By monika lagwal

cse

.

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

Provident Fund has come into force to give better future to employees on their retirement& his dependants incase 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

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

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

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

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• Upto 90% of the PF amount can be withdrawn at the age of 54 years or before one year of actual retirement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 prevailingmarket 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

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%

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

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 .

Purchase of site for constructionof house / construction ofHouse / 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 Abnormal conditions like natural calamities Physically handicapped member for purchasing an

equipment to minimize the hardship due to handicap

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

Employer shall send to commissioner within one month of close of the year, a consolidated annual contribution statement (Form-6A) and individual employee sheet (Form-3A) showing the contribution made by the employee and the employer during the year

PENALITY: -17-37% interest is payable for the delayed period in remitting contribution/ administration charges depending upon the delayed period

EXEMPTION: -Employer can get the exemption from the scheme if the similar/better benefits are provided other than the scheme by forming a VPF trust which will work under the rule and regulation of EPFO

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