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The Employee’s Provident Fund Act
1952
Sanvels Consulting Services I Pvt. Ltd.
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The Employee’s Provident Fund Act 1952
• The Employee’s Provident Funds Act 1952
• Employer role & responsibility
• Employee role & responsibility
• The Employees Pension Scheme 1995
• The Employees Deposit-Linked Insurance Scheme (EDLI) 1976
• List of Forms
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Introduction
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
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The Employee’s Provident Fund Act 1952
Introduction
• 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
Application
• 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
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The Employee’s Provident Fund Act 1952
Eligibility & Entitlement
• 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
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The Employee’s Provident Fund Act 1952
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
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The Employee’s Provident Fund Act 1952
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
• Immediate income tax exemption under Sec 80C of IT Act
• Equal contribution by the employer
• Interest rate is usually higher than the prevailing market 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
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The Employee’s Provident Fund Act 1952
Interest
• 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%
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
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The Employee’s Provident Fund Act 1952
Annual Statement of Account
• 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
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10.
The Employee’s Provident Fund Act 1952
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
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The Employee’s Provident Fund Act 1952
Advances / Withdrawals
• Purchase of site for construction of house / construction of House
/ purchase of flat
• Additions / alterations / improvements to the house
• Repayment of loan
• Hospitalisation 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
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12.
The Employee’s Provident Fund Act 1952
Employer Role & Responsibility
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The Employee’s Provident Fund Act 1952
Monthly Returns
• Filing monthly PF returns with the EPFO within 15 days of the
close of each month
• Provide list of new employees joined in the establishment during
the preceding month & are qualified to become member in fund
(Form-5)
• Provide list of employees leaving service during the preceding
month (Form-10)
• Employer should file 'Nil' returns if there is no new employee or
no employee leaving the service during the preceding month
• Provide the total no. of members last month, new members
joined and existing members resigned in the preceding month &
total no. of present subscribers to be fund
(Form-12A)
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The Employee’s Provident Fund Act 1952
Annual Returns
• Employer shall send to the Commissioner within one month of the
close of the year, a consolidated Annual Contribution Statement
(Form-6A) and individual employee sheet (Form-3A) showing the
contributions made by the employees and employer during the
year
Penalty
• 12–37% interest is payable for the delayed period in remitting
contributions/ administrative charges depending upon the delayed
period
Exemption
• Employer can seek exemption from the Scheme if similar / better
benefits are provided other than the Scheme by forming a
Voluntary PF Trust which will work under the rules & regulations of
EPFO
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The Employee’s Provident Fund Act 1952
Employee Role & Responsibility
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The Employee’s Provident Fund Act 1952
• 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
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17.
The Employees Pension Scheme 1995
Employees Pension Scheme 1995
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The Employees Pension Scheme 1995
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
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The Employees Deposit-Linked Insurance Scheme 1976 (EDLI)
The Employees Deposit-Linked Insurance
Scheme 1976
(EDLI)
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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% Administration charges calculated on total EDLI wages
• EDLI / administration charges are payable by the employer
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The Employees Deposit-Linked Insurance Scheme 1976 (EDLI)
Eligible
• Person who is eligible to receive PF dues of deceased member
who died while in service is only eligible to receive EDLI fund
Exemption
• Employer can seek exemption from the Scheme if similar / better
benefits are provided other than the Scheme with the consent of
majority of employees
(Ex: IJM opted LIC as it is giving death coverage of Rs. 1,60,000/under EDLI instead of Rs. 60,000/- given by EPFO)
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List of Forms
List of Forms
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List of Forms
Forms For Claiming Benefits Under PF Scheme
Form
Purpose
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(revised)
For transferring the PF A/c of a member from one establishment to
another establishment covered under the Act / Scheme
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Application for financing a life insurance policy out of PF A/c
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To be submitted by a member to withdraw his PF dues on leaving
service / retirement / termination
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In the event of death of member, this form is to be used by a
nominee / family member to claim the member's PF accumulation
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To be used by PF members to avail advances / withdrawals as
provided in the scheme
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List of Forms
Forms For Claiming Benefits Under Pension Scheme
Form
Purpose
10 C
For claiming :
- Refund of Employer share
- Withdrawal benefit
- Scheme certificate for retention of membership
10 D
To be submitted by the first claimant i.e.
- member
- widow / widower
- nominee
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List of Forms
Forms For Claiming Benefits Under EDLI Scheme
Form
Purpose
5 (I.F.)
To be submitted by the person eligible to receive the PF A/c dues of
the deceased member who died while in services
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