• Legis Scriptor

Employees Provident Fund Scheme

Authored by - Prachi Aggarwal

Keywords - EPF, EPF SCHEME 1952, Employees, Employers.


The total Employee Provident Fund (EPF) balance at any point in time includes the employee’s own contribution and that of the employer, along with the interest incurred on the contribution made. As an employee working in a corporate setup, there are various things that one would like to know about EPF. EPF is the main scheme under the EPF Act as well as under the Miscellaneous Provision Act 1952. Therefore, this article deals with the EPF scheme managed under the aegis of the Employment Provident Fund Organization (EPFO).


EPF Scheme is governed under EPFO. EPFO is one of the largest social security organizations in the world. It is a retirement fund body which on a mandatory basis provides universal social security coverage to all salaried employees in India. It looked after and maintained EPFO in India. As per law, any registration company which has more than 20 employees has to get registered with EPFO.

In the case of R.P.F. Commr. V. L.R.F Works[1]

It was held that:

Section 5 gives wholly unrestricted unguided direction to the central government to frame a scheme, and it appears on the other hand that the Act is full of carefully laid down principles to guide the central government.”

Under the EPF Scheme, an employee has to pay a certain contribution towards the scheme and an equal contribution is paid by the employers. The employee gets a lump sum amount including self and employer’s contribution with interest on both on retirement. As per rules of EPF employee whose pay is more than Rs 15000 a month at the time of joining, is not eligible and is called a non-eligible employee.

Employees during less than Rs 15000 per month have to mandatorily became a member of the EPF. However, an employee who is drawing pay above the prescribed amount can become a member with the permission of the Assistant PF Commissioner, if he and his employer agree.

Employees’ Provident Fund

EPF is a popular savings scheme that has been introduced by the EPFO under the supervision of the Government of India. The savings scheme is directed towards the salaried-class to facilitate their habit of saving money to build a substantial retirement corpus.

The EPF scheme has catered to over 5 Crore individuals and is directed by three different Acts, namely, the Employees’ Provident Fund Scheme Act, 1952, the Employees’ Deposit Linked Insurance Scheme Act, 1976 and the Employees’ Pension Scheme Act, 1995.

The fund is built with monetary contribution extended by employees and their employer each month. Both parties extend 12% each of the employees’ monthly salary, as their share of contribution towards EPF.

The fund thus built accrues a pre-fixed rate of interest that has been set by the Employees Provident Fund Organization. The accrued interest on the EPF is tax-free and can be withdrawn without paying for the same. Employees avail a lump-sum amount on their retirement, which is inclusive of the accrued interest.

In the case of District exhibitors Assn., Muzaffarnagar & others V. Union of India [2]

It was held that :

“When they say that this scheme has retrospective effect, the employer cannot be asked to pay the employees contribution for the period antecedent to the notification applying the scheme because he has no right to deduct the same for the future wages payable to the employee. The payment of employee contribution by the employer with the corresponding right to deduct the same from the wages of the employees could be only for the current period during which the employer also has to pay his contribution.”

In the case of Bombay printers LTD. & Others V. Union of India and others [3]

It was held that:

They were re-employment by the petitioner on a temporary basis. It was held that the employer cannot be asked to pay a contribution in respect of re-employed employees on a temporary basis.”

Individuals can apply to avail various online services of EPF India by accessing the official portal. The EPF online portal is a user-friendly platform that ensures to keep the flow of services transparent, efficient and hassle-free.

Eligibility to become Member of EPF

The Employee Provident Fund is open for employees of both the Public and Private Sectors, which means all employees can apply to become a member of EPF India.

Additionally, any organization that employs at least 20 individuals is deemed liable to extend the benefits of EPF to its employees.

When an employee becomes an active member of the scheme, they are considered eligible to avail of several benefits in the form of Employee Provident Fund benefits, insurance benefits and pension benefits.


The employees’ provident fund scheme extends an array of benefits towards the EPF employee members. It inculcates a sense of financial stability and security in them.

Here is a list of benefits that an EPF employee member can avail through the said scheme –

1. Capital appreciation – The PF online scheme offers a pre-fixed interest on the deposit held with the EPF India. Additionally, rewards extended at maturity further ensure growth in the employees’ funds and accelerate capital appreciation.

2. Corpus for Retirement – Around 8.33% of an employer’s contribution is directed towards the Employee Pension Scheme. In the long run, the sum deposited towards the employee provident fund helps to build a healthy retirement corpus. Such a corpus would extend a sense of financial security and independence to them after retirement.

3. Emergency Corpus – Uncertainties are a part of life. Therefore, being financially prepared to face such unwarranted situations is the best an individual can do deal with exigencies. An EPF fund acts as an emergency corpus when an individual requires emergency funds.

4. Tax-Saving – Under Section 80C of the Indian Income Tax Act, en employee’s contribution towards their PF account is deemed eligible for tax exemption. Moreover, earnings generated through the EPF scheme are exempted from taxes. Such exemption can be availed up to a limit of Rs. 1.5 Lakh.

The tax benefits applicable to the Employees Provident Fund scheme ensure higher earnings to the members. It further improves savings and an individual’s purchasing power in the long-term.

5. Easy Premature Withdrawal – Members of EPF India are entitled to avail benefits of partial withdrawal. Individuals can withdraw funds from their PF account to meet their specific requirements like pursuing higher education, constructing a house, bearing wedding expenses or for availing medical treatment.


Members of the fund may withdraw entirely from the fund on account of-

· retirement or after attaining the age of 55 years.

· If unemployed for two months after resigning or losing a job, 75% may be withdrawn post 1 month of unemployment.

· If the member is permanently settling abroad.

· 90% of the Fund may be withdrawn if the Subscriber has attained the age of 54 and the rest a year later.

EPF withdrawal for COVID- 19:

  • The EPF rules allow subscribers to withdraw non-refundable advances in certain cases like illness, buying a house etc.

  • Now, a pandemic can also be cited as a reason for withdrawing the non-refundable advance.

  • As COVID-19 has already been declared a pandemic, EPF subscribers can withdraw from their account to face the problems created due to the COVID-19 pandemic.

  • COVID-19 has been declared a pandemic for the entire country and therefore employees working in establishments and factories across entire India are eligible for the benefits of non-refundable advances.


Employees Provident Fund Scheme, 1952 came to India through Para 83 of the government of India notification in 2008, October 1. Employee Pension Scheme.1995 was created by a special provision in respect of international workers as mentioned in Para 43-A. After 2014 it became easily accessible through the EPFO website portal. This Act is created mainly for the purpose of encouraging saving during the period of employment, where they use it in their old age, sickness or for any emergency purposes.

[1] R.P.F. Commr. V. L.R.F Works, A.I.R 1962 Punj. 507 (India). [2] Assn.,Muzaffarnagar & others V. Union of India (1991) II LLJ 115 (SC). [3] Bombay printers LTD. & Others V. Union of India and others (1992)I LLJ 816 (BOM). Reference

1. Diva Rai, The Employee Provident Funds,1952 :A Guide, IPLEADERS(October 24, 2019),

2. Sunil Dhawan, What is EPF Scheme and how to calculate PF balance?, THE ECONOMICS TIMES(August 28, 2020,10:09 am),

3. Priyadarshini Maji, EPFO: All you want to know about EPF Scheme, Interest rate, Tax benefits, Balance check, Claim procedure, FINANCIAL EXPRESS(April19,2019,5:02pm),