PROCESS FLOW FOR FILING OF ONLINE e-NOMINATION FORM BY MEMBER ON EPF PORTAL

The member can file the online nomination form through UAN member portal which is available on Member Home (epfindia.gov.in)

Filling of e nomination form by an employee is mandatory. The procedure profile e-nomination form is attached herewith.

PROCEDURE TO RESET EMPLOYEE’S UAN LOGIN PASSWORD

The EPF has provided separate login to each member (employee). The Link for same is Member Home (epfindia.gov.in). Many times the employees forget their password and are unable to login. Attached herewith is the procedure to reset the password of the member portal.

PROCEDURE TO MODIFY EMPLOYEE’S BASIC DETAILS IN EPF WEBSITE

In order to link Aadhar with EPF the employee’s basic details like name and date of birth in the EPF website should be same as per his Aadhar Card. In case the basic details are different the employee must update the same through his member portal login. Attached file shows step by step procedure to modify basic details in EPF website.

EPF AND TAXATION

There are four points to be considered when we discuss about EPF and Taxes. Following are the cases in which your EPF money may be taxed:

  1. Premature Withdrawal – EPF Service is less than or equal to five year (FY 15-16 onwards)
  2. Employer’s Contribution to EPF for the year is above Rs 7.5 Lacs per annum (FY 19-20 Onwards)
  3. Employee’s Contribution to EPF for the year is above Rs 2.5 per annum (FY 21-22 onwards)
  4. Post-employment earnings through interest on EPF amount

Let us see each case one by one.

  1. Premature Withdrawal – EPF service is not more than five years.

This provision has come into effect from 01.06.2015. Withdrawal of Provident Fund may attract Income Tax. TDS @ 10% will be deducted from the withdrawal amount subject to monetary limit of Rs 50,000.  This rate will be applicable only after the submission of PAN card. If PAN details are not submitted than TDS @ 34.78% will deducted and the employee will not be able to claim the same in his ITR. If an eligible PF account holder submits Form 15G or 15H as the case may be, then no tax may be deducted at source.

In case of withdrawal with less than 5 years of contribution, not only the amount withdrawn becomes taxable, but the tax benefits enjoyed on PF contribution during the service are also reversed.  In such a case,

  • payment received by the individual in respect of the employer’s contribution along with the interest accrual thereon is taxed as “salary”.
  • Interest on the employee’s contribution is taxable as “other income”.
  • Payment received in respect of the employee’s own contribution is exempt from tax (to the extent not claimed as a deduction earlier)

Full exemption will be available only if

  • The employee has not completed 5 years of service due to termination of job by reason of the employee’s ill health or discontinuance of the employer’s business or for reason which is not in control of the employee.
  • If the account is transferred to the new employer then the previous service from whom the account is transferred is also considered as a service period.
  • Employer’s Contribution to EPF for the year is above Rs 7.5 Lacs per annum (FY 19-20 Onwards)

Any amount in excess of Rs. 7.50 lakh contributed by the employer to recognised provident fund accounts taken together shall be treated as perquisite in the hands of the employee  will be included in his salary and taxed at the slab rates. Even the interest accrued in respect of such excess contribution shall also be included in the value of perquisite of the employee year after year.

  • Employee’s Contribution to EPF for the year is above Rs 2.5 Lacs per annum (FY 21-22 onwards)

If the employee’s contribution to his or her EPF and VPF exceeds Rs 2.5 lakh in a year, the interest above that amount will be taxable as per employee’s income tax slab. This only takes into account the employees’ contribution and not employer’s (or the total contribution). It is not yet clear whether the interest income above the tax free level will be on accrual basis, which is every year, or at the time of withdrawal when the employee retires or withdraws PF amount.

  • Post-employment earning through interest on EPF amount

Once an individual leaves job or retires, he or she does not remain an employee; hence, any interest earned attracts tax. In Dileep Ranjekar Vs Income Tax Department the Income Tax Appellate tribunal Banglore stated that interest earned before retirement will not get taxed irrespective of when it is withdrawn after retirement, but any interest earned post retirement will be taxable in the hands of the account holder. This is because the exemption is available only to an employee. Once an individual leaves their job or retires, he or she does not remain an employee; hence, any interest earned attracts tax.

It may be noted To discourage provident fund subscribers from neglecting their EPF accounts, especially the ones in which no contributions are being made at all, in 2011 the EPFO stopped paying interest on accounts that had been inoperative for more than three years, or 36 months. But in 2016, the rule changed and the EPFO said that inoperative accounts will also earn interest till the account holder turn 58. But after the retirement of the account holder, the EPFO will not pay interest if the account becomes inoperative.