PF Trusts – An Overview

  • The Employees’ Provident Scheme (1952) came into effect to ensure social security for workers in both the organized and unorganized sectors.
  • The companies have to contribute to the Employees’ Provident Fund Organisation (EPFO) trust towards the EPF fund.
  • But some companies can also manage their own private PF trust if they acquire the exemption from the government.
  • Private PF trusts function according to the same rules as the EPF


  1. Efficient – Members need to pay only 0.18% rather than 1.1% for an administration charge.
  2. Higher returns: It can declare a higher interest rate than the EPF.
  3. Quality service: In terms of customer satisfaction EPFO service is slow and poor. It can provide better service for its members.
  4. Members get 80C Benefit upto Rs. 1.5 lakhs
  5. The interest on private PF trusts is exempt from tax (Subject to 5 years service period withdrawal condition)

Differences when compared to EPFO

  1. EPFO is a central govt. body where as the private trusts are authorized by EPFO
  2. EPFO functions under Ministry of Labour but these trusts function under EPFO
  3. Though the trusts are private, 8.67% of the Employer’s contribution of 12% is allocated to Employees’ Pension Scheme (EPS) which is managed by the EPFO
  4. The private trusts should maintain PF accounts, regularly remit pension contributions of the members to the EPFO, issue annual accounts slips & Submit a periodical report to the EPFO


  • Application to the Government through the jurisdictional Regional PF Commissioner
  • Creation of a board of trustees for the smooth functioning & Governance of the PF scheme

Other Aspects

  • Private PF trusts have to file monthly returns with the EPFO and they are rated by the EPFO based on 6 parameters
  • Contributions received by these trusts is deemed to be a Capital receipt and income in the nature of interest & dividend is also exempt u/s 10(25)(iv)
  • Trusts can invest the contributions either with any LIC Scheme or Investments approved under Rule 67(2) of Income Tax Rules 1962

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