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Employees 'Provident Funds Misc. Provisions Act & The Schemes

1. Eligibility

Every employee including part time worker and those employed by or through contractor is entitled to become member of the scheme from the date of joining the establishment. With effect from 01/09/1997 an employee is eligible for membership from the very first date of joining the establishment.

2.Employee Definition

As defined in Section 2(f) of the Act, means any person who is employee for wages in any kind of work manual or otherwise, in or in connection with the work of an establishment and who gets wages directly or indirectly from the employer and includes any person employed by or through a contractor in or in connection with the work of the establishment.

3. Excluded Employee

Exempted employee means an employee to whom a Scheme or the Insurance Scheme, as the case may be, would, but for the exemption granted under section 17, have applied. However, if the wage of an employee as covered under the Act, exceeds the prescribed ceiling he will be continue to remain covered up to prescribed ceiling. Similarly, if a new employee is drawing more than the prescribed wages but he will not be coverable but if he has never been member of Fund, he will be covered up to the prescribe wage ceiling.Now present wage ceiling of Rs.15000/ basic.

The Employees pension scheme membership will cease from the member attains 58 years of age.However he will continue to be member of Employees provident fund till he leave the services and withdraws the PF accumulations.

4. Basic Wages

"Basic Wages" means emoluments which are earned by employee while on duty or on leave or holidays with wages in either case in accordance with the terms of the contract of employment and which are paid or payable in cash, but does not include:

(A)The cash value of any food concession;
(B)Any cash payment, by whatever named called, paid to an employee on account of a rise in the cost of living, House rent Allowance, Overtime Allowance, Bonus, Commission or any other allowance payable to the employee in respect of employment or of work done in such employment.

5. Applicability

Every establishment which is a factory engaged in any industry specified in Schedule 1 and in which 20 or more persons are employed.

Any other establishment employing 20 or more persons whom Central Government may, by notification, specify in this behalf.

Any establishment employing even less than 20 persons can be covered voluntarily u/s 1(4) of the Act.

5.Benefits

Employees covered enjoy a benefit of Social Security in the form of an unattachable and un withdrawable (except in severely restricted circumstan­ces like buying house, marriage/ education, etc.) financial nest egg to which employees and employers contribute equally throughout the covered persons' employment.

This sum is payable normally on retirement or death. Other Benefits include Employees' Pension Scheme and Employees' Deposit Linked insurance Scheme

6. Penal Provision
Liable to be arrested without warrant being a cognizable offence. Defaults by employer in paying contributions or inspection/admin. charges attract imprisonment up to 3 years and fine up to Rs.10,000 (S.14). For any 15 retrospective applications, all dues have to be paid by employer with damages up to 100% of arrears.

7. Documents to be kept ready at the time of Inspection
1. Inspection/Visit Book
2. Form No.5-A submitted online
3. Bank details-Bank pass book,Branch name,IFSC Code
4. Balance sheet for the period of Inspection
5. Payment position format
6. Specimen signature-Digital
7. Attendance sheet/salary sheet for the period of Inspection

8. Documents required to obtain PF Code-Coverage under PF ActInspection
1. Name of Company
2. Address of company with address proof
3. Date of set up of the Company
4. Company PAN Card
5. Copy of licence, if any
6. Cancelled Cheque of Company
7. List of Directors/ Partners
8. Address proof of Directors/Partners/Proprietor Mail address of Company.
9. Mobile No. of Directors/Partners/Proprietor
10. Digital Signature of Directors/Partners/Proprietor
11. Copy of GST Number
12. Strength of employee
13. Memorandum of Articles of Association
14. Aadhar card of Owner

9. Composite claim form (in case of Death) is required to fill up and sign by claimant and company
1. Original death certificate of Deceased member
2. No break certificate duly filled in and signed
3. Family members photographs of all claimants (spouse & two children below age of 21 yrs) Three copies
4. LSM-Family members details
5. Birth certificate/school leaving certificate and Aadhar card No.of Deceased and all claimants
6. Any one of SBI/ICICI/AXIS/Dena Bank Pass book/cancelled cheque -Bank name & address ,branch code,IFSC Code –for all claimants
7. Address proof of claimant -Elect Bill,Tax receipt
8. Wage register for last three months from date of death
9. Attendance register for last three months from date of death
10. Joint Declaration form in case of change of deceased details

10.Benefits of Social Security-PF
1. Whatever amount (12%) is deducted from the salary of an employee , an equivalent matching amount is deposited by the company with PF Account A/c No.of an employee.
2. Interest is accrue @ 8.65% on the monthly basis on balance amount of PF of an employee
3. After becoming member of PF , UAN No of employee is taken which is a universal Number across the country and wherever employee join their service, the same UAN No is used to deposit amount of PF
5. Employee can access by using his PF Account No. to see the statement of his PF accumulations.
6. If employee change his employment in that case also, employee can continue to deposit the PF amount in the same PF Account No.
7. After leaving the services , if employee do not join another establishment , then in that case after two months of leaving service, he can withdraw the entire accumulation of his PF along with Employer’s contributions.
8. After five years of becoming member of PF ,an employee can withdraw the Advance from his PF accumulations for purchase of house,repairing of house or marriage of children, or education of children
9. After becoming member of PF , if unfortunately employee dies due to sickness or in accident ,his legal heir will get monthly minimum pension of Rs.1000/pm though he has contributed of PF only for one month.If diseased member contributed for long period then amount of monthly pension will be increased automatically.
10. If employee has contributed of PF for 10(ten) years , then he will get pension attaining the age of 58 years and it will continue till he or his wife alive.
11. In case of accident, employee can get pension based on loss of his earning capacity
12. PF amount accumulated/deposited is tax free amount as per section 80 of IT Act
13. Now PF deptt is becoming totally digitization and therefore employee can withdraw his PF Amount through online application ,without the signature of his Employer
14. Government has made it mandatory for all employees whose salary is up to Rs.15000/ pm to become a member of PF and accordingly 12% contribution is deducted from the salary of an employee and company is adding the same amount of PF and deposit with PF Account of an employee.
15. EDLI Insurance benefits(New):
New Calculation of EDLI w.e.f.15/02/2018 in case of death of PF member as follows:- The average monthly wages drawn (subject to a maximum of 15000.00), during the 12 months preceding the month in which he died, multiplied by 30 times plus 50% of the average balance in the account of the deceased in the Fund whichever is less subject to a ceiling of 1,50,000/-: Provided that the assurance benefit shall not be less than 2.5 lac rupees: Provided further that the assurance benefit shall not exceed 06 lac rupees:
Example:
Employee DOJ: 01/01/2018, DOD: 20/02/2018, PF salary:10,000/-
EPF Deduction: 10,000 / 26(working days) x 18 Present Days = 6923.00,
PF contribution @12% 831.00 + Employer share towards EPF @3.67% =254.00 + EPS @8.33% = 577.00 , Total EPF Balance = 1085 + Int.
EDLI calcultaion: 10,000 x 30 = 03 Lacs + 50% of EPF balance i.e.543.00.
EDLI Benefits would be 3,00,543.00 + Pension to widow and child up to 02 children of age up to 25 years + EPF balance.
The said provision shall be in force for first 02 years from 15/02/2018

11. Consequence of Non-compliance
The employer has the primary liability to deduct contribution from the wages of workmen and deposit the same at the PF department along with matching contribution in a prescribed form. Upon non-compliance, the same can be recovered in a manner provided in Section 8B & 8F of the EPF Act, 1952. Moreover, the employer may face penal action for such non-compliance. Thus, there is no escape from complying with the provisions of the Act except to the persons engaged as ‘consultants’.

12. Wage Ceiling
Effective 01/09/2014 ,employee receiving basic wage of Rs.15000/ pm to enroll under PF.

Period

Wage limit per month

01.11.1952 to 31.05.1957

Rs. 300/

01.06.1957 to 30.12.1962

Rs. 500/

31.12.1962 to 10.12.1976

Rs. 1,000/

11.12.1976 to 31.08.1985

Rs. 1,600/

01.09.1985 to 31.10.1990

Rs. 2,500/

01.11.1990 to 30.09.1994

Rs. 3,500/

01.10.1994 to 31.05.2001

Rs. 5,000/

01.06.2001 to 31.08.2014

Rs. 6,500/

01.09.2014 onwards

Rs. 15,000/


13. Rates of contribution

Scheme

Employee’s Employer’s Central Govt’s

PF Scheme

12%

3.67%

Nil

Insurance scheme

Nil

0.50%

Nil

EPS Scheme

Nil

8.33%

1.16%

Scheme

Administrative charges Inspection charges

EPF

0.65% of total wages

0.18% of total wages

EPS

Nil

Nil

EDLI

0.01% of EDLI Wages

0.005% of EDLI Wages


14. Default in payment

Period

Damages Interest

Less than 2 months

5%

12%

2 months and above but less than 4 months

10%

12%

4 months and above but less than 6 months

15%

12%

6 months and above

25%

12%


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