The Employees’ Provident Fund and Miscellaneous Provisions Act 1952 applies to the Factories engaged in Industries specified in Schedule I of the Act or to other establishments notified and employing 20 or more employees. To facilitate easy compliance by the Big Industries, Micro, Small, and Medium Enterprises (MSME), and other Establishments, EPFO has provided online facilities starting from registering the Establishments, filing of monthly returns integrated with online payment of the contributions and charges. It is mandatory for an employer to apply for an EPF Code number, start depositing monthly contributions, and required e- returns to the EPF Department under the Act well in time, failing which, the employer will stand liable for the damages and consequences thereof.
The Central Government may, by notification in the Official Gazette, frame a Scheme to be called the Employees’ Provident Fund Scheme for the establishment of provident funds under the Act THE EMPLOYEES’ PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT, 1952 for employees or for any class of employees and specify the [establishments] or class of [establishments] to which the said Scheme shall apply [and there shall be established, as soon as may be after the framing of the Scheme, a Fund in accordance with the provisions of the Act THE EMPLOYEES’ PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT, 1952 and the Scheme]. The contribution which shall be paid by the employer to the Fund shall be [Twelve per cent.] of the basic wages, [dearness allowance and retaining allowance (if any)] for the time being payable to each of the employees [(whether employed by him directly or by or through a contractor)], and the employees’ contribution shall be equal to the contribution payable by the employer in respect of him and may, [if any employee so desires, be an amount exceeding [twelve per cent.] of his basic wages, dearness allowance and retaining allowance (if any), subject to the condition that the employer shall not be under an obligation to pay any contribution over and above his contribution payable under this section].
EMPLOYEES’ PROVIDENT FUNDS Scheme 1952 :
Pension Scheme 1995 (EPS) :
Insurance Scheme 1976 (EDLI) :
It covers every establishment where 20 or more persons are employed, and specific organizations are covered, subject to certain conditions and exemptions,, even if they employ less than 20 persons each. The act does not apply to cooperative societies employing less than 50 persons and working without the aid of power. The central government has issued a notification under section 16 (2) of the Act exempting certain establishments which are employing only ex-servicemen and who receive pension benefits as admissible under the Government rules from the operations of the Act for five years with effect from February 08, 1995.
Further Explanation to the EPF Applicability
The Central Government issued a notification by the provisions of section 1 (3) (b) of the Employees’Provident Fund and Miscellaneous Act, 1952,, covering every trading and commercial establishment employing 20 or more persons engaged in the purchase, sale or storage of any goods including establishments of Exporters, Importers, Advertisers, Commission Agents and Brokers, Commodity and Stock Exchanges but not including Banks or Warehouses established under any Central or State Act.
As per the rules, in EPF, an employee whose pay is more than Rs. 15,000 per month at the time of joining is not eligible and is called a non-eligible employee. Employees drawing less than Rs 15000 per month must become members of the EPF. However, an employee who is drawing above the prescribed limit (at present Rs 15,000) can become a member with permission of the Assistant PF Commissioner if he and his employer agree.
EPF Act has been rightly made applicable upon an establishment employing more than 20 employees as per the report of the Enforcement Inspectors,, which was upheld by the designated authority of the PF. It was further held that when the question arises bout the applicability of the Act,. The employer wants to dispute findings of EPF Authority stating the Act is applicable, the employer is a legal custodian of the records and registers about payment of wages of employees and their attendance has to dislodge the findings otherwise the Act will be extended upon the concerned employer. In Shortly says, the employer is responsible for proving the Non-Applicability of the ESI Act.
EPF Registration Only
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EPF and ESI Registrations
Free Advisory on EPF & ESI Applicability and Benefits
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EPF Registration
ESI Registration
Shop and Establishment Registration
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In case a member withdraws his EPF and has rendered less than 5 years of service and accumulated amount is more than Rs. 50,000/, TDS shall be applicable on the following rates:-
| Submission of PAN | Non submission of PAN | No TDS deducted in case of |
|---|---|---|
| If 15G/15H is submitted, no TDS is deducted If 15G/15H is not submitted, TDS deducted at 10% |
TDS is deducted at Maximum Marginal Rate (34.606%) | Transfer of Fund Payment of advance Service is terminated by employer beyond control of employee |
A person who is employed for wages in any kind of work, manual or otherwise, in or in, connection with the work of a establishment covered under the Employees’ Provident Funds & Miscellaneous Provisions Act, 1952, and who gets his 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.
| BY | CONTRIBUTION ACCOUNTS | ADMINISTRATION CHARGES (Employers Only) |
||||
|---|---|---|---|---|---|---|
| To EPF | To EPS | To EDLI | To EPF @@ | To EDLI @@ | ||
| Employee | 12% / 10% | 0 | 0 | 0 | 0 | |
| Employer | Difference of EE share and Pension Contribution |
8.33% | 0.5% | 0.50% [w.e.f. 01-06-2018] |
0 [w.e.f. 01-04-2017] |
|
10% rate is applicable for :
* Contribution is rounded to the nearest rupee for each employee, for the employee share, pension contribution and EDLI contribution. The Employer Share is difference of the EE Share (payable as per statute) and Pension Contribution.
* Monthly payable amount under EPF Administrative charges is rounded to the nearest rupee and a minimum of Rs 500/- is payable. Note:- If the establishment has no contributory member in the month, the minimum administrative charge will be Rs 75/-
* In case Establishment is exempted under PF Scheme, Inspection charges @0.18%, minimum Rs 5/- is payable in place of Admin charges. In case the Establishment is exempted under EDLI Scheme, Inspection charges @ 0.005%, minimum Re 1/- is payable in place of Admin charges.
Notes :
UNDER EPF
>> The contributions are payable on maximum wage ceiling of Rs. 15000/
>> The employee can pay at a higher rate and in such case employer is not under any obligation to pay at such higher rate.
>> To pay contribution on higher wages, a joint request from Employee and employer is required [Para 26(6) of EPF Scheme]. In such case employer has to pay administrative charges on the higher wages (wages above 15000/-).
>> For an International Worker, wage ceiling of 15000/- is not applicable.
UNDER EPS
>> Contribution is payable out of the employer’s share of PF and no contribution is payable by employee.
>> Pension contribution not to be paid:
When an employee crosses 58 years of age and is in service (EPS membership ceases on completion of 58 years). When an EPS pensioner is drawing Reduced Pension and re-joins as an employee.
In both the cases the Pension Contribution @8.33% is to be added to the Employer Share of PF. (Pension contribution is not to be diverted and total employer share goes to the PF). In case an employee, who is not existing EPF/EP member joins on or after 01-09-2014 with wages above Rs 15000/- In these cases the pension contribution part will be added to employee share, EPF.
>> In all other cases Pension Contribution is payable. A member joining after 50 years age, if not a pensioner does not have choice of not getting the Pension Contribution on grounds that he will not complete 10 years of eligible service. The social security cover is applicable till he/she is a member.
>> For International Worker, higher wage ceiling of 15000/- is not applicable from 11-09-2010.
Note : In case an existing EPS member (as on 01-09-2014)whose Pension contribution was paid erstwhile EPS wage ceiling of 6500/- contribution to contribution above Rs 15000/- wage ceiling from 01-09-2014 he will have to give a fresh consent and an amount of 1.16% on wages above 15000/- will have to be contributed by him in pension Fund (A/C No 10) through the employer.
UNDER EDLI
1. Contribution to be paid on up to maximum wage ceiling of 15000/- even if PF is paid on higher wages.
2. Each contribution is to be rounded to nearest rupee. (Example for each employee getting wages above 15000, amount will be 75/-)
3. EDLI contribution to be paid even if member has crossed 58 years age and pension contribution is not payable. This is to be paid as long as the member is in service and PF is being paid.
| S.N. | Para of EPF Scheme 1952 | Purpose | Eligibility | Amount admissible |
|---|---|---|---|---|
| 1. | 62 | Financing of Member’s Life Insurance Policies | A policy in the name of the member. Policy should be legally assigned to CBT (EPF). |
Employees’ share should have sufficient balance to pay the premium. |
| 2. | 68-B, 68-BC,68- BD | Purchase of House/flat, including acquisition of land. | Five years membership of the Fund. Employees’ salary’s more than Rs 1,000/- |
Twenty four months wages & DA or total balance in PF account(Employees’ +Employer) or total cost, whichever is less.
After five years another part withdrawal equal to 12 months wages & DA or employees’ share for addition/alteration. After ten years from the original sanction, another part withdrawal equal to 12 months wages & DA or employees’ share for addition/alteration. |
| 3. | 68-BB | Repayment of housing loan. | Loan should have been taken from notified agencies. 10 years membership of Fund. employees’ share in PF account should be more than Rs 1,000/- | Thirty six months wages & DA or total balance in PF account (employees’ + employer share) or total outstanding loan & interest thereon, whichever is less |
| 4. | 68-BC | Purchase of House/flat, including acquisition of land. | Five years membership of the Fund. employees’ share is more than Rs 20,000/- | Total balance in PF account office member or cost of acquisition, whichever is less. |
| 5. | 68-BD | Purchase of House/flat, including acquisition of land. | Three years membership of the Fund. Member of a registered Cooperative Society. Employees’ share is more than Rs 25,000/- | 90% of PF accumulation (both shares) or cost payable, whichever is less. Employees’ salary’s more than Rs 25,000/- |
| 1. | 68-H | If establishment / factory is closed/locked down | Employee receives no compensation or has not got wages for two months or more. | Upto 100% of employees’ share. |
| 2. | 68HH | If the employee remains unemployed for more than one month | Unemployment should be more than one month | Upto75%oftotalPF balance. |
| 3. | 68-J | Illness of self and family | Hospitalization for more than one month, major illnesses or major surgery. | Basic Wages & DA for six months or employees’ share, whichever is less. |
| 4. | 68-K | Marriage (self ,children ,brother & sister) or post matriculation education of children | Seven years’ membership of fund. employees’ share in PF balance is more than Rs 1,000/- Only three withdrawals allowed. | 50% of employees’ share. |
| 5. | 68-L | Natural calamity | Natural calamity declaration by State Government & proof of damage to property. | not exceeding the basic wages and dearness allowances of that member for three months or up to seventy-five per cent. of the amount standing to his credit in the Fund, whichever is less. |
| 6. | 68-M | Cut in electricity in factory/establishment | Cut in electricity supplied by State Government. | Wages for a month or Rs 300/- or employees’ share, whichever is less. |
| 7. | 68-N | Physically handicapped members for purchase of equipment | On account of physical handicap. | Basic Wages & DA for six months or employees’ share or cost of equipment, whichever is less. |
| 8. | 68-NN | Withdrawal one year before retirement. | Age of member is 54 years and above | 90% of total PF balance |
| 9. | 68-NNN | For investment in Varishta Pension Bima Yojana. | Age of member is 55 years and above | 90% of total PF balance. |