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EPF - How To Get Maximum Returns From Employee Provident Fund?

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Employee Provident Fund Interest Rate

EPF is one of the most tax-effective investment options in India. Contributions up to Rs 1.5 lakhs per year are exempt from income tax, and the interest earned on EPF contributions is also exempt from income tax.

Now that you know the basics, let's take a look at how you can get maximum returns from your Employees' Provident Fund.

What Is the Employee Provident Fund?

Employee Provident Fund (EPF) is a retirement savings scheme in India. It is a compulsory savings scheme for salaried employees. Under EPF, an employee contributes 12% of his salary each month to the fund, and his employer matches this contribution. The employee can withdraw the money from EPF at the time of retirement.

EPF is a very good way to save for retirement. The current EPF interest rate is 8.10% per year. An employee can withdraw the money from EPF at the time of retirement.

What Are the Tax Advantages?

When you invest in EPF, you not only get the benefit of tax exemption on the principal amount, but also on the accumulated interest.

This makes EPF one of the most tax-efficient investment options available in the market today.

However, please keep in mind; if you try to withdraw EPF funds within 5 years of your career, you'll be taxed. When you try to withdraw online, you can see the tax alert.

How to Maximize EPF Returns?

You can maximize your EPF returns by never touching your funds until your retirement. This way, you'll be able to let them grow and compound over the years. 

Additionally, you can also avoid cashing in your EPF on emergency situations by creating an emergency fund. This will give you a buffer in case of unexpected expenses so you don't have to dip into your retirement savings.

Emergency fund:

Initially, try to create a emergency funds which is 12 months of your salary. Gradually, then increase as your salary increases.

Recommended to have at three times your annual salary, which helps you from sudden non employment, medical emergency & more.

Official Website of EPF

As a next step, you can visit the official website of EPF and do the below things:
  • Update your profile
  • Verify whether your details
  • Add PAN and Aadhar details
  • Add Bank details 
  • Withdraw funds & more

How Can I Check EPF balance?

To know how much monthly savings you have accumulated in your EPF account, check your EPF balance on a regular basis. You can do this by checking the EPF passbook, which will give you a detailed information.

You will have to register yourself first and then you can check your EPF balance online by providing your login credentials. To use the EPF mobile app, simply download it from the App Store or Google Play Store and register yourself as a user. Once you're in, you will be able to check your EPF balance along with other details such as transactions and claim status.

Common Mistakes to Avoid in EPF

We're almost at the end of our journey on how to maximize returns from an EPF, but before we wrap up, let's touch quickly on the common mistakes you should avoid when handling your EPF.

Switching job:

  • When you switch your job, each company creates new account under same UAN
  • As a first step, transfer your fund old company account id to the new account id created by new employer
  • This helps to receive interest rate correctly

Updating details:

  • Remember to update details like phone number, bank details, Aadhar, etc
  • In an emergency, when you need to withdraw money, this will slow down the process.

Withdrawing money:

After lockdown, government has made the EPF funds easily accessible because people may need funds immediately.
  • Usually people, tend to withdraw money when they switch the job.
  • Please remember, it is your money similar in a savings account.
  • Switching job, doesn't mean you've to withdraw your funds, else the funds will be lost
  • Try giving time which helps your funds to grow automatically. the power of compounding plays a vital role here.

Conclusion

Employee Provident Fund (EPF) is an important financial tool that helps employees save a part of their salary for retirement. It is a great way to ensure that employees have enough funds when they retire from work. 

With the help of tax benefits, EPF can help you save even more money over time, making it an invaluable financial tool for any employee.

FAQs

Q. What is EPF UAN number?

EPF UAN is a unique combination of digits that is provided to each employee when they start contributing to the fund.

The EPF UAN number allows the EPFO (Employees Provident Fund Organization) to identify and track all financial transactions related to an individual's provident fund accounts across different employers. 

This makes it easy for employees to check their accounts, transfer money, and so on.
In addition, having an EPF UAN number is essential if you want to avail the facilities offered by the EPFO such as online services, claim processes, and so on. 

Without the UAN number, you won't be able to access any of these services. So make sure you secure one if you haven't done so already!

Q. Can I withdraw my full EPF amount?

Yes, you can withdraw your full EPF amount. However, it is important to note that the EPF amount withdrawn is taxable, if it is done before 5 years of service. You can see this tax information when starting a online withdrawal process, so keep an eye out while submitting the form.

Q. How many days, will EPF withdrawal take?

Have you ever wondered how much time it takes to get your EPF right after you make a withdrawal? Well, the truth is that it depends on the kind of withdrawal you make. According to the EPFO website, if you're withdrawing just a partial amount, it can take anywhere from 10 days to 20 days to get your EPF.

But, if you're withdrawing your entire amount and closing your account, then it could take anywhere from 20 days to 30 days. This is because the EPFO requires that your documents be scrutinized and checked for integrity before issuing out any payments. So depending on how busy the office is and how quickly they can check everything, that's how long it'll take before you get your EPF money.

Q. What happens to EPF after leaving my current job?

Leaving your current job? No need to worry about what will happen to all the money you've saved in your EPF account. You can transfer the balance of your EPF account to next employer PF account via online or submitting form offline to your EPF office directly.

So remember, when leaving an organization, make sure you get all the necessary documents submitted and transferred so that you don't lose out on these vital savings.

Q. Can one person have 2 EPF accounts?

A common query one might have is whether you can open and maintain more than one EPF account.

The answer is every employee will be assigned single UAN number, which should be used till retirement.
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