EPF Members: Streamlining EPF Contributions: Relief for Specific Members Do you contribute to the Employees’ Provident Fund (EPF)? If so, here’s a crucial update!
The Employees’ Provident Fund Organisation (EPFO) has implemented a new policy offering relief to certain EPF account holders from submitting a joint declaration form. This form is typically required when employee contributions exceed the current statutory wage ceiling of Rs. 15,000 per month.
Who Benefits from the Relief?
The EPFO’s recent circular offers relief to two distinct categories of EPF members:
- Members who left employment or passed away: The relief applies to EPF members who contributed beyond the statutory limit but left their jobs or sadly passed away before November 1, 2023. These members are not obligated to submit the joint declaration form.
- Existing Employees: EPF members currently contributing on a salary exceeding the statutory limit, along with their employers who pay administrative charges on the higher contributions, are not required to submit the joint declaration form immediately.
Understanding the Relief and What to Do
This policy change simplifies the process for specific members. However, some points require clarification:
- New EPF members (post January 30, 2024): Employees joining the EPF scheme after this date must submit the joint declaration form if their basic salary surpasses the statutory limit.
- Higher Pension Applicants: The relief does not apply to those who opted for the higher pension under the Employees’ Pension Scheme (EPS). These members still need to submit the form.
- Existing Members (Future Submission): While the immediate submission isn’t mandatory, it’s advisable for existing members to eventually file the joint declaration form to avoid complications during future EPF claim processing.
EPFO’s New Joint Declaration Format
The EPFO has also introduced a revised format for the joint declaration form applicable to all members. Key points to remember:
- The form needs to be submitted when joining the EPF scheme for the first time with a basic salary exceeding the statutory limit.
- Existing members switching jobs with a basic salary exceeding the limit should submit the form with the new employer.
What You Can Do Now
The EPFO has begun sending SMS notifications to members about the new joint declaration functionality. This suggests that even existing members should consider filing the form. Here’s what you can do:
- Check your EPF account details: Verify your basic salary contribution and ensure it adheres to the statutory limit.
- Contact your employer: If your contributions exceed the limit, discuss the joint declaration form with your employer. You can access the revised form on the EPFO website.
- Consider future implications: While immediate submission isn’t mandatory for existing members, filing the form now avoids future hassles.
Understanding the EPF Scheme Rules
Here’s a quick refresher on the EPF scheme rules:
- Eligibility: Employees with a monthly basic salary below Rs. 15,000 are automatically enrolled in the EPF scheme.
- Joint Declaration Requirement: If the monthly basic salary exceeds Rs. 15,000 when joining, a joint declaration form from the employer and employee is mandatory.
- Statutory Wage Limit Hike: The limit was raised from Rs. 6,500 to Rs. 15,000 per month in September 2014.
- EPS Eligibility: To join the EPS, the monthly basic salary must not exceed the statutory wage limit when joining the provident fund scheme.
EPF Contribution Details
Both employers and employees contribute 12% of the basic salary to the EPF account. Here’s a breakdown:
- Employee Contribution (12%): Eligible for tax deduction under Section 80C of the Income Tax Act.
- Employer Contribution (12%)
- 8.33% goes to the EPS (capped at Rs. 1,250 for a basic salary exceeding Rs. 15,000)
- Remaining 3.67% goes to the provident fund account
Remember: This update simplifies the EPF contribution process for specific members. By understanding the eligibility, revised format, and recommended actions, you can ensure a smooth experience with your EPF contributions.