What is Provident Fund (PF)? The Ultimate Guide to Your UAN, Balance & Withdrawal

This is, without a doubt, the most important financial article I’ve ever written.

Why? Because we’re not just going to talk about some dry, boring government scheme. We’re going to talk about a true story of two friends, a costly mistake, and a pot of gold at the end of a very long rainbow.

If you’ve ever looked at your salary slip, seen that “PF Deduction,” and sighed, thinking it’s just another tax, this one is for you.

That line item isn’t a deduction. It’s a deposit. It’s not your money leaving; it’s your money being sent ahead in time to take care of you when you can’t, or don’t want to, work anymore.

I’m writing this today to demystify the Provident Fund (PF) completely. No jargon, no complicated math. Just a simple story and clear, actionable answers. Let’s begin.

The Tale of Two Colleagues: Ravi and Amit

I want you to meet two of my old friends, Ravi and Amit. They started their first “real” job at the same big tech company, on the same day. Both were smart, ambitious, and excited.

And both got their first payslip.

They both saw the “PF Deduction” of ₹3,600. Amit was annoyed. “Great,” he said. “₹3,600 just vanished. Less money to spend this weekend.” Ravi was curious. “Vanished? Or… gone somewhere? Where does it go?”

That single question, and the actions they took over the next 20 years, defined their financial futures. Amit’s journey was one of frustration and missed opportunities. Ravi’s was a masterclass in patience.

By using their story, I’m going to show you exactly how PF works, how you can become its master, and how you can avoid the simple, devastating mistakes that cost millions of people their retirement.

So, What is this “Provident Fund” Anyway?

Before we get to the numbers, let’s get this straight. The Employees’ Provident Fund (EPF), which is what most of us in the private sector have, is a mandatory retirement savings scheme.

Think of it as a piggy bank you and your boss are forced to put money into every single month. The piggy bank is locked, and the government (through the Employees’ Provident Fund Organisation, or EPFO) holds the key. They also pay you a high rate of interest (currently 8.25% for FY 2024-25) on the money inside.

Here’s the deal:

You pay: 12% of your “Basic Salary + Dearness Allowance (DA)” goes into this pot.
Your employer pays: Your employer also contributes 12%.

This is where Amit got confused. He thought only his ₹3,600 was going in. But Ravi, after digging around, found out the truth. The employer’s 12% is split.

This brings us to the first big question.

How much PF for a 60,000 salary?

This was Ravi’s exact question. His gross salary was ₹60,000. But PF isn’t calculated on the gross salary. It’s calculated on the Basic + Dearness Allowance (DA).

In his company, the Basic+DA was 50% of the gross pay.

Gross Salary: ₹60,000
Basic + DA: ₹30,000 (This is the amount PF is calculated on)

Now, let’s do the math that changed Ravi’s perspective forever.

1. Ravi’s Contribution (The Employee):

12% of ₹30,000 = ₹3,600
This entire amount goes into his EPF account.

2. The Company’s Contribution (The Employer):

12% of ₹30,000 = ₹3,600
This is where it gets interesting. This part is split in two:
- Part A: Employee Pension Scheme (EPS): 8.33% of the Basic+DA goes into your pension fund. BUT, this is capped. The government has a wage ceiling of ₹15,000 for this calculation.
  - So, 8.33% of ₹15,000 = ₹1,250. This amount goes into your EPS (Pension) pot.
- Part B: Employee Provident Fund (EPF): The rest of the employer’s contribution goes into your PF pot.
  - (Total employer share) – (EPS share) = (₹3,600) – (₹1,250) = ₹2,350.

Let’s Review Ravi’s Total Monthly Savings:

From his own pocket: ₹3,600 (into EPF)
From his company: ₹2,350 (into EPF) + ₹1,250 (into EPS/Pension)

Total deposited into his EPF piggy bank each month: ₹3,600 + ₹2,350 = ₹5,950

When Ravi saw this, his jaw dropped. He was only putting in ₹3,600, but his account was growing by ₹5,950 every single month. Plus, a separate pension was being built.

Amit, when shown the math, just shrugged. “It’s still locked money. I’d rather have that ₹5,950 in my pocket now.” This was his first mistake. He failed to see the power of free money and compounding.

How can I check my PF balance?

A year went by. Ravi was diligent. He wanted to see the money. He’d heard about something called a UAN (Universal Account Number).

This is your master key. Your UAN is a 12-digit number that stays with you for life, no matter how many jobs you change. Your first step is to get this UAN from your employer (it’s on your payslip) and activate it on the EPFO Member Portal.

Once Ravi activated his UAN, a world opened up. Here’s how he checked his balance, and how you can, too:

Method 1: The EPFO Member Portal (The Best Way)

Go to the EPFO Member e-Sewa portal.
Log in using your activated UAN and password.
Click on ‘View’ and select ‘Member Passbook’.
You’ll see your Member ID (a different one for each company you work for). Click on the one you want to see.
A detailed, bank-statement-style passbook opens.

When Ravi did this, he didn’t just see his ₹5,950 deposits. He saw a third column: “Interest.” The government had paid him interest on the total, and that interest was also earning interest. This is the magic of compounding.

Method 2: The UMANG App This is the official government super-app.

Download UMANG (Unified Mobile Application for New-age Governance).
Find the “EPFO” service.
Click ‘View Passbook’.
Enter your UAN, get an OTP on your registered mobile number, and voilà. Your passbook is on your phone.

Method 3: The Missed Call Service (Yes, really) This is my personal favorite for a quick check.

You must have your UAN activated and your KYC (like Aadhaar and PAN) linked.
From your registered mobile number, give a missed call to 9966044425.
That’s it. The call will disconnect, and within seconds, you’ll get an SMS with your total PF balance and last contribution.

Method 4: The SMS Service

From your registered mobile number, send an SMS to 7738299899.
The message format is: EPFOHO UAN ENG (where “ENG” is for English. You can use “HIN” for Hindi, “TAM” for Tamil, etc.)
You’ll get an SMS back with your details.

Ravi started checking his balance every six months. It became a high. He’d see the balance jump by thousands and felt a deep sense of security. Amit never activated his UAN. “Too much hassle,” he’d say.

Can I withdraw my PF Online?

Fast forward four years. Amit had switched jobs. He’d been at his new company for about a year. His total service was now 4 years (3 at the first job, 1 at the new one).

He wanted to buy a new, top-of-the-line motorcycle. He didn’t have the down payment. Then he remembered his “stuck money.”

“Can I just take my PF out?” he asked.

Ravi, who had also switched jobs but had been careful to transfer his old PF to his new account, advised against it. “Amit, don’t. It’s for retirement. Plus, I think there are rules.”

But Amit was determined. And the answer to his question was, yes, you absolutely can withdraw your PF online.

The process is deceptively simple if your UAN is active and linked to your Aadhaar and bank KYC:

Log in to the UAN Member Portal.
Go to ‘Online Services’ and select ‘Claim (Form-31, 19, 10C)’.
Verify your bank account details.
Select ‘Proceed for Online Claim’.
Choose the type of claim.
- PF Advance (Form 31): This is for a partial withdrawal while still employed. You need a valid reason: house construction, medical emergency, marriage, education.
- PF Final Settlement (Form 19): This is to withdraw the full PF amount after you’ve left a job (and have been unemployed for 2+ months).
- Pension Withdrawal (Form 10C): This is to withdraw the pension amount (if your service is less than 10 years).

Amit, being unemployed for two months between jobs, was eligible to withdraw his full amount from his first company. He logged in, filled out Form 19, and in about a week, the money was in his account.

He bought the motorcycle. He was happy for a month.

Amit’s Million-Rupee Mistake

What Amit didn’t know, and what Ravi had tried to warn him about, were the tax implications.

The Golden Rule of PF Withdrawal: If you withdraw your PF before completing 5 years of continuous, uninterrupted service, the entire amount (your contribution, your employer’s contribution, and all the interest) becomes TAXABLE in the year of withdrawal.

Amit’s service was only 4 years. The next year, at tax time, he got a massive tax demand. The entire PF withdrawal of over ₹3 lakhs was added to his income, pushing him into a higher tax bracket. He ended up paying nearly ₹90,000 in taxes.

But that wasn’t the worst part. The real tragedy? He had withdrawn the “seed corn.” That ₹3 lakh, if left untouched and compounded at 8% for the next 25 years, would have grown to over ₹20.5 lakhs on its own.

He traded ₹20.5 lakhs of future, tax-free money for a motorcycle that was worth half its price in three years.

Ravi, on the other hand, just transferred his PF. His “5 years of continuous service” clock kept ticking. When he hit the 5-year mark, his entire PF corpus became (and remained) 100% tax-free for life.

The Different “Flavors” of Provident Fund

This whole experience made Ravi a bit of a PF expert. He learned that “PF” isn’t just one thing. When people use the term, they could be referring to one of four different types. It’s crucial you know which one is yours.

What is Statutory Provident Fund (SPF)?

Who is it for? This is the OG of provident funds. It’s for government employees, university staff, and railway employees.
The Law: It’s set up under the Provident Funds Act, 1925.
The Gist: It operates similarly to the EPF but is managed directly by the government for its own employees.

What is Recognized Provident Fund (RPF)?

Who is it for? This is us. This is what Ravi, Amit, and 99% of private-sector employees have.
The Law: It’s governed by the Employees’ Provident Fund & Miscellaneous Provisions Act, 1952.
The Gist: It’s called “Recognized” because the scheme is approved by the Commissioner of Income Tax. This “recognition” is what gives it the magical tax benefits (tax-free contributions, tax-free interest, and tax-free withdrawal after 5 years).

What is Unrecognized Provident Fund (URPF)?

Who is it for? This is a red flag. It’s a PF scheme started by a company that is not approved by the Commissioner of Income Tax. This usually happens in very small companies that don’t meet the 20-employee threshold for the EPF.
The Gist: It’s the worst of all worlds. Your contribution doesn’t get a tax deduction. The employer’s contribution is taxed. And when you withdraw, the entire amount is taxed. If your company has a URPF, be very, very wary.

What is a Public Provident Fund (PPF)?

Now, this one is different. Ravi discovered this in his fifth year of working and it was a game-changer.

Who is it for? Everyone. Salaried people, self-employed people, business owners, students, anyone.
The Law: It’s a government savings scheme, not a pension fund tied to employment.
The Gist: This is a voluntary account you open yourself at a bank or post office.
- You can deposit anywhere from ₹500 to ₹1.5 lakhs per year.
- It has a 15-year lock-in period.
- The interest rate is set by the government (currently 7.1%).
- It’s E-E-E (Exempt-Exempt-Exempt): Your contribution is tax-deductible (under 80C), the interest you earn is 100% tax-free, and the final maturity amount is 100% tax-free.

Ravi, now earning well, started putting ₹1.5 lakhs into a PPF account every year in addition to his mandatory EPF. He was now building two massive, tax-free retirement pots.

What is the minimum pension in PF?

Remember that small slice of the employer’s contribution called EPS (Employee Pension Scheme)? The ₹1,250 per month from Ravi’s example?

For 30 years, that little amount quietly accumulated in Ravi’s pension account. Amit’s, however, was withdrawn (using Form 10C) when he took his money for the motorcycle. He got a small, one-time amount and closed the account.

To be eligible for a lifelong pension from the EPFO, you need two things:

You must be at least 58 years old.
You must have at least 10 years of “pensionable service.”

Ravi, who never withdrew and just kept transferring his PF, easily crossed the 10-year mark. Amit, by withdrawing, reset his clock. He never managed to complete 10 continuous years.

So, when Ravi retires at 58, he will get two things:

His massive, tax-free EPF lump sum (which we’ll see in a second).
A monthly pension for the rest of his life.

The minimum pension in PF is currently ₹1,000 per month, guaranteed by the government. But based on your salary and years of service, it can be much, much higher. Ravi’s pension was calculated to be around ₹7,500/month. It wasn’t a fortune, but it was ₹7,500 more than Amit was getting. It was his “free” money for daily expenses, for life.

The Final Tally: Two Retirements

Let’s fast-forward 35 years. Ravi and Amit are both 58, retiring on the same day, just as they started.

Amit’s Story:

He repeated his mistake. He took another partial withdrawal for his wedding. He took another for a home renovation.
Each withdrawal “solved” a short-term problem but permanently crippled his long-term wealth.
At retirement: His final PF balance is ₹22 lakhs.
His pension: ₹0 (He never completed 10 years of service).
He’s anxious. ₹22 lakhs is not enough to live on for the next 20-30 years.

Ravi’s Story:

He never touched his EPF. Not once. He saw it as sacred.
He dutifully transferred his UAN with every job change.
He let the magic of compounding do its work for 35 years.
At retirement (EPF): His final, 100% tax-free EPF lump sum is ₹1.85 Crores.
At retirement (PPF): His separate, 100% tax-free PPF corpus matured to ₹78 lakhs.
His pension: ₹7,500 per month, for life.

Ravi is relaxed. He is secure. He has a total tax-free corpus of ₹2.63 Crores and a guaranteed monthly income to cover his bills.

Your Story Starts Today

You are reading this article, which means you are already on Ravi’s path. You’re curious. That’s the only-begotten trait you need.

The Provident Fund is not a tax. It’s not “stuck money.” It is the single most powerful, protected, and automated wealth-building tool available to the Indian salaried employee.

Your employer is forced to give you free money every month. The government is forced to protect it and pay you high, compounding interest. All you have to do is the hardest thing of all: Nothing.

Just let it be. Let it grow.

Your first step? Your “Ravi moment”? Go find your UAN. Log in to the portal. Just look at your passbook. Watch your future self’s salary grow, month by month.

I promise you, it’s the best financial high you’ll ever get.

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