PF, Provident fundPf master
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EMPLOYEE PROVIDENT FUND CONCEPT & COMPLIANCE Abhipsa Mishra Corporate Coach, Content Developer & Columnist [email protected]
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Transcript of PF, Provident fundPf master
EMPLOYEE PROVIDENT FUNDCONCEPT & COMPLIANCE
Abhipsa MishraCorporate Coach, Content Developer & Columnist
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
Contd..
• 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
Who can apply?
• 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
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
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
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
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
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
Advances / Withdrawals• Purchase of site for construction of house / construction of House /
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
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
• 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
