Few frequently asked questions about Employees Provident Fund (EPF)

When I wrote a post about the recent changes of EPF effective from 1st Sept 2014, I
found that many employees not aware about the basic things about EPFO. Employers
use this as a tool to modify the rules to their wish. Hence, thought to summarize the
basic things in this post.

1) Which establishment or company eligible for this scheme?

This scheme applies to all companies or establishment, which employs 20 or more than
that. Do remember that once the employees strength reaches to 20 or more then
irrespective of employee strength (whether fall or rise) the company must continue with
this scheme. However, suppose company or establishment stopped its operation or
continue without any employee then in that case this scheme not applicable. In addition,
employee if considered as trainee or apprentice will not be covered under this act.
2) Which employees are excluded from this scheme?

An employee who was a member of this scheme and withdrawn all amounts of his
contribution based on either retirement from service after attaining age of 55
years or who migrating abroad for permanent settlement.

An employee whose salary (BASIC+DA) at the time of entry into scheme more
than Rs.15, 000.

If a member is considered as an apprentice then he will not come under EPF.

3) What do you mean by salary for this purpose?

Salary for this purpose is only BASIC+DA. Also remember that if your salary at the time
of entry is Rs.15, 000 or less than that, but after a few years or a month if your salary
revised then raised to more than Rs.15, 000, then in that case too member must
continue with this scheme. So for example, this month your salary is Rs.14, 000 and you

are a member of this scheme. But in March 2015 your salary revised and crossed the
limit of Rs.15, 000 then too you need to continue with this scheme.
Only employees who are eligible to stay away from this scheme are those whose salary
are more than Rs.15, 000 at the entry of employment.
4) What is the contribution percentage of employer and employee?
The detailed, recent changes are written in my earlier post. Please go through it and
available in below link.

Employee Provident Fund (EPF) -Changed rules from 1st Sept 2014

EPF Universal Account Number (UAN) -What it is?

5) Whether one can mention nomination?

Yes, one needs to nominate for EPF. This helps to get the money in case of sudden
demise of member. Usually if the member is married, then he should nominate to
spouse or kids. If he is unmarried then he can nominate his parents. Brothers or sisters
are not allowed for nomination. However, one can mention multiple nominations and
must disclose the percentage of sharing. In addition, if member doesnt have any family
members then he can nominate anyone of his choice. Do remember that once the
member acquire a family, then such nomination will become void.
6) What about arrears if one receives due to salary revision?
Salary revision is considered a normal hike. Therefore, any such arrears payable to the
employee are subject to EPF deduction.
7) Whether an employee contributes more than 12% of his salary?
Yes, you have the option to contribute more. But the employer has no such obligation to
match your contribution. Such contribution is called Voluntary Provident Fund (VPF).
Interest benefit will be same as that of EPF.

8) Who is responsible to deposit to EPF Scheme?

Your employer has whole responsibility to deposit all amounts, which is deducted from
the employee as well as an employer contribution.
9) My employer deducting his contribution from my salary, whether it is
legal?
According to EPF rules, an employer cant deduct it from employee salary. It is illegal. I
found that after revising rules from 1st Sept 2014, few employers started to deduct their
contribution from the employee. This is illegal.
10) Whether my employer can split salary components after 1st Sept 2014 to
reduce his contribution towards EPF?
This was happening since the latest changes and many of the readers of my post
mentioned this. But such activity is also considered as illegal. Please read below lines of
rules, which by Fund Commissioner. I found this information HERE.
Any agreement entered into between the employer and its employees for
splitting of the amount payable by the employer to its employees for the
service rendered by them, cannot take away the power of the
Commissioner under Section 7A of the Act to look into the nature of the
contract entered into between the employer and its employees and decide
that splitting up of the pay payable to the employees under several heads
is only subterfuge to avoid payment of contribution by the employer to the
provident fund. It was open to the Commissioner to lift the veil and read
between the lines to find out the pay structure fixed by the employer to its
employees and to decide the question whether the splitting up of the pay
has been made only as a subterfuge to avoid its contribution to the
provident fund.
11) Whether I am eligible for withdrawal of EPF? What will be tax treatment
on the same?

Both the questions are already answered in my earlier posts and links will be below.

All about EPF (Employee Provident Fund) advance withdrawal

Taxation of Employee Provident Fund (EPF)

12) Whether EPFO comes under RTI?

Yes. This being Govt. Organization, it will come under RTI Act.
13) Is it legal to withdraw EPF during job?
It is illegal if you withdraw your EPF during typical job change. One can withdraw EPF
only if one has no job for 2 months. Otherwise withdrawing for any new job change is
actually illegal. Rules allows only to transfer in case of job change.
14) How you can receive EPF withdrawals?
Currently any EPF withdrawal will be credited to beneficiary bank account directly. So
no need to worry.
15) How is interest calculated on EPF Account?
You can view the detailed explanation about the same in below link.