EPF Provisions applicable to IT companies in India
Employees receive benefits from their government and their employers in any country across the globe. Some of these benefits are mandatory, while some are voluntary. According to the employers, such employee benefits keep employees happy and committed to their work. On the other hand, employees feel that employers and government value them, and these benefits enable employees to keep their families and future safe. One of the key benefits that employees in India receive is the retirement benefits through the Employees’ Provident Fund (EPF). In this article, we answer all your questions regarding EPF provisions applicable to IT companies in India.
What is the EPF Scheme?
Who operates and administers the EPF Scheme?
Are you eligible for EPF?
How much do you contribute to the scheme?
In the case of employers with less than 20 employees, who register to this scheme voluntarily, employers and employees both contribute only 10% per month. The 10% contribution rate also applies to those organizations who are declared sick by the Board for Industrial and Financial Reconstruction; entities, which operate under the wage limit of INR 6,000.00; guar, beedi, jute, coir, brick, and gum industries; and companies, whose losses at the end of the financial year are greater than or equal to the net worth for that year.
In addition to the 8.33% contributed towards EPS and 3.67% towards EPF, the employer is also required to contribute 0.5% of the monthly salary to the EDLI. Furthermore, the employer is mandated to take care of the administration costs PF scheme, which is at the rate of 0.5%, respectively. Therefore, the total contribution of employers towards EPFO-run schemes is 13.00% of the monthly salary of employees.
How do you access your EPF account?
What are the interest rates?
Are there any tax concerns?
EPF in India has the EEE (exempt-exempt-exempt) status. The interest earned on this amount is tax-free; the employee can show the 12% contribution to the EPF as a deduction under Section 80C of the Income Tax Act and the eventual withdrawal amount from the EPF account after the mandatory period of five years is exempt from Income Tax. However, the withdrawal amount from the EPF account is taxable under certain circumstances: