Provident Fund

EMPLOYEES PROVIDENT FUND

Employees’ Provident Fund is a statutory benefit payable to employees working in India. The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (“Act”) is applicable pan-India. The administration and management of Employees’ Provident Fund (EPF) is carried out by the Central Board of Trustees (CBT) established by the Central Government consisting of representatives of the Government, employers and employees respectively. The Employees’ Provident Fund Organization (EPFO) assists this Board in its activities.

EPS 95, also called the Employee Pension Scheme 1995, is a type of social security scheme launched by the Employees’ Provident Fund Organisation (EPFO) on 19th November 1995. The Employee Pension Scheme (EPS) intends to benefit employees post their retirement.

APPLICABILITY OF THE ACT,

Every Establishment which is a Factory engaged in any industry specified in Schedule and in which 20 or more persons are employed. b) Any other establishment employing 20 or more persons or class of such establishment which the Central Govt. may notify in the Official Gazette.

Employees in organizations covered under the EPF Act, with a basic salary up to Rs. 15,000 per month, are eligible for Provident Fund although individuals at any income level can opt for it voluntarily.

SCHEMES UNDER THE ACT,

  1. Employees’ Provident Fund Scheme, 1952: Employees’ Provident Fund Scheme was set up under the Act for the purpose of providing a post retirement benefit for the employees or a class of employees or their legal heirs in case of death, employed under an establishment to which this Act applies.
  2. Employees’ Pension Scheme, 1995: Employees’ Pension Scheme was framed under the Act for the purpose of providing the superannuation pension, retiring pension or permanent total disablement pension to the employees of any establishment or class of establishments to whom this Act applies; and widow or widower’s pension, children pension or orphan pension payable to the beneficiaries of such employees.
  3. Employees’ Deposit-linked Insurance Scheme, 1976: Employees’ Deposit-linked Insurance Scheme (EDLI Scheme) was framed under the Act for the purpose of providing insurance benefits to the employees of an establishment or a class of establishments to whom this Act applies in case of death while in service.

CONTRIBUTION & REMITTANCE

1. Rate of Contribution

Employee: 12% on Basic + DA

Employer: 13% on Basic + DA [(PF-3.67% + 0.50%) + (EDLI-0.5%) + (Pension-8.33%)]

2. Monthly Remittance of Contribution & Return of employees

Remittance of Contribution (PF Challan), for the previous month, on or before 15th of following month

WHO IS NOT ELIGIBLE FOR EPF

If an employee at the time of joining the EPF scheme had a basic salary exceeding Rs 15,000 per month, then they cannot join the EPS. Further, the EPFO circular had clarified that certain employees will not be eligible to opt for higher pension contributions.

BENEFITS OF EPF

The employees covered under the various schemes of the Act are entitled for the following benefits

  1. Employees can take advances or make withdrawals*.
  2. PF amount of a deceased member is payable to the nominees or legal heirs.
  3. The employer not only contributes towards the PF but also makes the necessary contributions towards the employee’s pension which can be used by the employee post-retirement
  4. Under the EDLI Scheme employees are properly insured in order to avail the lump sum benefit at the time of death while in service.
  5. EEE (Exempt, Exempt, Exempt) tax benefit under the Income Tax Act enables tax-free returns for the employees.
  6. Employees receive special benefits in the form of added income to their savings in the form of interest.
  7. PF account can be transferrable if any member changes employment from one establishment to another where such Provident Fund scheme is applicable.
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