What is Provident Fund (PF)?
Provident Fund (PF) is a government-backed retirement savings scheme for salaried employees in India. Every month, a portion of the employee’s salary is deducted and deposited into a PF account. The employer also contributes an equal amount. This combined amount earns interest and builds a retirement fund over time.
PF is managed by the Employees’ Provident Fund Organisation (EPFO) under the Ministry of Labour and Employment.
How Does EPF Work?
Under the EPF scheme:
· Employee contributes 12% of Basic + Dearness Allowance (DA)
· Employer contributes 12% of Basic + DA
· 8.33% goes to Employee Pension Scheme (EPS)
· Remaining amount goes to EPF account
· EPFO declares annual interest on PF balance
This continues every month until retirement or job change.
Example of PF Calculation
If Basic + DA = ₹15,000:
· Employee Contribution (12%) = ₹1,800
· Employer Contribution (12%) = ₹1,800
· ₹1,250 → Pension (EPS)
· ₹550 → EPF
Total EPF deposit (excluding pension) = ₹3,600 per month
This amount grows with yearly interest.
Who is Eligible for Provident Fund?
· Companies with 20 or more employees must register under EPF.
· Employees earning up to ₹15,000 basic salary are mandatorily covered.
· Employees earning above ₹15,000 can voluntarily join (with employer approval).
Benefits of Provident Fund
- Retirement Security
Provides financial support after 58 years of age. - Tax Benefits
· Employee contribution eligible under Section 80C
· Interest earned is tax-free (within prescribed limits)
· Maturity amount is tax-free (subject to conditions) - Pension Benefit
Through EPS, employees receive monthly pension after retirement. - Partial Withdrawal Facility
PF amount can be withdrawn for:
· Medical emergencies
· Marriage
· Higher education
· Home purchase or construction
What is UAN?
UAN (Universal Account Number) is a 12-digit unique number given by EPFO. It links multiple PF accounts of an employee across different jobs.
With UAN, you can:
· Check PF balance online
· Download passbook
· Transfer PF when changing jobs
· Update KYC details
How to Check PF Balance?
You can check PF balance by:
· EPFO Member Portal login
· UMANG mobile app
· Missed call or SMS service (linked mobile required)