THE EMPLOYEE'S PROVIDENT FUND ACT, 1952

1

Presented By: Priyanaka Sule Priya Mishra

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

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 Act

To every factory engaged in any industry specified in schedule 1 to the act and employing 20 or more persons.

To every other establishment employing 20 or more persons specified but the central government in this behalf.

Any establishment to which the act applies shall continue to be governed but the act even if the number of persons employed therein at any time falls below 20.

Where a factory is closed down for good and only four security men are retained for keeping a watch over the assets and properties of the establishment, 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• Upto 90% of the PF amount can be withdrawn at the age of 54 years or before one year of actual retirement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

1. Let us calculate the contribution of an employee who is getting basic salary of rs.3500 .

Contribution towards Calculation Amount

EPF 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 fund

2.If an employee (having EPF benefit) drawing a salary of 10,000 (Basic + DA) , then what is the calculation for monthly remittance

1) 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

Calculation of employees provident fund

Recovery of moneys

If any dispute arises regarding the applicability of the act to an establishment or as to the amount of money due from any employer under the act or any scheme, the central provident fund commissioner, any additional central provident fund commissioner , any deputy provident fund commissioner, any regional provident fund commissioner, or any assistant provident fund commissioner may decide the same by holding an enquiry.

If a employer pays any contribution or administrative charges for or on behalf of a contractor. Then, he can recover the same from the contractor either by deduction from any amount payable to the contractor under any contract or as a debt payable by the contractor. The contractor can, then recover the employee’s contribution from the wages 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

OFFENCES

If any person, for the purpose of avoiding any payment to be made under the act 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 to RS.5000 or with both.

If any person makes default in complying with any other provision of the act or any condition for exemption from any scheme, he would be published with imprisonment up to six months but which shall not be less than 1 month and with fine up to 5000 Rs or with both.

If any person convicted of an offence under the act or the scheme commits it again, he would be punished with imprisonment up to 5 yrs but which shall not be 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 for the companies and the general masses so that they can easily know the Provident Fund online status which is also at times referred to as Provident Fund online scheme.

• Provident Fund online status is maintained by the Government of India and hence you can blindly rely upon the website that is mentioned below for knowing the Provident Fund online scheme. http://www.epfindia.com/

•Only with one click to this EPFO site, you would be able to get complete info about almost anything related to your Provident Fund account.

•The best thing about this is that you are allowed to interact with the customer service agents who would be able to help you with any of your problems that are related to Provident Fund in some way or the other.

16

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% EDLI Administration charges calculated on total EDLI wages• EDLI / administration charges are payable by the employer

Eligible

• Person who is eligible to receive PF dues of deceased member who died while in service is only eligible to receive EDLI fund

17

Employees Pension Scheme 1995

18

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

19

20

Thank You