The Employees' Provident Fund is a scheme for Indian employees governed by the Provident Funds and Miscellaneous Provisions Act, 1952. It operates under the Employees' Provident Fund Organization, widely recognized as EPFO.
What is EPF Registration?
Any establishment with 20 or more employees can seek PF registration in India. In specific cases, subject to certain conditions and exemptions, establishments with fewer than 20 employees may also be eligible for PF registration. Upon retirement or resignation, employees receive a sum that comprises their own and the employer's contributions, along with interest.
Risk Coverage: The Provident Fund provides essential coverage for employees and their dependents in the face of retirement, illness, or death.
Uniform Account: A key feature of the Provident Fund account is its consistency and transferability, allowing it to be moved to other places of employment.
Employee Pension Scheme (EPS): EPS is available to all PF account holders, with 8.33% of the employer's contribution (up to Rs.15,000) dedicated to a monthly pension for employees aged 58 and above.
Long-Term Goals: The accumulated PF amount often proves valuable for achieving long-term goals, such as marriage or higher education.
Emergency Needs: Sudden events like family gatherings, accidents, or illnesses that require immediate financial support can be covered by the PF amount.
Tax & Process
EPF Taxation Rules:
Employee's Contribution (Section 80C): Employee's EPF contribution is eligible for deduction under Section 80C, but it falls under the overall limit of INR 1.5 lakhs.
Employer's Contribution (Perquisites Taxable): Employer's EPF contribution of up to 12% of the PF Salary is exempt. However, from April 1, 2020, any contribution exceeding INR 7.5 lakhs per year to EPF, NPS, and superannuation becomes taxable as perquisites in the employee's 'Income from Salary'.
EPF Interest Tax (Threshold Increased): Effective April 1, 2022, interest on an employee's EPF contribution up to INR 2.5 lakhs per year is tax-free. Any interest earned on contributions over INR 2.5 lakhs is taxable. This threshold increases to INR 5 lakhs if the employer doesn't contribute to EPF.
Separate Taxable Account: The EPF balance is divided into two separate accounts for taxation purposes: one within the limit of INR 2.5 lakhs/5 lakhs and the other for excess contributions. TDS is applied to the interest paid on the taxable contribution.
Tax on Excess Employer Contributions: In addition to the taxable employer contribution, interest, dividends, etc., earned from the excess contribution are also taxed in the employee's hands.
Rule 3B and Reporting: Rule 3B is introduced to calculate the interest, dividends, etc., on the excess contributions. Employers must withhold tax on such accruals and report them in Form 16 and Form 12BA issued to employees.
Tax on EPF Withdrawals: No tax for withdrawals after 5 years of continuous service.
Early withdrawals face taxation:
a) Employer's Contribution and Corresponding Interest: Fully taxable under 'Income from Salary.'
b) Employee's Contribution: Taxable based on Section 80C deduction.
c) Interest on Employee's Contribution: Taxable as 'Income from Other Sources.'
RPFC deducts 10% TDS on withdrawals exceeding INR 50,000 before completing 5 years of service.
To complete the "Registration Form for EPFO," the employer must provide the following documents:
PAN Card of the Proprietor/Partner/Director.
Proof of address (e.g., Electricity Bill, Water Bill, or Telephone Bill) for the Registered Office (not older than 2 months).
Aadhaar Card of Proprietor/Partner/Director.
Shop and Establishment Certificate/GST Certificate/any Government-issued Establishment License.
Digital Signature of the Proprietor/Partner/Director.
Canceled Cheque or Bank Statement of the Entity.
Copy of the Hired/Rented/Leased Agreement (if applicable).
License Proof issued by the Identifier/Licensing Authority.
Step 1: Company Registration with EPF
Begin by visiting the EPFO web portal to register your company. You can access this portal's home page.
Step 2: Download the User Manual
Under the 'Establishment Registration' option, you'll be directed to a link: https://registration.shramsuvidha.gov.in/user/register. Here, you'll find a user manual that you should download. If you are new to the registration process, it's important to read this manual carefully.
Step 3: Register on the Unified Shram Suvidha Portal
After reviewing the user manual, proceed to sign up on the Unified Shram Suvidha Portal (USSP) of EPFO. Click on the 'Establishment Registration' tab on the home page to access the USSP sign-up page. Then, click on the 'Sign Up' button.
Complete the required information, including your name, mobile number verification code, and email, to create an account.
Step 4: Fill out the Registration Form
Log in to USSP and locate the 'Registration For EPFO-ESIC v1.1' tab on the left side of the screen. Next, choose the 'Apply for New Registration' option on the right side.
You will see two options: 'Employees' Provident Fund and Miscellaneous Provision Act 1952' and 'Employees' State Insurance Act 1948.' As an employer, select the option 'Employees' Provident Fund and Miscellaneous Provision Act 1952' and then click 'Submit.'
Clicking 'Submit' will open the 'Registration Form for EPFO' page. Here, provide employment details, branch or division information, contact persons, establishment details, and activities and identifiers.
Step 5: Attach Digital Signature Certificate (DSC)
After completing the registration form and attaching all necessary documents, upload the employer's Digital Signature Certificate (DSC) to the form. The Unified Shram Suvidha Platform will send an email to confirm the successful completion of EPF registration upon uploading the DSC.
Where can I register a PF account?
PF registration can be done with EPFO, and the process can be completed online on their website.
Is PF registration mandatory?
PF registration is mandatory for all establishments with 20 or more employees. Even if an establishment has fewer than 20 employees, PF registration is still required. Eligibility for PF begins at the start of employment, and it is the employer's responsibility to deduct and make PF payments.
How long does it take to obtain PF registration?
Obtaining PF registration in India takes 20-25 days.
What if the employee doesn't have PF?
If an employee does not wish to have PF registration, they can complete Form 11 when joining the job. Alternatively, the employee can provide a letter to the employer, expressing their desire to opt out of the Provident Fund Scheme.
How is the PF registration process helpful for pensions?
PF registration is directly linked to an employee's pension. In addition to the employee's 12% contribution towards the EPF, the employer contributes an equal amount. Of this employer contribution, 8.33% is allocated to the Employee Pension Scheme.