scheme.
• Earn a basic salary of Rs 15,000 or more per month.
• Have completed at least one year of continuous service with the company.  

Eligibility for the Employee’s Provident Fund (EPF)

To be eligible for the EPF, an employee must:

• Be aged between 18 and 54 years old.
• Be employed in an organisation with more than 20 employees.
• Have a basic monthly salary of Rs 15,000 or more.

If an employee meets these criteria, they will be automatically enrolled in the EPF scheme and will have to contribute 12% of their monthly salary towards the fund. Their employer will also contribute 12% of the employee’s salary to the fund.

How to apply for a provident fund?

Applying for a Provident Fund (PF) account is simple and can be completed online. This step-by-step guide will help you apply for a PF account:

1. Visit the EPFO website and click on the “Our Services” tab.
2. Under the “Our Services” tab, select “For Employees” and “Online services for employees.”
3. On the next page, select “Provident Fund” from the list of options.
4. You will be redirected to the UAN Member Portal login page. Enter your UAN and password to log in.
5. Once logged in, click the “Apply Online” link under the “Services” tab.
6. Select the type of PF account you wish to apply for: general provident fund (GPF) or employee provident fund (EPF).
7. Fill out the online application form with all the information that is asked for, such as your name, where you work, etc.
8. Attach all the required documents and submit the form online.
9. Once EPFO gets your application, it will be processed, and you’ll be given a PF account number.

Withdrawal rules for a provident fund

When it comes to withdrawing your provident fund, there are a few rules that you need to be aware of. Here are the withdrawal rules for the provident fund:

• You can only withdraw your provident fund when you reach the age of 55.
• You can only withdraw 50% of your provident fund balance.
• If you take money out of your provident fund before you turn 55, you will have to pay a 10% penalty.
• If you take money out of your provident fund after you turn 55, you won’t have to pay any fees for doing so early.
• You can only withdraw your provident fund once every three years.
• If you have more than one job, you can only withdraw your provident fund from one job at a time.

Conclusion

The provident fund is an excellent retirement savings choice for Indian workers. It has a lot of economic advantages, including tax-free growth, and is supported by the government. Employees may contribute to the provident fund as soon as they begin working and continue to do so until they retire.

If you have doubts about your eligibility for a provident fund, it is best to consult a financial expert like Piramal Finance. They can help you understand the rules and laws about PFs in India and give you advice on the best way to handle your situation.