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A Brief Introduction About EPF
EPF stands for Employee Provident Fund. It is a scheme under which people who are retired are benefitted. It was framed under the Employees Provident Fund and Miscellaneous Provisions Act, passed in the year 1952.
EPF Interest Rate 2022-23
According to this scheme, the employer cuts a certain amount of the employer’s salary and deposits it into his or her EPF account. The employer also contributes to the EPF of an employee. This scheme is only applicable to those people who are employed.
On having been retired, the employee receives the EPF savings including the employee’s contribution, the employer’s contribution, and the interest amount that is credited every year.
In the table given below, the percentage contribution of the various categories has been summarized.
| Category | Percentage of Contribution |
| Employee’s Provident Fund (EPF) | 3.67 % |
| Employee’s Pension Scheme (EPS) | 8.33 % |
| Employee’s Deposit Link Insurance Scheme (EDLIS) | 0.50 % |
| Employee’s Provident Fund Admin Charges | 1.10 %
|
| Employee’s Deposit Link Insurance Scheme Admin Charges | 0.01 % |
When an employee retires, he or she gets a lump sum payment from the Employee’s Provident Fund. The interest rates are changed by the government each and every month on the Employee’s Provident Fund accounts. The interest rate declared for the fiscal year 2019-20 was 8.5 per cent.
EPF Interest Rate 2022-23 Notification
The Employee’s Provident Fund was confirmed by the finance minister in October 2021. Then it was ordered by the Employee’s Provident Fund Organization (EPFO) to field employees to start applying the new declared interest of 8.5 per cent for the year 2020-21 into the subscriber’s account as soon as it became available.
After getting the confirmation from the finance ministry to the government, then only the Employee’s Provident Fund Organization (EPFO) releases the interest rates.
Provident fund deposits are now paying an interest of 8.5 per cent, which is a seven year low as compared with the 8.65 per cent paid in the year 2018-19. The rate was first reduced in the month of March in the year 2020.
Objectives of EPF
The points listed below inform us about the objective and needs of the Employee’s Provident Fund (EPF).
- EPF scheme is implemented to help the government, public, or private sector employees financially by providing them with a lump sum amount after they retire.
- It helps in providing social security to the members of the scheme.
- A single EPF account must be there for each, and every member and compliance should be made as simple as possible.
- To ensure that the rules and regulations made by the EPF are followed by every member.
- The accounts of every member should be accessible online.
- Promotion and promotion of voluntary compliance are two of the most important goals for establishing an Employee’s Provident Fund (EPF).
EPF Tax Benefits
According to the section 80C of the Indian Income Tax Act passed in the year 1961, only those employees who contribute to their provident fund account are eligible for tax benefits. This benefit is available for contribution to a provident fund account up to a maximum of Rs. 1 lakh.
If he or she makes a contribution to a provident fund account for five years, then he or she will not be eligible to claim a tax deduction for what they have put in. On the other hand, if he or she withdraws their provident fund contribution before the completion of five years, then income tax will be deducted at the point of withdrawal.
EPF Salary Update 2022
The employees have three options to choose from if their income is greater than Rs. 15,000 per month. The following options are:
- The employer can acknowledge, only if they want, that their employee may contribute to their basic salary and dearness allowances.
- It should be kept in mind that the contribution amount may not be greater than Rs. 15,000.
- Although the income of the employee is more than Rs.15,000, the company should be able to match the employee’s contribution.
What is the Formula for Calculating Interest on EPF?
- The rate of interest to be paid every fiscal year is announced every 6 months by the federal government.
- Interest is calculated as an equivalent to a percentage of the average monthly debt. Employee’s Provident Fund (EPF) employees can receive interest on their contribution along with the interest on their employer’s provident fund deposits.
- It is also to be noted that, however, the interest amount is calculated each and every month, the amount is only credited only once in a year. It is generally distributed at the end of the month of March.
- The offices have calendars that run from the month of March to the month of February.
Conclusion
This article focuses on the Employee’s Provident Fund (EPF), which is a scheme that provides financial support to those who have been retired. In this article, the various aspects of the EPF are explored, including its objectives, notifications, salary update, and calculation of interest.
