Santosh kumar sharmaUnit-v

EMPLOYEES PROVIDENT FUND AND MISC. PROVISIONS ACT, 1952

TYPES OF PROVIDENT FUND

EMPLOYEE PROVIDENT FUND

• EPF-

PUBLIC PROVIDENT FUND

• PPF-

GENERAL PROVIDENT FUND

• GPF-

Applicability -EPF

This Act is applicable where 20 or more employees are employed but in case of a company concerned with cinema or theatre it is applicable on 5 or more employee

Employee has right to join it from the day he joins but after 58 years he is not permitted to contribute in epf.

Where employees get benefits in the nature of provident fund or old age pension fund from the establishment which are not less favourable than the benefits under the Act

contributionEmployees’ share : 12% of the Basic + DAEmployer’s contribution : 12% to be deposited

as : 8.33% to be deposited in Pension Fund A/C No 10

and the balance, ie, 3.67% to be deposited in

Provident Fund A/C No 01 along with Employees’ share of 12%

Though joot factory, spinning factory, klin, bidis factory employee contribute 10%

The same amount is to be paid by the employer as contribution in EPF

If employer delayed or fault to deposit interest is to be paid by him.

ContributionAdministration charges - @ 1.1% of the total wages/salary disbursed

by deposit to A/C No 02,Employees Deposit Linked Insurance @

0.5% of the total wages/salary by deposit to A/C No. 21 and

Administration of EDLI @ 0.01% of the wages/ salary by deposit to A/C. No. 22.

Incomer tax relaxationMoney deposited in EPF is exempted from

income tax purview under section 80-cIf employee regularly deposit in EPF for 5

years, in the same job or in different jobs, money withdrawal is exempted from income tax

But if money is withdrawal before five years income tax shall be levied

Interest paid on EPFDuring Financial year 2006-07 the Central

Trust Board decided the interest Rate 8.5% but now this has been changed for financial year 2010-2011 to 9.5%.

MembershipAn employee at the time of joining the

employment and getting wages up to Rs.6500/- is required to become a member.

an employee is eligible for membership of fund from the very first date of joining a covered establishment

When money can be withdrawnCan be withdrawn with filling

appropriate forms and after 5 years continuous contribution.

In case of death nominees must intimate the organisation within two months

To purchase land for home construction money equal to 24 months and account must contain Rs,1,000.

For purchasing flats payments equal to 36 months.

Cont..For repairing the house where living from

last 5 years amount equal to one year payment can be withdrawn

To pay loan equal to 36 months pay.For treatment for grievous disease or

surgery, amount equal to 6 months payment can be withdrawn

For marriage of self, sister,son or daughter 50% of the contribution amount can be withdrawn if contribution is made to the fund for continuous 7 years

Points to rememberEmployee should be aware whether

amount for epf is being deducted or notThere is not agent chain in epfSomeone must be nominated if not all the

members of the family shall have the equal amount

If job is changed money can be transferred but if amount exceeds 2000 rupees it shall be transferred in employee bank account

If employee wants to increase the contribution of provident fund it may be by intimating employer

GPF-GENERAL PROV.FUNDAll temporary central employee who

completed one year in service and permanent employee can deposit money in gpf

From 6 to 100 of the basic payment and dearness allowance can be deposited

Annual compoundable interest on GPF is 9.5 %

Usually once can be deposited but it may be twice if amount is large

Money can be withdrawan on resignation,retirement,death dismissal,but not on suspension

PPF-PUBLIC PROVIDENT FUNDStarted in 1968 Money deposited exempted from income

taxConsultant,shopkeepers,freelancers and

even minor can open their account for ppfAccount can be opened in any nationalized

bank or in post offices8% compoundable interest is paidMaturity period is 15 years though it may

be extended to five more years

Cont..Minimum 500 and maximum 70 thousands rupees

annually can be deposited During first five years money can not be withdrawn

from the account but later on once during one financial year money can be withdrawn

But if ppf is for more than 15 years then during extended duration 60% amount can be withdrawn

One person can open one account only, he has two account one shall be closed or only principal amount shall be given no interest

if account if opened in the name of two minor both can deposit 70 thousand each

Money is to be deposited 12 times rather than once

Schemes under the Act Three beneficial schemes-

1.Employees Provident Fund Scheme, 1952

2.Employees Pension Scheme 1995

3.Employees Deposit Linked Insurance

Employees Provident Fund Scheme,1952

Fund – Created under Sec 5 and vested in and administered by the Board created under sec 5A

Contributions to the Fund – Clause 29 : By Employer - 10% of basic, DA and

Retention Allowance – 12% in respect of establishments/class specified by CG

Matching contribution by employeeScheme Applicable to :

All factories and other establishments to which Act applies or is applied – does not apply to Tea Factories in Assam

All employees drawing pay upto Rs 6,500 per month

Employees Provident Fund Scheme,1952

Corpus of the Fund under the Scheme to be deposited with RBI, SBI or any other approved scheduled bank – clause 48, 52

Corpus to be invested as per direction of CG, in securities referred to in Section 20 of Indian Trusts Act – clause 52

Fund cannot be expended for any purpose other than to credit of individual members

Employees Pension Scheme,1995

Pension Fund – Created under Sec 6A and vested in and administered by the Board created under sec 5A

Contributions to the Pension Fund – Clause 3: By Employee – 8.33% of basic, DA and Retention

Allowance – This is a part of the contribution made to the Fund under the EPF Scheme

By CG – 1.16% o the payScheme Applicable to :

All employees of factories and other establishments to which Act applies or is applied in terms thereof

Employees Pension Scheme,1995Scheme to provide for :

Replaces Family Pension Scheme which merges with this scheme

Superannuation pension, retiring pension, disablement

Widow/widower, children or orphan pensionCorpus of the Pension Fund, except the CG

contribution shall be invested as per directions of CG in securities referred to in Section 20 of Indian Trusts Act – clause 26

Cont..Employees Pension Scheme,1995Pension Fund cannot be expended for any

purpose other than payments envisaged in the scheme, i.e. payment of family pension, life assurance benefit and retirement cum withdrawal benefits – clause 27

Employees Deposit Linked Insurance Scheme,1976.

Deposit Linked Insurance Fund – Created under Sec 6C and vested in and administered by the Board created under sec 5A

Contributions to the Insurance Fund : By Employer – 1% of aggregate of basic, DA and

Retention Allowance - Sec 6C(2)Upto 0.25% to meet expenses etc. - Sec 6C(4)(a)

Scheme Applicable to :All employees of establishments to which the Act

applies

Cont..To provide life insurance benefits Investment of funds in the Insurance Fund :

Funds contributed into the Insurance Fund upto 31.3.1997 to be deposited with CG and shall fetch statutory interest @8.5% per annum.

From 1.4.1997- Corpus of the Fund under the scheme to be deposited with RBI,SBI or any other approved scheduled bank and invested as per direction of CG in securities referred to in Section 20 of Indian Trusts Act

Insurance Fund cannot be expended for any purpose other than payment of benefits under the scheme – clause 17(1)

Central Board

o Constituted by notification by CG – sec 5A

o Trustees appointed for a period of 5 years

o To administer the Funds in respect of the Schemes provided by the Act and to effectuate the provisions of the scheme

o Appoint Central Provident Fund Commissioner to act as the CEO of the Board

Composition

o Chairman & Vice Chairmano Not more than 5 persons

from the CG officialso Not more than 15 persons

representing state government

o 10 persons representing the employers of the establishments to which the respective schemes apply

o 10 persons among employees

Powers of Central Government

The Central Board to act through its functionaries such as the the Executive Committee, Central Provident Fund Commissioner (CEO of the Board), Regional Commissioner.

Till the time the Board is constituted the CG shall administer he Fund and may exercise any of the powers and discharge the functions of the Board

Power to give directions Power to make rules Power to remove difficulties

Adjudication Appeal to Tribunal

Any person aggrieved by a notification of the CG or by any order of the CG or any authority (Commissioner) under the Act, can prefer an appeal to a Tribunal

• Penalties & Prosecution Under the Provident Funds Scheme & the

deposit –linked insurance scheme any person who avoids making any payment shall be punished with an imprisonment for a term that may extend to one year and a fine of Rs. 4000.

Under the Employees Pension Scheme any person who is guilty of contravention of or non-compliance of any provision/requirement of the scheme shall be punishable with imprisonment that may extend to one year and with fine that may extend to Rs. 5000/

Duties of employer Employer to furnish information about:

(a) Ownership and names of responsible persons of the establishment.(b) Declaration and nomination.(c) Joining and leaving of service by the members in form 5 and form 10 respectively

(d) Form 12A with monthly challans of deposit.(e) Form 9 for details of employees.(f) Form 3A/6A at the end of the financial year.(g) Any other information as may be required under Para 76 of the scheme

Benefits to employees

benefits

first• Provide

nt• fund

benefits

second

• Pension benefits

third• Death benefits

Provident Fund BenefitsEmployer also contributes to Members’ PF @

3.67% (1.67% in case of sick industry - eg: beedi)

EPFO guarantees the Employer contribution and Govt. gives a decent interest to PF accumulations

Member can withdraw from this accumulations to cater financial exigencies in life - No need to refund unless misused

On resignation, the member can settle the account. i.e., the member gets his PF contribution, Employer Contribution and Interest

Pension Benefits Pension to Member Pension to Family (on death of member) Scheme Certificate

This Certificate shows the service & family details of a member

This is issued if the member has not attained the age of 58 while leaving an establishment and he applies for this certificate

Cont..Member can surrender this certificate while joining

another establishment and the service stated in the certificate is added with the service he is gaining from the new establishment.

After attaining the age of 50 or above, the member can apply for Pension by surrendering this scheme certificate (if total service is at least 10 years)

This is a better choice than Withdrawal Benefit, that if a member dies holding a valid scheme certificate, his family will get pension (Death when NOT in service

Pension benefit-cont..Withdrawal Benefit

if not eligible for pension, member may withdraw the amount accumulated in his pension account

the calculation of this amount is based only on (i) Last average salary and (ii) Service (Not based on actual amount available in Pension Fund Account)

No amount is taken from Member to give Pension to the Member. Employer and Govt. contribute to Pension fund @8.33% and @1.16% respectively

EPFO guarantees pension to members, even if the Employer has not contributed to Pension Fund.

Pension calculation is similar to that of Govt. Employee

Death BenefitsProvident Fund Amount to Family (or to

Nominee) Pension to Family (or to Parent /

Nominee) Capital Return of Pension Insurance (EDLI) amount to Family (or

to Nominee) No amount is taken from Member for this

facility. Employer contributes for this. Nominee is basically determined as per

the information submitted by the member at this office through FORM-2

OfficesNORTHERN REGION: Punjab, Uttar

Pradesh,himachal Pradesh,uttaranchal,haryana,delhi

SOUTHER REGION: Tamilnadu, Andhra Pradesh,kerala, Karnataka

WESTERN REGION: Rajastan, Gujarat,madhya Pradesh,chattisgarh,maharashtra

EASTERN REGION: Orissa,west Bengal,bihar, Jharkhand,north East Region