In this article I will be writing about the Employee Provident Fund (EPF) or PF transfer from one employer to another employer and what is the use of Form 13 . Job change is very normal in these days, so it become common for every one to transfer their Provident Fund(PF) to the new employer’s organizations. To do that, there is certain processes to be followed and it can be varied if the employer has their own PF trust for their employees. Any employer can maintain their own PF trust with government’s approval. This blog writes in detail about the PF and how to transfer from one employer from another. Please subscribe to our future articles here. Also join us in the face book fans page to write your comments.
What is Provident Fund (PF)?
- The Employee Provident Fund(EPF), or provident fund as it is normally referred to, is a retirement benefit scheme that is available to salaried employees.
- Under this scheme, a stipulated amount (currently 12%) is deducted from the employee’s salary and contributed towards the fund. This amount is decided by the government.
- The employer also contributes an equal amount to the fund.
- However, an employee can contribute more than the stipulated amount if the scheme allows for it. So, let’s say the employee decides 15% must be deducted towards the EPF. In this case, the employer is not obligated to pay any contribution over and above the amount as stipulated, which is 12%.
- If you urgently need the money, you can take a loan on your PF.
- You can also make a premature withdrawal on the condition that you are withdrawing the money for your daughter’s wedding (not son or not even yours) or you are buying a home.
- To find out the details, you will have to talk to your employer and then get in touch with the EPF office (your employer will help you out with this).
Return on Investment
Interest will be calculated for the amount deposited into the PF scheme. The rate of interest is 9.5% (updated) at present (revised rates on PF), this rate will be decided by the govt. on the budget times. The interest payable also will be added into the PF amount. Note that, the interest is monthly cumulative.
Another bad news is that, if the PF account is idle for more than three years, they there will not be any interest paid for that account. That means if you leave a company and leave the PF account. It will earn the interest for first three years.
Tax Exemption on PF
- The amount you invest is eligible for deduction under the Rs 1,00,000 limit of Section 80C.
- If you have worked continuously for a period of five years, the withdrawal of PF is not taxed.
- If you have not worked for at least five years, but the PF has been transferred to the new employer, then too it is not taxed. The tenure of employment with the new employer is included in computing the total of five years. If you withdraw it before completion of five years, it is taxed.
- But if your employment is terminated due to ill-health, the PF withdrawal is not taxed.
What is Form 13?
Form 13 is used for transferring your PF account from one employer to the another employer. You can download the form 13 from here. When you need to transfer the provident fund to another company, you have to fill the form 13 and give to the new employer. The new employer will start the process and send your application to the provident office of the region. This process normally takes few months.
This blog would have been useful for the readers who are looking for the basic knowledge on the provident fund and looking for the process on transferring to the new employer. You can download the form and read the instructions provided on that to understand it more. If you have any doubts please post it here and I will be answering all the questions.