Common contribution are should to be made by way of working a daily PPF


My sister Devyani labored for 4 years in a company. Throughout her employment, her EPF account was created and recurrently deductions had been constituted of her wage and deposited into her account. Nevertheless, she left this group and joined one other one after a spot of two months 4 years in the past. Within the new group, no deductions had been constituted of her wage for PF. This was due to the rule that if primary wage is greater than Rs. 15,000 and deduction for PF is just not obligatory. Thereby, with none doubt PPF can transform choice. 

A couple of days again when she inquired about her EPF account with EPFO, she learnt that her account has develop into dormant. It’s after this incident that I discovered that EPF accounts may develop into inoperative if you’re not making contributions in it recurrently. 

Origin of PF

Worker Provident Fund or EPF was began again in 1952 to assist employees construct a corpus fund for his or her retirement. Initially, solely coal employees had been lined beneath its purview. Nevertheless, owing to its success, it was afterward prolonged for all industries. Presently, any group with 20 or extra staff is required to get itself registered with EPFO for EPF and deduct the identical for its staff. 

Significance of PF

The success of EPF was because of the advantages supplied by it to staff. Among the key factors which proves how very important PF is for workers are as follows: 

  1. Pension: Within the EPF account, each worker and employer contribute 12% of worker’s wage. Nevertheless, 8.33% of the employer’s contribution is directed in the direction of the Workers Pension Scheme. Steady contributory membership of 10 years ensures lifelong pension as per the Workers Pension Scheme 1995.
  2. Untimely Withdrawal: The sturdy suggestion from EPFO is to not make any untimely withdrawal from the EPF account. Nevertheless, after it permits untimely withdrawal after 5 years of contributory membership in case of pre-specified situations akin to medical therapy, fee of the house mortgage, training, and so on. For instance, as much as 50% of an worker’s contribution may be withdrawn for training or marriage, whereas upto 90% PF amassed steadiness may be withdrawn for fee of a house mortgage.
  3. Excessive Returns: Present fee of curiosity on EPF is 8.50%. Nevertheless, the efficient fee of curiosity is way larger, contemplating the compounding impact because it applies to the curiosity calculation of EPF. Plus, the EPFO invests 5-15% in ETFs (Trade Traded Funds) from its investable deposits, whereas 45-50% of the funds are invested in authorities securities. The purpose is, the speed of curiosity on EPF is prone to be larger than many protected funding choices for a very long time to return.
  4. Tax Advantages: The worker’s contribution to EPF, the curiosity earned on EPF account can be found for deduction beneath Part 80C of Revenue Tax Act. As well as, the EPF withdrawals made after 5 years of membership are additionally exempt from revenue tax.
  5. Insurance coverage: EPFO offers insurance coverage cowl beneath the Worker Deposit Linked Insurance coverage (EDLI) Scheme. A yr in the past, the minimal insurance coverage restrict was enhanced to Rs. 2.5 lakhs. The utmost restrict is Rs. 6 lakhs. The nominees obtain the lump sum quantity within the occasion of the dying of the insurer. 

Contemplating these advantages and the latest expertise, my sister had, I like to recommend you to proceed your EPF account with out disruption. An inoperative EPF account may be acquired solely when the employer begins deducting EPF. Nevertheless, the PF account continues to earn curiosity even when no contribution is made for years. 


The Central Authorities initiated the EPF or Worker Provident Fund with the target of offering a corpus fund to employees for his or her retirement. It began by protecting coal employees, and after a number of many years, it grew to become relevant to all industries. Now, each group with 20 or extra staff must register beneath EPF and deduct the identical for its staff. 

As an EPF account holder, your contribution within the PF account together with curiosity earned on it’s relevant for deduction beneath Part 80C. Apart from the untimely withdrawal after 5 years of membership can also be tax free. Secondly, ten years of steady contributory membership ensures life-long pension beneath the Workers Pension Scheme 1995. To not neglect the insurance coverage profit supplied by the EPFO by which, the lump sum quantity is transferred to the nominee in case of dying of the insured. The minimal assurance quantity is Rs. 2.5 lakhs whereas the utmost quantity is Rs. 6 lakhs. 

As per EPF rule, deduction of PF is just not obligatory if the essential wage is above Rs. 15,000. Thus, if after having some years of contributory PF you alter the group which don’t deduct PF for workers above Rs. 15,000, then even in that case you’ll proceed to earn curiosity in your PF account.

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