EE balance means, Employee PF contributions. It's a tax-deductible expense for your business. What does this mean? It means that if you're not taking advantage of the Employee PF deduction. Then you're missing out on an opportunity to reduce taxable income and save money with your company's tax bill. What is ee balance? This provides you balances in any one of three different modes: Balance Summary, Payroll Details, or Contributions History. The world of work has changed a lot over the past few years and PF is one way that employers can help their employees take care of themselves and their families. To be eligible, you have to have been working for the same employer for 5 years or more, and your total contributions cannot exceed 12% of your salary. Companies also have to contribute 1/12 of the employee's salary every month. They had published & contributed as per the decided rates by an independent agent each year. The contribution rate for employees is 8% while the same for employers is 16%. What is Employee PF? The Employee Provident Fund is a retirement savings plan for Indian citizens. Government made compulsory for PF contribution. Employees deposit the fund for the general Indian Government agencies or organizations that employ more than 20 people. Employee PF Have Multiple types of withdrawals The following are the different types of withdrawals: Withdrawal before five years of continuous employment This is applicable if an employee has been working at his job for less than five years. He will not have to pay any penalty and will be able to withdraw 100% of his contributions (employee + employer) within 15 days after leaving the company. However, these funds will not earn interest like they would if they were left in the account. If he were to leave this money in the account until retirement, it could potentially increase tenfold or more! And who wouldn't want 10x return on their investments? Voluntary withdrawal before maturity This type of withdrawal is available to all employees. An employee can withdraw some or all of his PF balance (employee + employer) after two months of employment and before he turns 55 years old. You can withdraw till 10 times of the total amount as Penalty will be imposed on the total amount withdrawn which is equal to 10 times the amount being withdrawn from the account. So if you have been working for 5 years, want to leave your job, and have a balance in your Employee Provident Fund account of Rs 1 lakh, 10% deduction i.e Rs 10,000 will be made from this amount leaving you with a sum of Rs 90,000 in your account. Voluntary withdrawal after five continuous years Any withdrawals made after five years of continuous employment will be tax free. Voluntary withdrawal before the age of 58 If an employee retires prior to reaching the age of 58, he can withdraw 100% of his funds from the Employee PF account as long as it does not exceed Rs 20 lakhs. A sum of 20 lakhs rupees is taken by a person who is under the age of the age of 58. In the end, the remaining 60% the amount will be tax-free and the remaining 40 percent will be taxed as per the tax rate for income. Withdrawal on becoming incapacitated This can be done if an individual becomes totally and permanently incapacitated and is unable to earn a living by himself/herself any longer. In this case, 60% of the withdrawn amount will be tax free. Being unemployed for 2 months or more to Withdraw Any individual cannot find suitable employment after completing his graduation, post graduation, etc. Eligibility of this withdrawal, After two months from the time he/she last received any income. Death If an employee dies and has contributed to his PF account, all money (employee + employer) in the account will be paid to the nominee. If there is no nominee, it will ultimately go to the legal heirs of this person. Employee PF contributions calculation? How they fluctuate over time as someone works at their job for various lengths of time? The Employee PF contributions and subsequent interest earned on these contributions depend on the type of job someone has and how long they have been working at the same company. The following is a table showing how much one needs to contribute based on their monthly income: Monthly Income EmployeesWho Are Contributing (In Rs)Employees Who Aren't Contributing (In Rs)Less than or equal to 1,200No contributionNo contributionGreater than 1,200 and less than 2,4004% of the amount in excess of Rs 1,2003% of salary Greater than 2,400Less than or equal to 5,0009% of salary6% of salaryAmount in Excess Of Rs 5,00012% of salary9% of salaryTable of Employee PF contributions Differences between how contributions to Employees Provident Fund and Public Provident Fund fluctuate over time as someone works at their job for various lengths of time There are several main differences between PF and PPF:- Employees provident fund is a form of savings made by companies, where as public provident fund only citizens can contribute. Employees provident fund accumulates interest monthly whereas PPF accumulates interest annually -one cannot withdraw from employees provident fund after joining a new company. But one can withdraw from PPF after a certain period of time -the minimum contribution to an employees provident fund is Rs 1,200 per month compared to 500 rupees for public Provident Fund. Conditions under which withdrawals are permitted from Employees Provident Fund and Public Provident Fund accounts A withdrawal can be made if there is proof of financial hardship, the purchase of any property (house/flat), repayment of house/educational loans or marriage purposes. If withdrawing on account of financial hardship then it must not exceed more than 50% of the amount in the savings account. Why should employees contribute to their PF? There are many reasons why people should contribute to their PF. One of them is that it allows people to build up assets that can grow considerably over time. In addition, it provides for a retirement plan that does not depend on social security benefits or pensions. Another reason is that it helps improve financial stability and quality of life in old age. It also improves the chances of financial independence, which is important for mental health and general wellbeing. How much should you contribute to your account each month? The amount that you contribute to your account each month will vary depending on what your employer sets as the monthly contribution. The average contribution rate is 15% of the gross pay. "Gross pay" is the total amount that you are earning before any deductions are taken out. Most employers adjust their employees' gross monthly income for taxes, health care, and other benefits. How do I make contributions through my company's HR portal or website? If you are interested in the idea of contributing to your company's retirement plan, there are many different ways to do so. You can log into your company's HR portal and check out the different plans that they offer. If your company offers a match for contributions, then this is an option that you may want to consider. Here are some tips for saving and investing money in the future with a good retirement plan: Plan ahead - start nowPay yourself firstSave small amountsInvest wisely What are some of the benefits of contributing to an employee PF account (e.g., tax benefits, matching funds)? Contributing to an employee PF account (e.g., tax benefits, matching funds) will give you a chance at increasing your retirement savings. Another benefit of contributing to an employee PF account is that it could potentially reduce the taxes that you owe. What happens if I don't contribute to my Employee PF Account? Many companies today offer their employees the option of setting up a retirement account. Employees typically have to contribute regularly so that they can avoid paying income taxes on the money that was saved into the account. What happens if I don’t contribute to my Employee PF Account? This blog post will enlighten you on some of the consequences of not contributing your contributions to your company’s retirement account. Final Words Contributing to an employee PF account is a great way for employers to show their appreciation and support. It also provides employees with the opportunity to save for retirement in a tax-advantaged manner, while receiving matching funds from their employer. This type of contribution can be surprisingly affordable when factoring in how much it could cost them over time if they had saved on their own! You may have some questions about implementing this or want help determining what amount you should contribute each year - give us a call today so we can provide answers and get started planning your next strategy together.