Download Bare Act of The EPF Act, 1952 (PDF version)

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Introduction

The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (EPF Act) is India’s oldest and most popular social security law. Most people simply call it the “PF Act”. It started in 1952 and today covers more than 65 crore accounts and ₹22 lakh crore in savings (2025 figures). The Act has three main schemes:

1. Employees’ Provident Fund (EPF) – retirement savings

2. Employees’ Pension Scheme (EPS) – monthly pension after 58

3. Employees’ Deposit Linked Insurance (EDLI) – free life insurance up to ₹7 lakh

One law, three lifelong benefits!

Scope and Objective

Who benefits? Salaried workers in factories, companies, and organisations. Main Objectives (in simple words):

• Force regular savings for old age

• Give monthly pension after retirement

• Provide free life insurance to family if worker dies in service

• Protect workers from financial problems after job loss or retirement

Key Definitions Explained with Real-Life Examples

1. Employee Any person employed for wages in the establishment (includes contract workers if paid through company). Example: A security guard hired through contractor but salary paid by factory → covered.

2. Basic Wages All cash earnings except HRA, overtime, bonus, and commission. PF is calculated only on this.Example: If your total salary is ₹50,000 (Basic ₹25,000 + HRA ₹15,000 + Conveyance ₹10,000), PF is calculated only on ₹25,000.

3. Establishment Any factory or place with 20 or more employees. Once covered, it remains covered even if staff falls below 20. Example: A textile mill started with 25 workers in 1990. Now only 15 workers → still under PF law forever.

4. Excluded Employee Worker drawing more than ₹15,000 basic + DA per month AND joined after 01-09-2014.Example: Mr. Rajesh joins as manager in 2025 with ₹20,000 basic → he can choose NOT to join PF. But if he was member earlier, he must continue.

Applicability of the Law

Automatic coverage when any establishment has 20 or more employees. Voluntary coverage allowed even with less than 20 employees if employer and workers agree. Once covered, always covered (called “once in, always in” rule).

Who is NOT covered?

• Government offices (they have separate schemes)

• Co-operative societies with less than 50 workers

• Tiny tea shops with 5–10 staff (unless they choose voluntarily)

Salient Features of the EPF Act (Easy to Remember)

• 12% from employee + 12% from employer every month

• Interest rate decided every year (8.25% in 2025–26)

• Tax-free savings (EEE status – Exempt-Exempt-Exempt)

• Online portal (www.epfindia.gov.in) – check balance, transfer, withdraw

• UAN (Universal Account Number) – one number for lifetime

Important Provisions of the Act – Explained Step by Step

1. Contribution Rates (Section 6)

Employee → 12% of (Basic + DA) Employer → 12% total, but splits it:

• 3.67% goes to EPF (Provident Fund)

• 8.33% goes to EPS (Pension)

• 0.50% goes to EDLI (Insurance)

Real Example (Salary ₹30,000 Basic + DA):

• You deduct ₹3,600 from salary

• Company adds ₹3,600

• Out of company’s ₹3,600 → ₹1,101 to EPF, ₹2,499 to pension, ₹150 to insurance

2. Employees’ Provident Fund Scheme (1952)

• Money grows with compound interest (8.25% now)

• Full amount withdrawable at 58 years or after 2 months of unemployment

• Partial withdrawals allowed for marriage, house, illness, education

Real Example: Priya joined job in 2015 at ₹15,000 basic. By 2025 she has ₹18 lakh in PF. She buys first home → withdraws 90% (₹16.2 lakh) tax-free.

3. Employees’ Pension Scheme (1995) – EPS

• Started in November 1995

• Minimum 10 years service → lifelong monthly pension after 58

• Pension amount = (Pensionable Salary × Pensionable Service) ÷ 70

Real Example: Mr. Sharma worked 28 years, last basic + DA ₹15,000. His pension = (15,000 × 28) ÷ 70 = ₹6,000 per month for life + Dearness Relief.

4. Early Pension Rules

• Age 50–57 → reduced pension (4% less for each year below 58)

• Less than 10 years service → no pension, only withdrawal benefit

5. Employees’ Deposit Linked Insurance (EDLI) – Free Life Cover

• No extra premium

• If worker dies while in service → family gets up to ₹7 lakh (average salary of last 12 months × 35 + bonus up to ₹1.75 lakh)

Real Example 2025: Worker earning ₹20,000 basic dies in accident → family gets ₹7 lakh instantly + full PF + widow pension.

6. Advances / Partial Withdrawals (Very Popular)

You can take money before retirement for:

• Medical treatment → up to 6 months basic or own share

• Marriage (self, child) → 50% of own share (max 3 times in life)

• House purchase/construction → 90% (after 5 years membership)

• Education → 50% (after 7 years)

• One year before retirement → 90%

7. Nomination and Death Benefits

• Every member must fill Form 2 (nomination)

• If nominee dies first → legal heirs get money

• Minor nominee → guardian needed

8. Transfer and Withdrawal Made Easy

• UAN + Aadhaar + bank linking → automatic transfer when you change job

• Online withdrawal within 3–5 days (2025 reality)

9. Penalties for Employers

• Delay in deposit → 12–25% interest + penalty up to ₹25,000

• Fake records → jail up to 3 years

Quick Benefits Summary (2025)

• Save ₹1 lakh per year → get ₹3+ crore at retirement (with 8.25% interest)

• Monthly pension up to ₹50,000+ possible for high-salary long-service members

• Free ₹7 lakh life insurance

• Tax saving up to ₹1.5 lakh under 80C + ₹50,000 extra under 80CCD(1B)

The EPF Act is truly the best friend of every salaried person in India — start early, stay regular, retire rich and tension-free!

Have questions about your PF balance or withdrawal? Ask in comments!