Dear friends
Few Points which covers all aspects under PF Act.
Employees covered under the scheme - As per section 2(f), “employee” means any person who is employed for wages in any kind of work, manual or otherwise, in or in connection with the work of an establishment, and who gets his wages directly or indirectly from the employer. It includes any person - (i) employed by or through a contractor in or in connection with the work of the establishment (ii) engaged as an apprentice, not being an apprentice engaged under the Apprentices Act, 1961 or under the standing orders of the establishment.
Thus, (a) Persons employed through contractor in connection with work of establishment are covered (b) Apprentices employed under Apprentices Act or under standing orders of establishment are excluded, i.e. they are not employees. [The model standing orders merely state that an ‘apprentice’ is a learner who is paid an allowance during the period of his training].
Non-Eligible employees under PF - * Employee whose ‘pay’ is more than Rs. 6,500 per month are not eligible. (It may be noted that limit of pay was Rs 5,000 upto 31.5.2001 and Rs. 3,500 upto 30th Sept., 94) * Apprentices as per certified standing orders or under Apprentices Act * Casual employees. However, employees employed through contractors have also to be covered under PF.
Employee to become member of Fund immediately on joining – Every employee employed in or in connection with work of a factory or establishment to which the Act applies is entitled and required to become member of Provident Fund, unless he is an excluded employee. [para 26(1) of EPF Scheme]. An employee who is drawing ‘pay’ above prescribed limit (presently Rs 6,500) can become member with permission of Assistant PF Commissioner, if he and his employer agree. [para 26(6) of EPF Scheme].
Contribution by employer and employee - As per section 2(c) “contribution” means a contribution payable in respect of a member under a Scheme or the contribution payable in respect of an employee to whom the Insurance Scheme applies.
As per section 6, contribution shall be paid by employer @ 10% of basic wages plus dearness allowance plus retaining allowance. This amount is defined as ‘pay’ as per explanation to para 2(f)(ii) of EPF Scheme.
Equal contribution is payable by employee also. This contribution can be increased to 12% by Central Government and in fact, has been increased to 12% in most of the cases.
A person who is already a member continues to be a ‘member’ even if his ‘pay’ exceeds Rs 6,500. However, the contribution is limited to Rs 6,500 only. [para 26A(2) of EPF Scheme].
RPFC is liable under Consumer Protection Act - The Regional Provident Fund Commissioner is providing service under the Act and hence he is liable under Consumer Protection Act. - RPFC v. Shiv Kumar Joshi (1996) 4 CTJ 805 = 1996 LLR 641 (NCDRC 5 member bench) - confirmed in RPFC v. Shiv Kumar Joshi 1999 AIR SCW 4456 = 1999(7) SCALE 453 = 2000 LLR 217 = AIR 2000 SC 331 = 99 Comp Cas 347 = (2000) CLA-BL Supp 26 = 24 SCL 46 (SC).
Employees Provident Fund Scheme - This is the main scheme under the Act. Both employer and employee have to pay contribution to Provident Fund. The employer has to deduct contribution of employee from the salary of employee and has to pay both employees’ contribution as well as employer’s contribution by a challan in prescribed form. The amount has to be paid in approved bank.
Employee can pay higher contribution - Employee has to contribute 12/10% of his 'pay' as contribution. The employee can voluntarily pay higher contribution above the statutory rate. However, employer does not have to match the voluntary contribution, over and above the statutory rate. [para 26(2) of EPF Scheme].
Contribution payable under PF Scheme - The Principal Employer is liable to pay contribution of his own employees as well as employees employed through contractor. Principal Employer can recover from contractor the amount paid by him on behalf of contractor. The contribution is 12% of ‘pay’ i.e. basic wages, plus dearness allowance, cash value of food concession and retaining allowance. Contribution of both employer and employee is same i.e. 12% each. [para 29 of EPF Scheme].
Employer has to pay his contribution to EPF. He cannot deduct his contribution from wages of the employee. [Para 31 of EPF Scheme]. However, he has to deduct employee’s share from his salary and pay the same in EPF scheme. This deduction can be only from the wages pertaining to period for which contribution is paid. However, if there is accidental omission, the amount can be recovered later. Amount deducted from salary of employees is held in trust by the employer or contractor. [Para 32 of EPF Scheme].
Out of employer’s contribution of 12/10%, the Employer’s contribution of 8.33% will be diverted to Employees’ Pension Scheme. The balance will be retained in the EPF scheme. Thus, on retirement, the employee will get his full share plus the balance of Employer’s share retained to his credit in EPF account. [This diversion is only w.e.f. 16th November, 95. Earlier Employer’s contribution to their credit will continue to remain to their credit].
Lower contribution in certain cases - The employer's and employee’s contribution is 12% each. This is applicable to many of industries and establishments. However, this contribution is not applicable to - * any establishment employing less than 20 persons * any establishment registered with Board for Industrial and Financial Reconstruction (BIFR) as a sick company - the lower rate of contribution continues till its net worth is positive * any other establishment which has accumulated loss equal to or more than its assets and has also suffered cash loss in last two years. * Jute industry * Beedi industry * Brick industry * Coir industry other than the spinning sector * Guar gum factories. In these cases, the contribution is 10%.
Interest on account – PF Commissioner shall maintain account of each member of EPF scheme. [Para 59 of Scheme]. Interest is credited to the account of employee. The Interest is calculated on monthly running balance basis. Amount standing to credit at end of the month is considered for calculation of interest for the following month. The interest rate is declared every year by Central Government in consultation with Central Board of Trustees of Provident Fund. [Para 60 of EPF Scheme].
Employees’ Pension Scheme - This scheme has been introduced w.e.f. 16th November, 95. The Scheme is applicable to all subscribers of Employers’ Provident Fund. It is also compulsory to persons who were subscribers as on 16.11.95.
Contribution - The employer’s contribution of 8.33% will be diverted to the fund of Pension Scheme. Employee does not have to make any contribution. Employer’s contribution is 12%/ 10%. In such cases, 8.33% is diverted to Pension scheme and balance 1.67%/3.67% as the case may be, will be in credit of employee’s name in Provident Fund account. The 8.33% is on maximum salary of Rs. 6,500. If some employers are paying contribution on salary in excess of Rs. 6,500, the excess contribution will be credited to Provident Fund account and not to Pension scheme.
No separate administration charges or inspection charges are payable, as these are already paid along with Provident Fund contribution.
Benefits under the scheme - Members will get pension on superannuation or retirement from service and upon disablement during employment. Family pension will be available to widow/widower for life or till he/she remarries. In addition, children will be entitled to pension, upto 25 years of their age. In case of orphans, pension at enhanced rate is available upon death of widow/widower or ceasing payment of widow pension. Benefit of pension to children or orphan is only restricted for two children/orphans.
If the person is unmarried or has no family, pension is available to nominee for a specified period.
Commutation of Pension - The member can commute 33.33% of the pension, so as to receive hundred times the monthly pension so commuted as commuted value of pension. Balance will be paid on monthly basis.
Employees Deposit Linked Insurance Scheme - The purpose of the scheme is to provide life insurance benefits to employees who are already covered under PF/FPF. The employer has pay contribution equal to 0.50% of the total wages of employees In addition, administrative charges of 0.1% of total wages. [Notification No. AO 503(E) dated 28-7-1976 issued u/s 6C(2) of PF Act].
The employee does not contribute any amount to the scheme. The salary limit for coverage of employees is same as that of Provident Fund.
Exemption from the scheme can be obtained from RPFC if LIC Group Gratuity scheme is adopted by employer. If exemption is granted, only inspection charges @ 0.005% are payable to PF authorities.
Benefit to nominee of employee - If an employee dies during employment, his nominee or family member gets an amount equal to average balance in the Provident Fund Account of the deceased employee during last 12 months. If such balance is more than Rs. 35,000, the insurance amount payable is Rs. 35,000 plus 25% of the amount in excess of Rs. 35,000, subject to overall limit of Rs. 60,000. If the employees are covered under another life insurance scheme whose benefits are better than this scheme, an exemption from this scheme can be obtained. [Increased to 35,000 and 60,000 w.e.f. 13.6.2000]
Regards
Arun K Mishra[/quote]
From India, Bahadurgarh
47Few Points which covers all aspects under PF Act.
Employees covered under the scheme - As per section 2(f), “employee” means any person who is employed for wages in any kind of work, manual or otherwise, in or in connection with the work of an establishment, and who gets his wages directly or indirectly from the employer. It includes any person - (i) employed by or through a contractor in or in connection with the work of the establishment (ii) engaged as an apprentice, not being an apprentice engaged under the Apprentices Act, 1961 or under the standing orders of the establishment.
Thus, (a) Persons employed through contractor in connection with work of establishment are covered (b) Apprentices employed under Apprentices Act or under standing orders of establishment are excluded, i.e. they are not employees. [The model standing orders merely state that an ‘apprentice’ is a learner who is paid an allowance during the period of his training].
Non-Eligible employees under PF - * Employee whose ‘pay’ is more than Rs. 6,500 per month are not eligible. (It may be noted that limit of pay was Rs 5,000 upto 31.5.2001 and Rs. 3,500 upto 30th Sept., 94) * Apprentices as per certified standing orders or under Apprentices Act * Casual employees. However, employees employed through contractors have also to be covered under PF.
Employee to become member of Fund immediately on joining – Every employee employed in or in connection with work of a factory or establishment to which the Act applies is entitled and required to become member of Provident Fund, unless he is an excluded employee. [para 26(1) of EPF Scheme]. An employee who is drawing ‘pay’ above prescribed limit (presently Rs 6,500) can become member with permission of Assistant PF Commissioner, if he and his employer agree. [para 26(6) of EPF Scheme].
Contribution by employer and employee - As per section 2(c) “contribution” means a contribution payable in respect of a member under a Scheme or the contribution payable in respect of an employee to whom the Insurance Scheme applies.
As per section 6, contribution shall be paid by employer @ 10% of basic wages plus dearness allowance plus retaining allowance. This amount is defined as ‘pay’ as per explanation to para 2(f)(ii) of EPF Scheme.
Equal contribution is payable by employee also. This contribution can be increased to 12% by Central Government and in fact, has been increased to 12% in most of the cases.
A person who is already a member continues to be a ‘member’ even if his ‘pay’ exceeds Rs 6,500. However, the contribution is limited to Rs 6,500 only. [para 26A(2) of EPF Scheme].
RPFC is liable under Consumer Protection Act - The Regional Provident Fund Commissioner is providing service under the Act and hence he is liable under Consumer Protection Act. - RPFC v. Shiv Kumar Joshi (1996) 4 CTJ 805 = 1996 LLR 641 (NCDRC 5 member bench) - confirmed in RPFC v. Shiv Kumar Joshi 1999 AIR SCW 4456 = 1999(7) SCALE 453 = 2000 LLR 217 = AIR 2000 SC 331 = 99 Comp Cas 347 = (2000) CLA-BL Supp 26 = 24 SCL 46 (SC).
Employees Provident Fund Scheme - This is the main scheme under the Act. Both employer and employee have to pay contribution to Provident Fund. The employer has to deduct contribution of employee from the salary of employee and has to pay both employees’ contribution as well as employer’s contribution by a challan in prescribed form. The amount has to be paid in approved bank.
Employee can pay higher contribution - Employee has to contribute 12/10% of his 'pay' as contribution. The employee can voluntarily pay higher contribution above the statutory rate. However, employer does not have to match the voluntary contribution, over and above the statutory rate. [para 26(2) of EPF Scheme].
Contribution payable under PF Scheme - The Principal Employer is liable to pay contribution of his own employees as well as employees employed through contractor. Principal Employer can recover from contractor the amount paid by him on behalf of contractor. The contribution is 12% of ‘pay’ i.e. basic wages, plus dearness allowance, cash value of food concession and retaining allowance. Contribution of both employer and employee is same i.e. 12% each. [para 29 of EPF Scheme].
Employer has to pay his contribution to EPF. He cannot deduct his contribution from wages of the employee. [Para 31 of EPF Scheme]. However, he has to deduct employee’s share from his salary and pay the same in EPF scheme. This deduction can be only from the wages pertaining to period for which contribution is paid. However, if there is accidental omission, the amount can be recovered later. Amount deducted from salary of employees is held in trust by the employer or contractor. [Para 32 of EPF Scheme].
Out of employer’s contribution of 12/10%, the Employer’s contribution of 8.33% will be diverted to Employees’ Pension Scheme. The balance will be retained in the EPF scheme. Thus, on retirement, the employee will get his full share plus the balance of Employer’s share retained to his credit in EPF account. [This diversion is only w.e.f. 16th November, 95. Earlier Employer’s contribution to their credit will continue to remain to their credit].
Lower contribution in certain cases - The employer's and employee’s contribution is 12% each. This is applicable to many of industries and establishments. However, this contribution is not applicable to - * any establishment employing less than 20 persons * any establishment registered with Board for Industrial and Financial Reconstruction (BIFR) as a sick company - the lower rate of contribution continues till its net worth is positive * any other establishment which has accumulated loss equal to or more than its assets and has also suffered cash loss in last two years. * Jute industry * Beedi industry * Brick industry * Coir industry other than the spinning sector * Guar gum factories. In these cases, the contribution is 10%.
Interest on account – PF Commissioner shall maintain account of each member of EPF scheme. [Para 59 of Scheme]. Interest is credited to the account of employee. The Interest is calculated on monthly running balance basis. Amount standing to credit at end of the month is considered for calculation of interest for the following month. The interest rate is declared every year by Central Government in consultation with Central Board of Trustees of Provident Fund. [Para 60 of EPF Scheme].
Employees’ Pension Scheme - This scheme has been introduced w.e.f. 16th November, 95. The Scheme is applicable to all subscribers of Employers’ Provident Fund. It is also compulsory to persons who were subscribers as on 16.11.95.
Contribution - The employer’s contribution of 8.33% will be diverted to the fund of Pension Scheme. Employee does not have to make any contribution. Employer’s contribution is 12%/ 10%. In such cases, 8.33% is diverted to Pension scheme and balance 1.67%/3.67% as the case may be, will be in credit of employee’s name in Provident Fund account. The 8.33% is on maximum salary of Rs. 6,500. If some employers are paying contribution on salary in excess of Rs. 6,500, the excess contribution will be credited to Provident Fund account and not to Pension scheme.
No separate administration charges or inspection charges are payable, as these are already paid along with Provident Fund contribution.
Benefits under the scheme - Members will get pension on superannuation or retirement from service and upon disablement during employment. Family pension will be available to widow/widower for life or till he/she remarries. In addition, children will be entitled to pension, upto 25 years of their age. In case of orphans, pension at enhanced rate is available upon death of widow/widower or ceasing payment of widow pension. Benefit of pension to children or orphan is only restricted for two children/orphans.
If the person is unmarried or has no family, pension is available to nominee for a specified period.
Commutation of Pension - The member can commute 33.33% of the pension, so as to receive hundred times the monthly pension so commuted as commuted value of pension. Balance will be paid on monthly basis.
Employees Deposit Linked Insurance Scheme - The purpose of the scheme is to provide life insurance benefits to employees who are already covered under PF/FPF. The employer has pay contribution equal to 0.50% of the total wages of employees In addition, administrative charges of 0.1% of total wages. [Notification No. AO 503(E) dated 28-7-1976 issued u/s 6C(2) of PF Act].
The employee does not contribute any amount to the scheme. The salary limit for coverage of employees is same as that of Provident Fund.
Exemption from the scheme can be obtained from RPFC if LIC Group Gratuity scheme is adopted by employer. If exemption is granted, only inspection charges @ 0.005% are payable to PF authorities.
Benefit to nominee of employee - If an employee dies during employment, his nominee or family member gets an amount equal to average balance in the Provident Fund Account of the deceased employee during last 12 months. If such balance is more than Rs. 35,000, the insurance amount payable is Rs. 35,000 plus 25% of the amount in excess of Rs. 35,000, subject to overall limit of Rs. 60,000. If the employees are covered under another life insurance scheme whose benefits are better than this scheme, an exemption from this scheme can be obtained. [Increased to 35,000 and 60,000 w.e.f. 13.6.2000]
Regards
Arun K Mishra[/quote]
From India, Bahadurgarh
Dear All,
Warm Reagards & best wishes for the Chrstmas & New year. The topic was wheather to deduct or not the Pf if basic is above 6500/-. What the pf Act says that, if the Employee is getting the salary or wages which is above 6500/-, the employer contribution towards the pf will be 6500/- Per Month.
For Example:
Mr.X has a package of Rs.100,000/- Out of which the basic is 60,000 & the D.A is 10,000/-.
In the above case if we will take the 12% of Basic + D.A it will 12% of 70,000. That comes to 8400/-. But the employer is liable to pay only 6500/-. So even if the salary goes up the employer's liability is limited upto Rs.6500 Per Month.
Please revert back if i am wrong or if you have any suggestions.
Regards
B.R.Misra M.B.A, M.H.R.M, ADCHN
Warm Reagards & best wishes for the Chrstmas & New year. The topic was wheather to deduct or not the Pf if basic is above 6500/-. What the pf Act says that, if the Employee is getting the salary or wages which is above 6500/-, the employer contribution towards the pf will be 6500/- Per Month.
For Example:
Mr.X has a package of Rs.100,000/- Out of which the basic is 60,000 & the D.A is 10,000/-.
In the above case if we will take the 12% of Basic + D.A it will 12% of 70,000. That comes to 8400/-. But the employer is liable to pay only 6500/-. So even if the salary goes up the employer's liability is limited upto Rs.6500 Per Month.
Please revert back if i am wrong or if you have any suggestions.
Regards
B.R.Misra M.B.A, M.H.R.M, ADCHN
Dear Nagendra,
Ones the employee is covered in PF Act, he is covered till he continues in the employment. If employee basic salary crosses the set limit of Rs.6500, in that situation employer has to deduct to the maximum limit of Rs.6500 which is Rs.780 (employer share), he is legally bound to do that. If the employer stops deducting and contributing in the PF fund he is violating the law. This is what i think.
By now you must have collected all the relavent information on this topic so what you say on this. Please mail me the details on
.
thanks and regards,
Bibhutosh Bhadauria
1/206 White Horse Road,
Balwyn 3103, Melbourne
Victoria, Australia
From Australia, Balwyn
Ones the employee is covered in PF Act, he is covered till he continues in the employment. If employee basic salary crosses the set limit of Rs.6500, in that situation employer has to deduct to the maximum limit of Rs.6500 which is Rs.780 (employer share), he is legally bound to do that. If the employer stops deducting and contributing in the PF fund he is violating the law. This is what i think.
By now you must have collected all the relavent information on this topic so what you say on this. Please mail me the details on
thanks and regards,
Bibhutosh Bhadauria
1/206 White Horse Road,
Balwyn 3103, Melbourne
Victoria, Australia
From Australia, Balwyn
Dear Mr. Samba Siva,
In your post you said that PF coverage limit is raised to Rs.10, 000. This issue was pending for years. Have the notification have come on this issue and it has been implemented or still in progress.
I will be grateful if you send me detailed information on this. My Email is
thanks and regards,
Bibhutosh Bhadauria
1/206 Whitehorse Road,
Balwyn 3103 Victoria,
Melbourne, Australia
From Australia, Balwyn
In your post you said that PF coverage limit is raised to Rs.10, 000. This issue was pending for years. Have the notification have come on this issue and it has been implemented or still in progress.
I will be grateful if you send me detailed information on this. My Email is
thanks and regards,
Bibhutosh Bhadauria
1/206 Whitehorse Road,
Balwyn 3103 Victoria,
Melbourne, Australia
From Australia, Balwyn
Dear Nagendra,
An employer can not stop deducting PF of covered Employee irrespective of any hike in his / her salary. Of course, Employer can restrict the contribution to 12% of Rs 6500 and need not contribute 12% of hiked salary, but continued coverage is mandatory.
From India, Kota
An employer can not stop deducting PF of covered Employee irrespective of any hike in his / her salary. Of course, Employer can restrict the contribution to 12% of Rs 6500 and need not contribute 12% of hiked salary, but continued coverage is mandatory.
From India, Kota
heloooooooooooooo sir i am kamal please clarify me Is the employer bound to pay his share of PF if the basic salary of an emplloyee exceeds 6500/- p.m.? What else, if it exceeds 6500/-p.m?
From India, New Delhi
From India, New Delhi
Dear Friends,
Please clarify my doubt with regard to EPF Employer contribution is treated as a Expenses which stands in the Profit and Loss account Expenses side. Is it correct method for finalize the accounts? Any bodies can prove regarding my doubt with EPFO notification if available any in the EPF act.
Please do the needful and feel free to contact my e-mail
Thanks & Regards,
J.Jayaprakash
From India, Chennai
Please clarify my doubt with regard to EPF Employer contribution is treated as a Expenses which stands in the Profit and Loss account Expenses side. Is it correct method for finalize the accounts? Any bodies can prove regarding my doubt with EPFO notification if available any in the EPF act.
Please do the needful and feel free to contact my e-mail
Thanks & Regards,
J.Jayaprakash
From India, Chennai
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HC All - Trainees not covered for PF -2010.pdf
PF Ledger.xls