Right to Provident Fund

PF or EPF is also called the Employee Provident Fund Scheme. It is one where the employees contribute a small portion of their remuneration i.e. 12% of their basic pay every month. A matching amount is contributed by the employer. Such a contribution, together, form a corpus. This is to be used to fund the employee’s retirement.

Here, it would be relevant to mention that EPF organisation has made the allotment of UAN i.e. the Universal Account Number compulsory for all the employees covered under the PF Act. UAN would be linked to the employee’s EPF account. The UAN remains portable throughout the lifetime of an employee and there is no need to apply for EPF transfer at the time of changing jobs.

Employees Provident Fund Law in India is regulated and controlled by the Employees Provident Fund Act of 1952 which is basically a welfare legislation enacted for the protection of the rights of employees. It is applicable to the establishments of the notified classes which employ more than 20 persons at one point of time in the establishment. Once an establishment is covered under the EPF Act, it remains under the purview of the Employees Provident Fund Law in India even after the reduction of the number of employees in the establishment. Almost all types of establishments are covered under Employees Provident Fund Law in India.

EPF contribution is made up of four components - employee's contribution, employer's contribution, interest on employee's contribution, and interest on employer's contribution. Out of these, three components - employer's contribution and interest earned on both the contributions are fully taxable.

"According to rule number 9 of schedule IV and section 111 of the Income Tax Act, the rules of unrecognised provident fund would be applicable in case of withdrawal before the completion of five years. All the four components of EPF will be taxable. The amount of tax liability would have to be recomputed for each of the financial years at the tax rates that were applicable to the withdrawer in those respective years."

"The taxability of your contribution, i.e., employee's contribution will depend on whether you had earlier claimed deduction under section 80C while filing your income tax return (ITR) in the previous years." 

Employee's own contribution to EPF is eligible for deduction under section 80C of the Income Tax Act. Most of salaried employees use this as a way to save income tax while doing their tax planning.

"Even if your current income tax liability is zero, you are still liable to pay tax on the withdrawal from EPF. This is because it is the tax liability for the previous financial years when PF contributions by you and your employer were made. It would have been taxable had the PF been an unrecognised one from the start."

For claiming funds, a request has to be raised to The Employees’ Provident Fund Organisation (EPFO). The EPFO is a statutory body under the Ministry of Labour and Employment. Upon requesting for PPF withdrawal, there is a possibility that you may not get to know the status of your requisition. To address this problem the EPFO has launched an online process to know the status of your requisition.   To know the status of your claim the following information should be available to you:
a. Universal Account Number (UAN)

b. EPF regional office of your employer

c. company

d. Extension code (if relevant)

Source : https://cleartax.in/s/epf-withdrawal-online

Step 1: Go to theEPFO portal. Click on Our services> For Employees

 

Step 2: Click on ‘Know Your PF Status’

 

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Step 3: Enter your UAN and enter the captcha image

  

Step 4: Enter the following details

              1. Enter the state of your PF office            2. Select your PF Office from the drop-down menu            3. Enter your establishment code            4. Enter your Provident Fund account number

               

Step 5: Click on the ‘Submit’ button to check the status of your PF claim.

  For the benefit of the claimant, the EPFO also provides for alerts via SMS if a mobile number has been linked to the account. The SMS is sent to the following two instances: 1. On receipt of claim application. 2. On transfer of funds to the claimant’s bank account.   There could be income tax implication on your PF withdrawal under ‘certain scenarios.