All about Employees’ Provident Fund (PF) in Detail

Published on: September 7, 2022

Reading Time: 7 minutes

Planning for financial security after retirement is an important part of an employee’s financial journey. In India, several government-backed schemes help employees build long-term savings while they are working. One of the most widely used schemes is the Provident Fund, which allows employees to save regularly with contributions from both the employee and employer.

What is Provident Fund (PF) in India?

A provident fund or PF in India is a government managed retirement fund where certain amount is fetched from the employee’s salary and deposited in the particular fund for future use. According to the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, eligible employees and their employers contribute a portion of the employee’s salary. For most covered employees, the employee contributes 12% of basic wages plus dearness allowance, and the employer also contributes 12%. However, the employer’s contribution is divided between EPF and EPS (Employees’ Pension Scheme), subject to applicable rules.

The PF account and universal account number (UAN) are connected and valid till the employee’s life. In fact, employees can easily switch their PF accounts when they change their jobs.

What are the Benefits of Provident Fund?

As a private salaried employee, it is essential to open an employee provident fund for better future savings. The major benefits of having a provident fund include:

➔ Future Income

Employees save money for future expenses. It helps employees during financial emergencies.

➔ Manageable Deduction

Instead of spending a huge amount, employees can invest a small amount every month. Making small investments monthly helps save a huge amount over a long period of time.

➔ Interest Earnings

The Government sets a competitive rate of interest on every EPF account. This interest rate is typically higher than what is offered by regular savings accounts or fixed deposits in banks.

➔ Liquidity for Emergencies

During certain emergencies, employees can use the fund as financial assistance during unexpected situations.

➔ Compliance with Labor Laws

Besides, employees’ employers get the benefits as well. Labour law contributes to the EPF for eligible employees as per the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. Non-compliance can result in legal penalties.

PF Eligibility Criteria in India

Eligibility for EPF is determined by various factors, including organization types, age limit, salary limit, EPF account acceptance, nature of employment, etc.

➔ Organization Types

The organization plans for EPF integration for employees should have establishments with 20 or more employees. However, organizations with fewer than 20 employees can get voluntary EPF contributions for employees.

➔ Age Limit

There is no specific age limit for EPF eligibility. Employees of all ages can contribute to the EPF as long as they meet the other eligibility criteria.

➔ Salary Limit

EPF is mandatory for employees earning a basic salary (including dearness allowance) of up to ₹15,000 per month.

➔ Nature of Employment

EPF applies to various types of employment, including permanent, temporary, contractual, and part-time work. It covers both Indian and expatriate employees working in covered establishments.

PF Contribution Rules in India 2026

Both the employers and employees contribute to the employee provident fund every month. The contribution to the employee provident fund is equal. If the employee’s monthly income exceeds ₹15,000, the EPF contribution must be distributed as follows. Here are the aggregated EPF Contribution Rules, introduced by EPFO in 2026.

1. EPF Contribution Rate

Employees and employers each contribute 12% of the employee’s basic salary plus dearness allowance (DA) every month. Of the employer’s contribution, 8.33% (subject to the wage ceiling) is diverted to the Employees’ Pension Scheme (EPS), and the remaining amount goes to the EPF account.

2. Mandatory EPF Coverage

EPF registration is mandatory for establishments employing 20 or more employees. Employees earning up to ₹15,000 per month in basic salary plus DA must be enrolled under the EPF scheme. Establishments with fewer than 20 employees may opt for voluntary coverage.

3. EPF Interest Rate

The EPF interest rate for FY 2026-27 remains 8.25% per annum. Interest is calculated on the monthly running balance and credited to members’ accounts after the end of the financial year.

4. Higher Auto-Settlement Limit

EPFO now auto-settles eligible advance claims of up to ₹5 lakh, reducing claim processing time to around 72 hours for members with complete KYC. This is one of the major operational updates applicable in 2026.

5. Digital Claim Processing

Members with an Aadhaar-linked UAN, a verified PAN, and a bank account can submit eligible EPF claims online without employer intervention in most cases, thereby making claim processing faster and more paperless.

EPF Contribution Rate Table (FY 2026–27)

Contributor	Standard Rate	Applicable Rate (Special Cases)	Remarks
Employee	12%	12%	12% of Basic Salary + DA
Employer	12%	10%	10% applies to establishments with fewer than 20 employees, establishments declared sick by BIFR, and certain notified industries
Total	24%	22%

Employer’s 12% contribution is further split as:

Component	Rate	Credited To
Employees’ Pension Scheme (EPS)	8.33% (capped at ₹1,250/month)	EPS account
EPF account	3.67%	EPF account

For more insight into the 2026 PF updates, click here.

Objectives of Employee Provident Fund Contribution

Employee’s total contribution is split between the employee pension scheme and employee provident fund.
Out of 12 % from the employee side, 8.33% is contributed as EPS and 3.67 % as EPF as an employee contribution.
The EPF passbook is updated with all monthly contributions.
Employees whose salary is less than 15000, instead of PF, can contribute to the Voluntary Provident Fund (VPF).

How to check my PF account balance?

Are you thinking about how to check your PF balance? If you have a PF account, then you must have a UAN number that helps you check and review the PF account balance. Here are the steps:

➔ PF checking Through Website Login

Visit the EPF Passbook website.
Enter the UAN number and Password (In case you forget your password, click on ‘forget my password’).
View and download the current EPF statement.

➔ PF Balance Check by SMS

If your internet is not working or you just want to check your balance via SMS, you can send an SMS to 7738299899 from your registered mobile number by typing ‘EPFOHO UAN’.

➔ PF Balance Check with Umang App

Download the Umang App through ‘Google Play Store’ or ‘Apple App Store’, depending on your smartphone.
After downloading the app, click on a member and then go to ‘balance/passbook’
Enter your UAN-registered mobile number; the system will verify the mobile number.
After verification is done, you can check and download your PF balance in PDF format.

How to Withdraw EPF Amount?

Before we get into the process of withdrawing Provident Fund, employees should ensure the following are correct:

They have an Activated UAN.
Their Aadhaar is seeded to their UAN and mobile number is live for OTP.
Their PAN and bank Account are linked.
Their KYC shows ‘Digitally Approved’ on the EPFO Portal.

Additionally, you should also understand the relevant forms:

Form 19: Full Settlement (retirement, resignation, unemployment).
Form 10C: EPS Pension Withdrawal.
Form 31: Partial Withdrawals (marriage, education, medical, housing).
Form 10D: Monthly Pension Claims.

How to Withdraw PF Online?

The steps to withdraw PF online are:

Log in to the UAN Member Portal using UAN, password, and captcha.
Click Online Services → Claim (Form-31, 19, 10C & 10D).
Enter the last 4 digits of your bank account to verify, then proceed.
Select the claim type: full settlement, partial advance, or pension withdrawal.
Fill in the reason, amount, and address, and choose the payout method.
Authenticate with the Aadhaar-linked OTP and submit.

Steps to Withdraw using UMANG App

The steps to withdraw PF using the UMANG app are:

Open the UMANG app, log in with your registered mobile number.
Search and select EPFO services, then tap ‘Raise Claim.’
Enter UAN, verify via Aadhaar OTP.
Verify bank details, upload documents if applicable, and submit.

Conditions to Withdraw PF Amount

Under EPFO’s revised 2026 withdrawal framework, PF withdrawal rules have been consolidated from 13 separate categories into three broad heads: Essential Needs, Housing Needs, and Special Circumstances.

Employees must complete a minimum of 12 months of continuous service to become eligible for partial withdrawal under any of these categories, and a minimum 25% balance must be retained in the account at all times to keep earning interest.

The conditions to withdraw PF Amount include:

1. Essential Needs

Covers illness, education, and marriage-related expenses.
For medical treatment of self, spouse, children, or parents, there is no minimum service requirement, and withdrawal can be made any number of times.
Education withdrawals (for self or children, post-matriculation) are allowed up to 10 times, capped at 50% of the employee’s own contribution.
Marriage withdrawals (for self, son, daughter, brother, or sister) are allowed up to 5 times, also capped at 50% of the employee’s own contribution.

2. Housing Needs

Covers purchase of land, purchase or construction of a house, home loan repayment, and renovation.
Purchase of a plot requires a minimum of 5 years of EPF membership, with withdrawal capped at 24 times the monthly basic salary plus DA.
Purchase or construction of a house requires 5 years of service, with withdrawal capped at 36 times the monthly basic salary plus DA.
Home loan repayment requires 10 years of service, allowing withdrawal of up to 90% of the total PF balance.
Renovation is permitted after 5 years of house ownership, capped at 12 months’ salary.

3. Special Circumstances

Covers unemployment, natural calamities, and other unforeseen situations, without the need to specify a detailed reason.
Employees can withdraw up to 75% of their PF balance after 1 month of unemployment.
The remaining 25% can be withdrawn if unemployment continues for 12 months.
Full and final settlement, including both employee and employer contributions, is permitted upon retirement (typically at age 58), permanent disability, or relocation outside India.
Employees within 1 year of retirement (age 54 or above) can withdraw up to 90% of their accumulated balance.

Can an employee transfer the PF account in case of a change in employment?

Yes, an employee can transfer their PF account at the time of their job change. However, they have to go through a well-defined process:

➔ Offline technique

Every employee who contributes money to EPF has a unique UAN. You have to submit the Universal Account Number (UAN) to your new employer.
Employers link your UAN number with the new PF account. Your previous employer might need to approve the PF transfer request.
Once the approval is done, the EPFO transfers the PF balance from the old PF account to the new one.
Employees continue making PF contributions through their new employer, and the transferred amount gets added to the new PF account.

➔ Online technique

Employees can initiate the transfer of their PF balance to the current employer’s PF account through the EPFO’s online portal. This online transfer is known as the “online PF transfer claim.”
In case of online PF transfer, you have to fill the FORM 13 (an application form for transferring the PF accumulation)
During the online transfer process, after the commencement of the transfer request, previous employers verify and authorize PF transfer requests.
After verification and approval from the previous employer, the EPFO transfers the PF balance from the old PF account to the new one.
It takes two to three weeks, and then the employee can again invest in EPF.

Conclusion

In recent days, a provident fund is behaving like a non-considering part of CTC of an employee. It helps employees build long-term savings through regular contributions while also helping employers meet their statutory responsibilities. From PF contributions and UAN management to withdrawals and compliance and understanding the process, The provident fund helps both employees and HR teams manage provident fund requirements more effectively.