A part of the salary of employees working in the organized sector is deducted and deposited in their PF account every month. This money works to secure the life of the employee at the financial level after retirement. Due to this, the money deposited in the PF account becomes a source of stable income in the old age of the employees. The money deposited in the PF account has a joint contribution by the employee and the employer (company) every month. Often people have this question that how much part of PF is deducted from your salary and how much is given by the company?

Many employees in the country are not aware of this. If you also want to know about this then this news is especially for you. Today we are going to tell you about this. Let’s know –

12% of your basic salary is deducted and deposited in your PF account. The company also contributes 12%. Due to this, 24% of your total salary gets deposited in your PF account every month.

The government also gives attractive interest rates on the money deposited in the PF account. The government revises the interest rates on the money deposited in the PF account every year.

A part of the money deposited in the PF account also goes to the pension fund. The remaining amount keeps getting deposited in your PF account. At present, you are getting an interest rate of about 8.25 percent on the money deposited in the PF account.

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But through Voluntary Provident Fund (VPF), you can also increase your contribution in EPF and can avail the same interest on your investment which you get on EPF. At present, interest is being given on VPF at the rate of 08.15 percent. Know all the important information related to VPF.

How much money can be deposited in VPF

Any EPFO member can avail the facility of contribution in VPF and increase his contribution in the provident fund. There is no limit for salary deduction in VPF. If the employee wishes, he can also contribute up to 100 percent of the basic salary. The method of investing in VPF is exactly the same as that of depositing money in EPF, that is, if you start investing money in VPF, then its money will also be automatically deducted from your salary every month, like EPF is deducted.

How to start investing

If you are also interested in investing in VPF, then you will have to meet the HR of your company and tell him that you want to increase your investment in PF. With the help of HR, you can open your VPF account along with EPF. You will have to fill a form and submit it to HR regarding how much contribution you want to increase in your salary. After this the process of linking your VPF account with EPF account will be completed. After this process is completed, you can start deducting money from your salary in VPF. Once you opt for VPF, it is mandatory to deposit money in it for at least 5 years.

What are the rules for withdrawal of funds?

The interest and benefits received on VPF amount are the same as in EPF, similarly the rules for withdrawal of money are also the same as in EPF. You can withdraw the entire amount of VPF fund only after retirement. After 5 years, when its lock-in period ends, you can withdraw partial amount from it. Claim for this can be made online.

Tax exemption and account transfer

If you change your job, PF account can also be transferred like EPF. On investing in VPF, there is no tax to be paid on its interest and withdrawal amount. Therefore it is considered as Exempt-Exempt-Exempt (E-E-E) category investment. In this, one gets the benefit of tax exemption under Section 80C of the Income Tax Act. In this fund, you can claim tax exemption up to Rs 1.50 lakh in a financial year.

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If your salary has increased and the letter with salary hike has reached in your hands, then you should also take a look at the monthly provident fund i.e. PM (PF) deduction. This is because as per the income tax rules, if the annual EPF contribution of the Employees’ Provident Fund Organization (EPFO) member is more than the prescribed limit, then the EPF interest tax will have to be paid. In fact, the contribution amount in excess of the limit will also be taxable.

What is rule?

According to the income tax rules effective from 1 April 2021, tax will have to be paid on the interest earned on contribution of more than Rs 2.5 lakh annually. Let us tell you that the Finance Minister had taken this decision keeping in mind the high salary employee. However, this rule will not affect those with a monthly salary of Rs 2 lakh.

If an employee has invested ₹3 lakh in his EPF account in a financial year, the interest earned on the additional ₹50,000 contribution will be taxable. Explain that according to its recent notification (dated 15-02-2022) by the Revenue Department, tax will be levied on the interest of government employees who have deducted GPF above five lakh rupees.

The government has implemented the Income Tax (25th Amendment) Rules 2021.Due to this, the limit of maximum tax free contribution in GPF has been implemented to 5 lakhs. If the deduction is made by the employee over this, then the interest income will be considered as income.

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In fact, the Employees’ Provident Fund Organization can increase the coverage of its pension plan. This new scheme is proposed to be based on individual contribution, which ensures that every employee gets a minimum pension of Rs 3,000 per month after the age of 60 years.

This proposed scheme may be named as Universal Pension Scheme, which aims to address the various challenges of the existing Employees’ Pension Scheme (EPS), 1995. There is no coverage for employees earning more than Rs 15,000 per month, but a simple pension amount.

There will be provision for retirement pension, widow pension, children’s pension and disability pension in the new scheme. However, the minimum qualifying period of service for this pension benefit will be increased from 10 to 15 years. If a member dies before the age of 60, then pension will be given to the family under the Universal Pension Scheme.

To get 3 thousand pension every month, this amount will have to be deposited for a
minimum pension of Rs 3,000 every month, a total of Rs 5.4 lakh will need to be deposited. A committee set up by the Central Board of Trustees (CBT), the highest decision-making body of EPFO, said EPFO ​​members can also voluntarily opt for higher contribution and deposit a larger amount for higher pension. At present, EPF contribution is mandatory for workers earning up to Rs 15,000 per month in establishments having more than 20 workers. Every employee gives 12% of his basic salary in the EPF scheme.

EPS is mandatory for all those who contribute to EPF. 8.33% of the employer’s contribution is deposited in the pension scheme, subject to a ceiling of Rs 1,250 per month based on the salary ceiling of Rs 15,000 per month.

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In fact, soon the amount of interest will be sent to the employee. The interest rate applicable on EPF contribution for the financial year 2021-22 is 8.10%. The government is not currently considering any proposal to reconsider the existing EPF rate. At present, the EPF rate is higher than other comparable schemes such as General Provident Fund (7.10%), Senior Citizen Savings Scheme (7.40%), Sukanya Samriddhi Account Scheme (7.60%).

The current EPF interest rate is the lowest in four decades. Last year it was 8.5 per cent. From 2016-17, EPF rates remained around 8.5%. It was 8.65% in 2018-19, 8.55% in 2017-18 and 8.65% in 2016-15. Suppose the total EPF contribution (including employee + employer) in a month is Rs 5000 at the beginning of the month. At 8.1% interest rate, the total interest earned on PF contribution till the end of this month will be 5000×8.1%/12 = Rs 33.75.

On 1 August 2022, Union Minister of State for Labor and Employment, Rameshwar Teli, in a written reply to a question in Rajya Sabha, said that CBT, EPF had recommended 8.10 percent interest rate on EPF for the financial year 2021-22, approved by the government. and more than other schemes. General Provident Fund (7.10%) / Senior Citizen Savings Scheme (7.40%) / Sukanya Samriddhi Account Scheme (7.60%). There is no proposal to reconsider the accepted rate of interest (8.10%) on EPF deposits for the year 2021-2022.

The Employees’ Provident Fund Organization provides a 12-digit code to its provident fund account holders. Which is known as Universal Account Number. UAN does not change when employees change jobs between organizations, unlike EPF account number and member ID.

If a company has twenty or more employees, the employer is required to generate a UAN number for each employee. On joining a new organization, the employee has to give his UAN to the employer. The employee has to submit identity proof, residence proof, bank account details, Permanent Account Number (PAN), Aadhaar and Employees State Insurance Corporation (ESIC) card to generate his UAN while linking with EPFO ​​for the first time.

How to Generate UAN Online

• Select the “Activate UAN” link located in the Important Links section.
• Select the Aadhaar option and give the required information to continue.
• Click on the button titled “Get Authorization PIN”.
• Your browser will redirect you to a new page with the data you entered. Verify information to ensure accuracy.
• To proceed, select the Agree checkbox.
• To verify your request, enter the OTP sent to your phone.
• Click on Activate UAN and Validate OTP.
• After submission, your UAN number and password will be sent to the registered mobile number via text message.

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