EPF, EPS, EDLI & EPFO — Set 19

Correct Answer: D. 9.5% was the highest in 2010-11 and 2011-12

The EPF interest rate was at 9.5% in 2010-11 and 2011-12, which was the highest in recent decades. Post-2012, the rate gradually moderated as global interest rates declined. The rate was 8.65% in 2016-17, then declined to 8.10% in 2021-22 before recovering to 8.25% in 2023-24.

Correct Answer: A. Section 1(4) — voluntary coverage

Section 1(4) of the EPF Act allows any establishment with fewer than 20 employees to voluntarily apply for EPF coverage, with the employer and majority of employees agreeing. Once covered voluntarily, the establishment remains subject to EPF provisions. This provision extends social security to small establishment workers who would otherwise be uncovered.

Correct Answer: B. Amounts are kept indefinitely in inoperative accounts; members can claim anytime

Unclaimed EPF amounts are kept in the member's account indefinitely. EPFO does not transfer unclaimed amounts to the government. However, inoperative accounts (no contributions for 3+ years) stop earning interest. Members or their nominees can claim the amount at any time without a limitation period.

Correct Answer: C. 10 days for offline, 3 days for online claims

EPFO's service delivery standard is to settle online claims within 3 working days and offline/physical claims within 10 working days. Death claims have a target of 7 days. These timelines are monitored by EPFO management and the Ministry of Labour. Achieving these targets requires complete and error-free KYC seeding by members.

Correct Answer: B. Section 10 of EPF Act — EPF funds are not attachable, not liable to assignment

Section 10 of the Employees' Provident Funds Act protects EPF corpus from attachment, attachment, or diversion by courts or creditors. The EPF amount is exclusively for the member's retirement benefit and cannot be used to repay personal loans, court decrees, or other liabilities. Only income tax authorities can claim dues from EPF in certain circumstances.

Correct Answer: C. About 6 industries including textile, cement, cigarettes, electrical equipment, iron and steel

When EPF was first enacted in 1952, it was applicable to about 6 industries including textile mills, cement factories, cigarette manufacturers, electrical equipment, iron and steel, and paper. Over the decades, its scope was progressively expanded to cover virtually all industries and establishments with 20 or more workers.

Correct Answer: B. Employer contribution above Rs 7.5 lakh per year is taxable as perquisite

From FY 2020-21, employer contributions to EPF, NPS, and superannuation fund exceeding Rs 7.5 lakh per year in aggregate are treated as taxable perquisite in the hands of the employee. This change targets high-income executives receiving disproportionately large employer PF contributions. Below Rs 7.5 lakh, the employer's contribution remains tax-free.

Correct Answer: B. Employer digital verification of workers' identity using Aadhaar

EPFO's Parichay portal facilitates Aadhaar-based identity verification of employees by employers during onboarding. It ensures accurate seeding of Aadhaar with UAN right from the time of joining. Correct Aadhaar seeding at the start of employment streamlines all future EPFO services including claim settlement.

Correct Answer: B. EPFO's monthly payroll data informs formal employment tracking

EPFO's monthly payroll data, showing net new formal sector jobs (new EPF subscribers), is a key input for India's national employment tracking. Policymakers use this data to assess the impact of economic policies on formal job creation. EPFO thus serves a data and analytics function beyond its core social security mandate.

Correct Answer: B. Allowed after 7 years of membership for higher education of children

EPF members can withdraw up to 50% of their own EPF contributions for higher education of children (post-matriculation) after completing 7 years of EPF membership. This provision recognises the high cost of higher education and allows workers to use retirement savings for their children's education without full withdrawal. The advance can be availed a maximum of 3 times.