EMPLOYEE PROVIDENT FUND & MISCELLANEOUS

ACT 1952

Abhishek Nagre

Abhisheknagre777@gmail.com

EPF ACT 1952

The Employees' Provident Funds and Miscellaneous Provisions Act, 1952 came into

effect on 4 March 1952

3 schemes come under this

• Employees' Provident Fund Scheme, 1952

• Employees' Deposit Linked Insurance Scheme, 1976

• Employees' Pension Scheme, 1995 (replacing the Employees' Family Pension

Scheme, 1971)

The act came into immideate effect from 14 - 3 - 1952

EMPLOYEES' PROVIDENT FUND ORGANIZATION OF INDIA

• Statutory body of the Government of India under the Ministry of Labor and Employment

• The headquarters of the organization is in New Delhi

• It administers a compulsory contributory Provident Fund Scheme, Pension Scheme and an

Insurance Scheme.

• It is one of the largest social security organizations in the India in terms of the number of

covered beneficiaries and the volume of financial transactions undertaken

• The total assets under management at more than INR 5 lakh crore (US$91 billion) as

of 1 May 2013

• The organization is administered by a Central Board of Trustees, composed of

representatives of the Government of India, provincial governments, employers and

employees

• The board is chaired by the Union Labor Minister of India.

he total assets under management at more than 5 lakh crore (US$91 billion) as of 1 May 201

EPF Organization

Regional Offices headed by Regional P.F. Commissioners

(Grade I)

Regional P.F. Commissioners (Grade II)

Regional Offices headed by Regional P.F. Commissioners

(Grade I)

Additional Central Provident Fund Commissioner

Additional Central Provident Fund Commissioner

Regional P.F. Commissioners (Grade II)

For every political state they have

The states have either one or more than one

which are further sub- divided into Sub-Regions

WHAT IS EPF

The EPF (Employees' Provident Fund) is the most popular investment for salaried

individuals

and is maintained solely by the Employees' Provident Fund Organization of India (EPFO).

RULE :

A part of the employees salary is benefitted to this scheme which can be withdrawn by

the employee in later stages for his purpose – Security , Help during dire circumstances

“As a rule, any company having more than 20 employees has to register

with the EPFO”

Rate of 12 %

Rate of contribution shall be [twelve] per cent in respect of any establishment or class of

establishments which the Central Government may specify in the Official Gazette from time

to time

Contribution as described in law

The contributions payable by the employer under the Scheme shall be at the rate of [ten per

cent] of the [basic wages, dearness allowance (including the cash value of any food

concession) and retaining allowance

CONTRIBUTION RATES SECTION 6

The contribution is made by both Employer and the employee

Employees contribution

The contribution payable by the employee under the Scheme, shall be equal to the contribution

payable by the employer in respect of such employee

Rate of contribution is 10 % usually in the following conditions

• Employees are less than 20

• The units that are declared sick

• Units of Beedi , Jute , Brick , coir

The contributions shall be calculated on the basis of

• Basic wages, dearness allowance (including the cash value of any food concession)

• Retaining allowance

actually drawn during the whole month whether paid on daily, weekly, fortnightly or

monthly basis

Contribution in excess

In case an employee wants to contribute more than 12 % he is allowed to do so but

the employer is not entitled to contribute the extra percentage

CONTRIBUTION COMPULSORY ???

Contribution is compulsory wherein the basic salary is 6500 rupees and

if the basic salary exceeds 6500 rupees then the membership is taken

upon the joint request of the employer and the employee

INTEREST PAID

• The Commissioner shall credit to the account of each member interest at such rate as may be

determined by the Central Government in consultation with the Central Board.

• At current the interest rate is 8.5 %

• Interest shall be credited to the member’s account on monthly running balances basis

PENALTY ON NON PAYMENT 32 A

Where an employer makes default in the payment of any contribution to the fund, or in the transfer of

accumulations required to be transferred by him

Imprisonment depending upon non payment up to 3 years with 10 thousand fine

Period of default Rate of damages

(% of arrears per annum)

Less than two months 17

Two months and above but less than four months 22

Four months and above but less than six months 27

Six months and above 37

COVERAGE

Every establishment which is a factory engaged in any industry mentioned herein, namely,

• cement

• cigarettes

• Electrical

• mechanical or general engineering products

• iron and steel

• paper and textiles (made wholly or in part of cotton or wool or jute or silk, whether natural

or artificial)

be deemed to have come into force, with effect from 2nd day of September, 1952 and which

employees 20 or more persons

EXEMPTIONS SECTION 16

This Act shall not apply

(a) to any establishment registered under the Co- operative Societies Act, 1912 (2 of 1912 ),

(b)to any other establishment belonging to or under the control of the Central Government or a State

Government

(c) to any other establishment newly set up, until the expiry of a period of three years from the date on

which such establishment is, or has been, set up

Right from day one

The act comes in to enactment from the very day of the company's establishment or

commencement of business except some class establishments which are mentioned

under section 16 of the act

Once applied ….

The Act once applied will continue to apply even after the employees number comes

down to below 20

Applicable to cinema theaters that have employed 5 or more than 5 employees

MEMBERSHIP

• Right from the day of establishment

• Membership is offered to employees working part time / full time and

temporary /contractual employees

• Compulsory for people having basic pay of Rs 6500

• If basic pay exceeds Rs 6500 then it is granted by the request from the

employer and the employee

VOLUNTARY COVERAGE

Section 1 [4]

If any company / establishment which does not come under coverage wants to

enroll for the membership it can do so by the consent of the employer and the

consent obtained by the majority of the employees

WHAT DOES ACT COMPLY TO

• Coverage of the possible coverable establishments according to the rules laid down

• Extending membership to all the employees who work in the establishments that get

registered

• Ensuring proper implementation of act and the schemes thereof

REGISTRATION PROCESS

• Upon registration the company / establishment is issued with registration number

or code number

• Issued by the regional provident fund commissioner of the particular region the

establishment belongs to

• Code number is usually issued within 3 days on submission of the requisite

documents

• The members - as in the employees are assigned a separate PF account number

for life long reference

DUTIES OF EMPLOYER

• Enroll all employees including contractual or contracted employees and

hourly rated employees

• Remit contributions and administrative charges before the 15th of the

following month

• Filing of the initial returns form 9

• Monthly returns filing with the help of form 12 A

• Make all records available for the inspection of the authority

• Ensure continuous payment to prevent penalties

BENEFITS OFFERED UNDER SCHEME

Payment of accumulation plus interest on the eve of retirement resignation or death

Partial withdraws are permitted for special purposes

• Financing life insurance policies

• Acquiring house or site

• Marriages of self or dependents

• Education of children

• Treatment of illness

• Purchase of any equipment by physically handicapped persons

• Financial assistance on lockout or discharge of duties