THE EMPLOYEES PROVIDENT FUND ACT, 1952 Presented By: Priyanaka Sule Priya Mishra 1
Introduction Salary consists of two parts i.e. earnings & deductions Provident Fund is one of the statutory deduction done by the employer at the time of salary payment Provident Fund is governed by the Employee’s Provident Fund Act 1952 2
Introduction to EPF• Provident Fund has come into force to give better future to employees on their retirement & his dependants in case of his death during employment• The Employees Provident Funds Act 1952 is compulsory contributory fund for the future of an employee after retirement or for his dependents in case of his early death• Act is applicable to all states of India except Jammu and Kashmir 3
Applicability of the ActTo every factory engaged in any industry specified in schedule 1 to the actand employing 20 or more persons.To every other establishment employing 20 or more persons specified but thecentral government in this behalf.Any establishment to which the act applies shall continue to be governed butthe act even if the number of persons employed therein at any time falls below20.Where a factory is closed down for good and only four security men areretained for keeping a watch over the assets and properties of theestablishment, the act would not continue to be applicable to the factory.
Eligibility & Entitlement• Every employee employed directly / through a contractor who is in receipt of wages are eligible to become a member of the fund• Irrespective of permanent / probationary employees, all employees are eligible for joining the PF scheme from the date of joining the service• Minimum 10% of the basic pay for establishments employed less than 10 persons; sick industries declared by necessary authority; Jute, Beedi , Brick, Coir & Guar Gum Industries / Factories• Other industries maximum 12% of the basic pay• A member can contribute voluntarily more than statutorily prescribed rate (up to 100% of basic salary) which will be transferred to his PF A/c 5
Benefits• Employees can take advances / withdraw the PF in case of retirement, medical care, housing, family obligation, education of children & financing of life Insurance Polices• Upto 90% of the PF amount can be withdrawn at the age of 54 years or before one year of actual retirement• PF amount of the deceased member is payable to nominees / legal heirs• Equal contribution by the employer• present interest rate @ 8.5%• PF A/c can be transferred if any member changes from one establishment to other where the PF Scheme is applicable 6
Calculation• 12% contribution by the employee is directly transferred to his Provident Fund A/c• 12% is contributed by the employer out of which 8.33% is credited to Employee Pension Fund and the balance 3.67% is transferred to PF A/c of the employee• 1.10% Administration charges on total wages are payable by the employer• 0.50% EDLI calculated on total EDLI slab (Rs. 6500) wages and payable by the employer towards EDLI fund• 0.01% EDLI Administration charges calculated on total EDLI slab wages are payable by the employer 7
Calculation of employees provident fund1. Let us calculate the contribution of an employee who is getting basicsalary of rs.3500 .Contribution towards Calculation AmountEPF Employees share 3500*12% 420EPS Employer share 3500*8.33% 292EPF Employer Share 3500*3.67% 128EDLI Charges 3500*0.5% 17.5EPF Admin Charges 3500*1.1% 38.5EDLI Admin Charges 3500*0.01% 0.35(round up to rs.1)
Calculation of employees provident fund2.If an employee (having EPF benefit) drawing a salary of 10,000(Basic + DA) , then what is the calculation for monthly remittance1) Employee Contribution (12% of 10000) : 1,200.002) Employer Contribution- Pension (8.33 %) : 541.00 (limited to 6500 )3) Employer Contribution-PF (balance ) : 659.00 ( 1200 - 541 )TOTAL : 2,400.00
Recovery of moneysIf any dispute arises regarding the applicabilityof the act to an establishment or as to the amountof money due from any employer under the act or anyscheme, the central provident fund commissioner, anyadditional central provident fund commissioner , anydeputy provident fund commissioner, any regional providentfund commissioner, or any assistant provident fund commissionermay decide the same by holding an enquiry.If a employer pays any contribution or administrative charges for oron behalf of a contractor. Then, he can recover the same from thecontractor either by deduction from any amount payable to thecontractor under any contract or as a debt payable by the contractor.The contractor can, then recover the employee’s contribution from thewages of the employee.
Interest• Interest is credited to the members PF A/c on monthly running balance.• The present rate of interest is 8.5%Nomination• The member can nominate other person / persons to receive the Fund amount in the event of his death.• The nomination details provided by the members are maintained at the Regional Provident Fund Office for use in the event of death of the member. 11
OFFENCESIf any person, for the purpose of avoiding any payment to be made under theact or the scheme, knowingly makes any false statement or false representation,he would be punished with imprisonment up to one year, or with fine up toRS.5000 or with both.If any person makes default in complying with any other provision of the act orany condition for exemption from any scheme, he would be published withimprisonment up to six months but which shall not be less than 1 month and withfine up to 5000 Rs or with both.If any person convicted of an offence under the act or the scheme commits itagain, he would be punished with imprisonment up to 5 yrs but which shall notbe less than two yrs, plus fine up to Rs. 25,000 s.14 and 14(AA).
Advances / Withdrawals• Purchase of site for construction of House / purchase of flat• Additions / alterations / improvements to the house• Repayment of loan• Hospitalization for more than a month / major surgical operation / suffering from TB, Leprosy, Paralysis, Cancer, Heart ailment etc• Marriage of self / son / daughter / sister / brother• Education of son / daughter• Physically handicapped member for purchasing an equipment to minimize the hardship due to handicap 13
Full Settlement• PF A/c settled immediately under the circumstances; – Retirement after 58 years – Retirement on account of permanent incapacity – Termination of service on retrenchment – Voluntary Retirement Scheme (VRS) – Permanent migration from India to settle abroad / taking employment – For female members leaving service for getting married• PF A/c settled after two months under the circumstances; – Resignation from the services 14
Online Provident Fund• Provident Fund online payment has been devised forthe companies and the general masses so that they caneasily know the Provident Fund online status which is also at times referredto as Provident Fund online scheme.• Provident Fund online status is maintained by the Government of India andhence you can blindly rely upon the website that is mentioned below forknowing the Provident Fund online scheme. http://www.epfindia.com/•Only with one click to this EPFO site, you would be able to get completeinfo about almost anything related to your Provident Fund account.•The best thing about this is that you are allowed to interact with thecustomer service agents who would be able to help you with any of yourproblems that are related to Provident Fund in some way or the other.
The Employees Deposit-Linked Insurance Scheme 1976 (EDLI) 16
Application• EDLI scheme is compulsory for all the existing members who become members of the PF Scheme.• Life insurance benefit (death coverage) of the employee is available under this scheme while in service.Calculation• EDLI is calculated on EDLI slab – Rs. 6500/-• 0.50% EDLI calculated on total EDLI slab (Rs. 6500) wages and transferred to EDLI fund• 0.01% EDLI Administration charges calculated on total EDLI wages• EDLI / administration charges are payable by the employerEligible• Person who is eligible to receive PF dues of deceased member who died while in service is only eligible to receive EDLI fund 17
Introduction To give long term protection / financial security to employee upon retirement and his family in case of his pre-mature death, family pension scheme has come into force by diverting 8.33% contribution made by employer towards PF scheme.Application Scheme is compulsory for all the existing members who become members of the Employees Provident Fund SchemeEligible Monthly pension to employees on retirement Widows on death of the member Children of the member below 25 years age Monthly pension to members upon permanent total disablement during service 19