New Provident Fund Rules: 4 key changes PF account holders must be aware of

Here are 4 key changes that have been brought in for the benefit of the PF account holders.

New Delhi: Retirement fund body Employees' Provident Fund Organisation (EPFO) has put in place several facilities, formats, rules and regulations for the benefit of its Provident Fund (PF) account holders. These rules and regulations make claim, transfer and other benefits a smooth process for the PF Subscribers.

Here are 4 key changes that have been brought in for the PF account holders. You must be aware of these rules as mentioned below:

EPFO employees’ deposit-linked insurance (EDLI) scheme

EPFO had in April this year hiked the death insurance benefits for employees’ deposit-linked insurance (EDLI) scheme beneficiaries, amidst the onslaught of the second wave of the COVID-19 Pandemic. The retirement fund body had hiked the minimum death insurance benefit to Rs 2.5 lakh while the maximum benefits have been raised to Rs 7 lakh from the previous limits of Rs 2 lakh and Rs 6 lakh respectively. EPFO had extended the benefit payable under EDLI Scheme shall be extended to such beneficiaries where the deceased employee was a member of the Fund or a provident fund exempted under Section 17 of the EPF & MP Act aid was in employment for a continuous period of 12 months preceding the month in which he died, irrespective of change of establishment during the said period. Under paragraph 28(4) of EDLI Scheme, the power to grant exemption to a Class of employees from the provisions of the scheme has been delegated to ACC (Zone), the EPFO notification further added. The monetary fie payable under paragraph 29 of EDLI Scheme has been enhanced to Rs.25,000. The provisions as mentioned above shall remain in force for a period of three years from their date of publication in the Official Gazette, EPFO had said.

Mandatory UAN-Aadhaar linking

Effective November 30, 2021, EPFO has made it mandatory to link UANs with Aadhaar numbers. The Employees Provident Fund (EPF) account must now be linked to the Aadhaar card, thanks to a recent revision in section 142 of the Code of Social Security 2020.

“In partial modification of the Circular No. WSU/15(1)2019/ATR/529 dated 15.06.2021 under reference, it is informed that the date of completing the seeding and verification of Aadhaar with UAN, is hereby extended till 30.11.2021 and accordingly, the date in Para 1 of the referred Circular dated 15.06.2021 mentioned as 01.09.2021 may be read as 01.12.2021," the EPF said in a circular.

EPF nomination deadline

EPF e-nomination service can be availed online, and the deadline to do so is 31 December 2021. EPF members can file a new nomination to replace the existing EPF / EPS nomination. The name of the nominee mentioned in the latest PF nomination will be treated as final, whereas after fresh nomination by the account holder, the earlier nomination will be treated as cancelled.

Two PF Accounts from April 1, 2022

Subscribers of Employees' Provident Fund and Voluntary Provident Fund (VPF) who have PF contribution of over Rs 2.5 lakh per financial year will now have two separate PF accounts. These rules will be effective from April 1, 2022.

Finance Minister Nirmala Sitharaman had announced in this year's budget, that PF contribution of more than Rs 2.5 lakh in a fiscal will be taxable. In line with the decision, recently, the Central Board of Direct Taxes (CBDT) notified the rules for taxation of the interest on the excess EPF contributions. What this means is that till FY22, all contributions made in PF accounts so far, including contribution of upto Rs 2.5 lakh made in FY22, will be placed in one account where no tax will be levied as has been the practice with the PF, where contribution, interest, and withdrawal, all are tax free. But another PF account will be opened for each subscriber in FY22, where contribution of over Rs 2.5 lakh made in the current year and subsequent years will be placed. This will taxable account meaning interest earned on this contribution would be subject to applicable tax.