Employment Provident Fund (EPF) is a scheme under which an employee pays a certain contribution of his/her salary towards the scheme and an equal contribution is paid by the employer. Later, the employee can avail the lump sum amount with interest on retirement. The PF scheme is managed by the Employees’ Provident Fund Organisation (EPFO). Any organisation that has more than 20 employees must register with the EPFO.
All salaried employees working in an organisation with 20 or more people are familiar with the provident fund (PF) deductions that are made from their salary.
However, many people often get confused about the PF dues that they are supposed to get. There have been scenarios where the employer withholds its contribution to an employee’s PF with interest, citing that the employee did not complete a tenure of five years with the said employer.
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The employees need not let go of the share withheld from them. Under the Employees Provident Fund Act, the employer’s share cannot be deducted from the employee. The employer cannot recover the share of funds from the salary of its employees either. It is wrong if an employee’s PF is deducted or not paid by the employer.
Instead, what happens is that the payment received as the employer’s contribution as well as the interest before the completion of five years is taxed under an account holder as ‘salary’.
In certain cases, the employees face TDS (tax deduction on source) when they withdraw the PF amount, even after five years of continuous employment. There is no requirement of a TDS at this point.
If it is still deducted, the matter can be raised at the appropriate level or the concerned individual can claim the refund deducted on the PF while filing their income tax return. It is to be noted that documentation of PF to prove completion of five years of employment should be kept at hand.