information on pf for employer

8/14/2019 Information on PF for Employer

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Information on PF for Employer

By Sunil P. Jagtap


2/25

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Provident Fund

What is Provident Fund?

Ans: PF means Provident Fund. Its like a pension A part of your salary isdeducted every month and deposited in your Provident Fund Account.

If you are working in a private company then the company pays the

same amount as it is deducted from your account and when you leave

the company you can apply and withdraw the amount. It's your

personal saving. If you are a Government employee then you will get

your saved PF of your whole life of your service when you retire.


3/25

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Coverage

Establishments employing 20 or more persons and engaged in any of the 180

industries / Classes of Businesses specified.

Co-operative Societies, employing 50 or more persons & working without the

aid of power.

Establishments not coverable statutorily can come under the coverage of the

Act statutorily.

An establishment continues to be covered under the Act, irrespective of the fall

in the employment strength.

Since the Act applies on its own force to the establishments, the employers are

required to file the particulars in the specified format for registration and

allotment of business number.


4/25

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Financial Obligations: Contributions

Statutory rate of contribution is 12% of emoluments (basic wages, dearness

allowance, cash value of food concession and retaining allowances if any,) in the

case of 175 establishments.

Rate of contribution shall be 10% in the case of the following:Brick, beedi, jute, guar gum factories, coir industry other than spinning sector.

Establishments declared as sick undertakings by BIFR.

A matching contribution is to be collected from the emoluments of the employees.

Out of 12% (or 10% as the case may be) of the employers share of contribution,8.33% is to be remitted towards pension fund.

Employer is also required to pay a contribution of 0.5% of the emoluments towards

EDLIS1976.


5/25

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Financial Obligations:

Administrative Charges

An employer is required to pay administrative charges at 1.10% of emoluments

towards provident fund charges and 0.01% towards EDLI Scheme 1976.

No separate administrative charges for pension scheme


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Financial Obligations:

Inspection Charges

In respect of exempted establishment under P.F. Scheme employer is liable to pay

only inspection charges at the rate of 0.18% of emoluments.

In the case of establishment exempted from EDLI Scheme, the employer is

required to pay only inspection charges at the rate of 0.005% of emoluments.


7/25

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Financial Obligations: Interest Liability

For belated remittances of contributions, administrative / inspection charges interest

at the rate of 12% on such remittances for the period of delay is to be remitted.


8/25

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Financial Obligations: Damages

For all the belated remittances of contribution and administration/inspection

charges damages are also payable as penalty ranging from 17% to 37% p.a.

depending upon delay.


9/25

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Duties of Employer

Enroll all categories of employees including the employees engaged by or throughcontractors and also piece rated, hourly rated employees.

Remit the contributions and administrative charges before the 15th of the followingmonth.

File the initial returns of Form 9, Form 3(P.S.), form 5A.

File the monthly returns in Form 12A, Form 5, Form 10 and Challans for remittingthe dues.

Maintain the contribution card in respect of each employee in Form 3A and submitthe annual returns in Form 3A and 6A after reconciliation with Challans and form12A.

The employer has to ensure that statutory dues in respect of contractorsemployees are remitted and returns filed.

Employer should attest the form No.2 and the claims forms submitted by themember/ legal heirs/ nominees.

Make available all relevant records for inspection of visiting officials with dueauthorization.


10/25

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Exemptions under the Schemes:

Provident Fund

An individual member getting Provident Fund benefits on par with or better thanstatutory provisions can apply for exemption in Form 1 under Para 27.

Employers can apply for exemption in respect of a class of employees gettingsimilar or better benefits than the statutory P.F. Scheme under P. 27A subject tothe conditions governing grant of exemption.

The employer can seek exemption from P.F. Scheme for the entireestablishment if the majority of the employees also consent for exemption,subject to certain conditions governing grant of exemption and certainformalities.


11/25

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Pension Scheme

Employer can avail exemption for the establishment as a whole, with the consent of

majority of employees, if an alternative pension scheme is formulated by the

establishment with benefits either on par with or superior to the EPS 95 and subject

to certification of the viability and long sustenance of the scheme by anindependent qualified actuary and satisfying the other conditions prescribed

governing the grant of exemptions.

There is no provision for exemption of individuals or for class of employees.


12/25

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EDLI Scheme

The establishment can get exemption from the EDLI Scheme, if the employees

therein are entitled for a benefit in the nature of insurance whether linked to their P.F.

deposit or not and without paying any contributions.


13/25

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Members: Eligibility to Membership

a) Employees' Provident Fund Scheme:

Every employee (including part-time workers and those employed by or through

contractors) shall be entitled to become a member of the Scheme from the date ofjoining the factory or the other establishment. (Para 26)

Every excluded employee shall be entitled to become a member from the date he

ceased to be such employee.

Every member of an exempted Provident Fund on joining establishment to whichthe Scheme applies.

Any employee who is not otherwise eligible to become member of the Scheme,

on request by him and his employer.
http://www.epfindia.com/spp.htmhttp://www.epfindia.com/spp.htm


14/25

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Every newspaper employee other than an excluded employee shall be entitled to

become member of the Fund after completion of 3 months continuous service orif he has actually worked for 60 days during 3 months or less (There is no wage

ceiling in the case of newspaper employee). (Para 80)

Every Cine Worker other than an excluded employee shall be entitled to become

a member of the Fund if he has worked in not less than three feature films with

one or more producers provided his pay at the time of joining the Fund does not

exceed Rs. 1600/-P.M or Rs.15,000/- per year. (Para 81).

Note: w.e.f 1-11-90 , an employee is eligible for membership from the very first date

of joining a covered establishment.
http://www.epfindia.com/spp.htmhttp://www.epfindia.com/spp.htm


15/25

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b) Employees' Pension Scheme:

Every employee who became member of the Employees' Provident FundScheme on or after 16-11-95. (Employee who is above the age of 58 on the date

of joining the Employees' Provident Fund Scheme shall not be enrolled).

Every employee who is a member of Employees' Provident Fund Scheme 1952and who has not opted for erstwhile Employees' family pension scheme, mayalso become a member if he opts for Employees' Pension Scheme.

Every employee who was a member of Employees' Provident Fund Scheme andhas left service between 1-4-93 and 15-11-95 can also join the Employees'

Pension Scheme by submission of option. Note: The Employees' Pension Scheme membership will cease from the date

the member attains 58 years of age . However, he will continue to be a memberof Employees' Provident Fund till he leaves the service and withdraws theProvident Fund accumulations.

http://www.epfindia.com/eps95.htmhttp://www.epfindia.com/eps95.htm


16/25

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c) Employees' Deposit Linked Insurance Scheme:

Every employee who become member of the Employees' Provident fund

Scheme/exempted Provident Fund Scheme.

http://www.epfindia.com/edli.htmhttp://www.epfindia.com/edli.htm


17/25

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Administrative Charges

a) Employees' Provident Fund Scheme:1.10% of total wages on which Provident Fund is recovered subject to a minimumof Rs. 5/- shall be payable by the employer every month . Prior to 1.8.98, w.e.f.1.8.98 .65% of total wages

b) Employees' Pension Scheme Scheme:No administrative charges are payable by the employer .The entire cost ofadministration is met by Central Government.

c) Employees' Deposit Linked Insurance Scheme:0.01% of the total on which the Employees' Deposit Linked Insurancecontributions recovered subject to a minimum of Rs. 2/- per month .


18/25

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Inspection Charges


0.18% of the total wages on which Provident Fund is recovered.

b) Employees' Pension Scheme Scheme:

Nil.

c) Employees' Deposit Linked Insurance Scheme:

0.005% of the total wages of the employees who are entitled to become members

of the Employees' Deposit Linked Insurance Scheme subject to a minimum of Re.

1/-


19/25

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Duties of Employer

a) Employees' Provident Fund Scheme (Para 36)and(Para 36A):

Enroll the eligible employees as Employees' Provident Fund subscriber from theright date.

Send initial returns in Form 5A , F9(Revised) , accompanied by F2(Revised),monthly returns in F5, accompanied by F2, F10, F12A accompanied by challansand annual return in F3A accompanied by F6A.

To maintain the inspection note book for an inspector to record his observation.

Maintain such accounts in relation to the amounts contributed to the fund and by hisemployees.

To comply with all the directives issued by the Central Board for properimplementation of the scheme.

Pay to the Fund within 15 days of the close of the month both the shares ofcontribution and administrative charges or inspection charges.


20/25

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Duties of Employer

b) Employees' Pension Scheme Scheme

(Para 20 EPS '95):

There is no need to furnish a separate return by the employers.

Pay to the Fund within 15 days of the month Pension Fund contributions.

c) Employees' Deposit Linked Insurance Scheme

(Para 10):There is no need to furnish a separate return by the employers. Pay to the Fund

within 15 days of the close of the month both the contributions and Administrative

charges or Inspection charges .


21/25

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DO'S FOR A MEMBER:

While joining an establishment, furnish details of previous employment if any, withprevious Provident Fund a/c number and scheme certificate.

In case of existing Provident Fund/ Pension a/c, apply for transfer of previous a/cnumber to the present a/c number.

Ensure that employee furnishes form with details of previous Provident Fund a/cno. to Employees' Provident Fund Organization.

Execute form-2, in details of self, nominee for Provident Fund and pension anddetails of family and see that it is forwarded to Employees' Provident FundOrganization by the employer.

Ensure that particulars furnished are correct in all respects.

Ensure that enrolment to Employees' Provident Fund/ Employees' PensionScheme is done immediately on joining the establishment.


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Provident Fund is deducted at statutory rate from the total wages i.e. basic, D.A.and retaining allowance if any.

If desirous of enhancing rate of contribution, inform the desire with the higher rateopted for to Employees' Provident Fund Organization through employer and allowemployer to deduct at enhanced rate from the wages.

If the wages drawn is more than Rs. 6500/-, intimate your desire to contribute onthe whole amount to Employees' Provident Fund Organization through employer.Employer can also contribute on the whole amount drawn as wages underintimation to Employees' Provident Fund Organization.

Check up periodically with the employer that contribution and other charges arepaid to Employees' Provident Fund Organization and ensure it's correctness by

verifying the form-3A (contribution card) maintained by the employer.

DO'S FOR A MEMBER:


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24/25

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DON'TS FOR A MEMBER:

Don't give false clarification and incorrect particulars to Employer and

Employees Provident Fund Organization.

Don't fall victim to middlemen/ agents. Employees' Provident Fund Organization

does not have any agent.

Don't allow Employer to deduct his own share of contribution or administrative

charges payable by him from the wages.

Don't be a party to misclassified allowances, with a view to avoid payment of

Provident Fund.


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References

http://www.epfindia.com/

http://www.citehr.com/
http://www.epfindia.com/http://www.citehr.com/http://www.citehr.com/http://www.epfindia.com/

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