Employees provident fund act 1952

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Employees provident fund act 1952,Detailed Report

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Employees provident fund act 1952

  1. 1. The Employee’s Provident Fund Act 1952 Sanvels Consulting Services I Pvt. Ltd. 1
  2. 2. The Employee’s Provident Fund Act 1952 • The Employee’s Provident Funds Act 1952 • Employer role & responsibility • Employee role & responsibility • The Employees Pension Scheme 1995 • The Employees Deposit-Linked Insurance Scheme (EDLI) 1976 • List of Forms www.sanvelsinfo.com 2
  3. 3. 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 www.sanvelsinfo.com 3
  4. 4. The Employee’s Provident Fund Act 1952 Introduction • 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 Application • Every industry employing 10 or more persons (180 industries are specified in Schedule 1 of the Act) • Every industry employing 10 or more persons which the Central Govt. may notify • Any other establishment notified by the Central Government even if employing less than 10 persons www.sanvelsinfo.com 4
  5. 5. The Employee’s Provident Fund Act 1952 Eligibility & Entitlement • Every employee employed directly / through a contractor who is in receipt of wages are eligible to become a member of the fund (exception - Apprentice under the Apprentices Act and casual laborers) • 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 (upto 100% of basic salary) which will be transferred to his PF A/c www.sanvelsinfo.com 5
  6. 6. The Employee’s Provident Fund Act 1952 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 www.sanvelsinfo.com 6
  7. 7. The Employee’s Provident Fund Act 1952 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 • Immediate income tax exemption under Sec 80C of IT Act • Equal contribution by the employer • Interest rate is usually higher than the prevailing market rate (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 • Totally tax free returns www.sanvelsinfo.com 7
  8. 8. The Employee’s Provident Fund Act 1952 Interest • Interest is credited to the members PF A/c on monthly running balance • Interest rate is fixed by the Central Government in consultation with the Central Board of trustees of EEPF every year during March / April • 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 www.sanvelsinfo.com 8
  9. 9. The Employee’s Provident Fund Act 1952 Annual Statement of Account • After the close of each year of contribution, annual statement of account will be sent to each member through establishment where the member was last employed • The annual statement of fund account will show the opening balance at the beginning of the year, contributions during the year, the amount of interest credited at the end of the period and the closing balance at the end of the year • If any error is noticed in the annual statement, the member shall bring the same to the notice of the PF Office through employer within 6 months from the date of receipt of the statement www.sanvelsinfo.com 9
  10. 10. The Employee’s Provident Fund Act 1952 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 www.sanvelsinfo.com 10
  11. 11. The Employee’s Provident Fund Act 1952 Advances / Withdrawals • Purchase of site for construction of house / construction of House / purchase of flat • Additions / alterations / improvements to the house • Repayment of loan • Hospitalisation 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 • Abnormal conditions like natural calamities • Physically handicapped member for purchasing an equipment to minimize the hardship due to handicap www.sanvelsinfo.com 11
  12. 12. The Employee’s Provident Fund Act 1952 Employer Role & Responsibility 12
  13. 13. The Employee’s Provident Fund Act 1952 Monthly Returns • Filing monthly PF returns with the EPFO within 15 days of the close of each month • Provide list of new employees joined in the establishment during the preceding month & are qualified to become member in fund (Form-5) • Provide list of employees leaving service during the preceding month (Form-10) • Employer should file 'Nil' returns if there is no new employee or no employee leaving the service during the preceding month • Provide the total no. of members last month, new members joined and existing members resigned in the preceding month & total no. of present subscribers to be fund (Form-12A) www.sanvelsinfo.com 13
  14. 14. The Employee’s Provident Fund Act 1952 Annual Returns • Employer shall send to the Commissioner within one month of the close of the year, a consolidated Annual Contribution Statement (Form-6A) and individual employee sheet (Form-3A) showing the contributions made by the employees and employer during the year Penalty • 12–37% interest is payable for the delayed period in remitting contributions/ administrative charges depending upon the delayed period Exemption • Employer can seek exemption from the Scheme if similar / better benefits are provided other than the Scheme by forming a Voluntary PF Trust which will work under the rules & regulations of EPFO 14
  15. 15. The Employee’s Provident Fund Act 1952 Employee Role & Responsibility www.sanvelsinfo.com 15
  16. 16. The Employee’s Provident Fund Act 1952 • Provide details of self & nominees (Form-2) for PF & Pension Scheme at the time of joining the establishment • In case of already having PF A/c, apply for transfer of previous A/c to the present A/c • If willing to increase contribution, inform the same to the employer to deduct the amount from the salary (Voluntary Provident Fund). • Voluntary PF can be upto 100% of wages • Understand that the employer is not liable to pay any contribution on voluntary PF • Periodically verify the details maintained by the employer • Don't allow employer to deduct his share of contribution/ administrative charges payable by him from the wages • Understand that Employees' Provident Fund Organization does not have any agent / middlemen www.sanvelsinfo.com 16
  17. 17. The Employees Pension Scheme 1995 Employees Pension Scheme 1995 17
  18. 18. The Employees Pension Scheme 1995 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 Scheme Eligible • 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 18
  19. 19. The Employees Deposit-Linked Insurance Scheme 1976 (EDLI) The Employees Deposit-Linked Insurance Scheme 1976 (EDLI) 19
  20. 20. The Employees Deposit-Linked Insurance Scheme 1976 (EDLI) 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% Administration charges calculated on total EDLI wages • EDLI / administration charges are payable by the employer www.sanvelsinfo.com 20
  21. 21. The Employees Deposit-Linked Insurance Scheme 1976 (EDLI) Eligible • Person who is eligible to receive PF dues of deceased member who died while in service is only eligible to receive EDLI fund Exemption • Employer can seek exemption from the Scheme if similar / better benefits are provided other than the Scheme with the consent of majority of employees (Ex: IJM opted LIC as it is giving death coverage of Rs. 1,60,000/under EDLI instead of Rs. 60,000/- given by EPFO) www.sanvelsinfo.com 21
  22. 22. List of Forms List of Forms 22
  23. 23. List of Forms Forms For Claiming Benefits Under PF Scheme Form Purpose 13 (revised) For transferring the PF A/c of a member from one establishment to another establishment covered under the Act / Scheme 14 Application for financing a life insurance policy out of PF A/c 19 To be submitted by a member to withdraw his PF dues on leaving service / retirement / termination 20 In the event of death of member, this form is to be used by a nominee / family member to claim the member's PF accumulation 31 To be used by PF members to avail advances / withdrawals as provided in the scheme 23
  24. 24. List of Forms Forms For Claiming Benefits Under Pension Scheme Form Purpose 10 C For claiming : - Refund of Employer share - Withdrawal benefit - Scheme certificate for retention of membership 10 D To be submitted by the first claimant i.e. - member - widow / widower - nominee 24
  25. 25. List of Forms Forms For Claiming Benefits Under EDLI Scheme Form Purpose 5 (I.F.) To be submitted by the person eligible to receive the PF A/c dues of the deceased member who died while in services www.sanvelsinfo.com 25
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