Hi all,
I am working in a software company and we are covered under PF act.So is there any provision for exempting any employee from PF,if yes what is the procedure and what are the compliances for that.The individual's salary is above the required limit of PF act.
Regards,
Deepika
From India, Delhi
I am working in a software company and we are covered under PF act.So is there any provision for exempting any employee from PF,if yes what is the procedure and what are the compliances for that.The individual's salary is above the required limit of PF act.
Regards,
Deepika
From India, Delhi
Hi Deepika,
Would be useful to you.
Provident Fund
An individual member getting Provident Fund benefits on par with or better than statutory provisions can apply for exemption in Form 1 under para 27.
Employers can apply for exemption in respect of a class of employees getting similar or better benefits than the statutory P.F. Scheme under P. 27A subject to the conditons governing grant of exemption.
The employer can seek exemption from P.F. Scheme for the entire establishment if the majority of the employees also consent for exemption, subject to certain conditions governing grant of exemption and certain formalities.
From India, Pune
12Would be useful to you.
Provident Fund
An individual member getting Provident Fund benefits on par with or better than statutory provisions can apply for exemption in Form 1 under para 27.
Employers can apply for exemption in respect of a class of employees getting similar or better benefits than the statutory P.F. Scheme under P. 27A subject to the conditons governing grant of exemption.
The employer can seek exemption from P.F. Scheme for the entire establishment if the majority of the employees also consent for exemption, subject to certain conditions governing grant of exemption and certain formalities.
From India, Pune
HI Santosh,
Thanx for your reply.But you mentioned that if the provisions of an employee are better than those required,then what is the criteria behind deciding whether his provisions are better or not.And secondly is there any amount to be paid by the employer in case it gets some of its employees exempted.
From India, Delhi
Thanx for your reply.But you mentioned that if the provisions of an employee are better than those required,then what is the criteria behind deciding whether his provisions are better or not.And secondly is there any amount to be paid by the employer in case it gets some of its employees exempted.
From India, Delhi
Hi,
It should be clearly understood that there is no way of getting out of paying provident fund benefit to an employee. One can get exemption from the provisions under the Act provided better benefits are being provided by the organization.
Once you submit your scheme for getting the exemtion, the EPF authority will examine the same with reference to the provisions under the Act, and on being satisfied grant the exemption.
The best course in this regard is to get hold of the exempted scheme from a similarly placed organisation like yours and use it as a guide line for formulating your own scheme. The emplyer and the employee both have to contribute under the scheme and the amound is deposited in a Fund. The investment of the amount so deposited in the Fund is to be in accordance with the provisions under the Act.
Cyril
From India, Nagpur
It should be clearly understood that there is no way of getting out of paying provident fund benefit to an employee. One can get exemption from the provisions under the Act provided better benefits are being provided by the organization.
Once you submit your scheme for getting the exemtion, the EPF authority will examine the same with reference to the provisions under the Act, and on being satisfied grant the exemption.
The best course in this regard is to get hold of the exempted scheme from a similarly placed organisation like yours and use it as a guide line for formulating your own scheme. The emplyer and the employee both have to contribute under the scheme and the amound is deposited in a Fund. The investment of the amount so deposited in the Fund is to be in accordance with the provisions under the Act.
Cyril
From India, Nagpur
Hi All,
I agree with the comment made by Cyril, that there is no way out. Getting the entire establishment out of PF coverage is next to impossible now, earlier an organisation could apply for its own PF trust.
So far I remember the competent authority has not approved any PF trust in the last 15 years.
As per the PF act, if once the PF contribution has been deducted you continue to be a member till such time you join an organisation which is not covered / exempted (has its own PF trust) under the act.
The only way to exempt an employee is to induct him/her at a basic which is higher than the PF wages i.e. 6500/- today.
This does not mean that an employee whose PF wages were 6000/- and due to the increment the PF wages has gone beyond 6500/- shall be exempted, he will continue to be the member.
Only difference is that you may restrict the PF contribution upto this, in other words the employer need not contribute PF or deduct PF contribution from the employee on PF wages (BASIC salary) exceeding 6500/- p.m.
I hope this will throw some light.
Best wishes,
Sunil Joshi
From United States, Bedford
I agree with the comment made by Cyril, that there is no way out. Getting the entire establishment out of PF coverage is next to impossible now, earlier an organisation could apply for its own PF trust.
So far I remember the competent authority has not approved any PF trust in the last 15 years.
As per the PF act, if once the PF contribution has been deducted you continue to be a member till such time you join an organisation which is not covered / exempted (has its own PF trust) under the act.
The only way to exempt an employee is to induct him/her at a basic which is higher than the PF wages i.e. 6500/- today.
This does not mean that an employee whose PF wages were 6000/- and due to the increment the PF wages has gone beyond 6500/- shall be exempted, he will continue to be the member.
Only difference is that you may restrict the PF contribution upto this, in other words the employer need not contribute PF or deduct PF contribution from the employee on PF wages (BASIC salary) exceeding 6500/- p.m.
I hope this will throw some light.
Best wishes,
Sunil Joshi
From United States, Bedford
Thanx Cyril,
It was a useful piece of information.Just if you could clear one doubt.As per your post did you mean to say that for an exempted employee also we need to maintain a fund and make deposits into it of similar nature of benefits as under PF,Pension etc.And if yes then how is the payment out of this fund made to the employee after his superannuation,resignation,etc.
Regards,
Deepika
From India, Delhi
It was a useful piece of information.Just if you could clear one doubt.As per your post did you mean to say that for an exempted employee also we need to maintain a fund and make deposits into it of similar nature of benefits as under PF,Pension etc.And if yes then how is the payment out of this fund made to the employee after his superannuation,resignation,etc.
Regards,
Deepika
From India, Delhi
the system is like this: -
1 Either u maintain ur own PF fund (after approval & scrutiny from teh PF commissioner)
2. Or u pay it to the govt.
3 There is no third option - U have to pay PF for employees, u only have a choice of paying it to teh govt or to your own fund - which no companyin teh last 15 yrs has been allowed to constitute (as come earlier in the replies)
PS - For the employees - it saves tax so they are generally quite happy about it
A
1 Either u maintain ur own PF fund (after approval & scrutiny from teh PF commissioner)
2. Or u pay it to the govt.
3 There is no third option - U have to pay PF for employees, u only have a choice of paying it to teh govt or to your own fund - which no companyin teh last 15 yrs has been allowed to constitute (as come earlier in the replies)
PS - For the employees - it saves tax so they are generally quite happy about it
A
If the person is a new joinee, with sal. above the prescribed limits, u may treat him as an excluded employee. In case the salary exceeds Rs. 6500 for an existing member, u have to apply for exemption provided u r going to pay him some benefit equal to or higher than that prescribed in the PF Act. The thumb-rule is "Once a Member, Always a Member"
Regds.
Ranjit J. Pandya
From India, Ahmadabad
Regds.
Ranjit J. Pandya
From India, Ahmadabad
Hi Deepika,
As eplained, you have all the statutory obligations to fulfill even if you have an exempted fund . you are also liable for statutory inspections by the Provdent Fund Authorites, in regard to the implementation of the Scheme.
As an exempted organization, you are required to give the non refundable advances to employees, settle their provident fund on retirement, transfer the provident fund amount to the organization where the employee is joining etc. The only difference in having your own Fund is that you operate the same with your own employees and the same is under your control.You have the responsibility of making the investments of the amount as per the guidelines under the Act.
In case of Government operated Fund, the employer remits the employer and employees' contribution to provident fund organization, maintains statutory registers and does the paper work of forwarding cases for settlement of claims.
The Government keeps a close watch on the exempted organizations that they are remaining within the parameters of the approved scheme.
Cyril
From India, Nagpur
As eplained, you have all the statutory obligations to fulfill even if you have an exempted fund . you are also liable for statutory inspections by the Provdent Fund Authorites, in regard to the implementation of the Scheme.
As an exempted organization, you are required to give the non refundable advances to employees, settle their provident fund on retirement, transfer the provident fund amount to the organization where the employee is joining etc. The only difference in having your own Fund is that you operate the same with your own employees and the same is under your control.You have the responsibility of making the investments of the amount as per the guidelines under the Act.
In case of Government operated Fund, the employer remits the employer and employees' contribution to provident fund organization, maintains statutory registers and does the paper work of forwarding cases for settlement of claims.
The Government keeps a close watch on the exempted organizations that they are remaining within the parameters of the approved scheme.
Cyril
From India, Nagpur
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Exemption under Sec.17(1)(a) of PF Act 18.11.2011.pdf