The Employee’s Provident Fund

Act
1952

Dr.R.Anitha

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Employee’s
Provident
Fund Act
1952
 PURPOSE
The Employees' Provident Fund (EPF)- is one of the most
beneficial and popular investment scheme for the salaried
persons in India.

The Employees'' Provident Fund Organisation- a statutory

body under the Ministry of Labour and Employment-
Government of India administers social security schemes
framed under the Employees' Provident Funds &
Miscellaneous Provisions Act, 1952

The PF account benefits are extended to all the

establishments which employ 20 or more persons.
 INTRODUCTION OF EPF SCHEME, 1952

EPF is one of the main platforms of saving in

India for nearly all people working in Govt ,
Public or Private sector organization.

It is implemented by the EMPLOYEES

PROVIDEND FUND ORGANIZATION (EPFO) OF
INDIA.
 Scope of Provident Fund Act,
1952
APPLICABLE TO
1. Whole of India except the State of Jammu
and Kashmir.
2. Every establishment (factory or industry)
which 20 or more persons are employed.
3. Any other establishment employing 20 or
more persons which the Central Govt may
notify from time to time.
 Who is liable for
contribution
SEC 43(1) provide that every employee and
Every employer within the meaning of this act are
liable to pay monthly contributions.
The employer shall, in the first instance be liable to
pay both the contributions payable by himself
and also on behalf of the employee.
ADMINISTRATION OF THE SCHEMES
UNDER PROVIDENT FUND ACT,1952

• CENTRAL
1 BOARD
SECTION(5(4)
• EXECUTIVE
2 COMMITTEE
SECTION 5(AA)
• STATE BOARD SECTION
3 5(B)
 1.CENTRAL BOARD
• A Chairman and vice Chairman
• Central Provident Commissioner-Ex Officio
• Not more than 5 person appointed by the
Central Govt
• Not more than 15 person appointed by Govt
representing the Central and State Govt.
• 10 person representing employers of the
establishment to which scheme applies.
• 10 person representing employees.
 2.EXECUTIVE COMMITTEE
• IT would be appointed by the central govt to
assist the central govt board and would consist
of;
• 1 CHAIRMAN appointed by CENTRAL GOVT.
• 2 person appointed by CENTRAL GOVT
REPRESENTING CENTRAL GOVT.
• 3 PERSON representing the EMPLOYER’S
elected by CEN.. GOVT.
• 3PERSON representing the EMPLOYEE
ELECTED BY THE CEN. GOVT
 3.STATE BOARD

•The centralgovt can appoint a

state board of trustees for a state
in consultation with the govt. of
that state.
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 FundsAct 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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 Employer and Employee Contribution
CONTRIBUTION ADMINISTRATI Total
ACCOUNTS ON ACCOUNTS
EPF EPS EDLI EPF EDLI
EMPLOYEE 12 0 0 0 0 12

EMPLOYER 3.67 8.33 0.5 1.10 0.01 13.61

TOTAL 15.67 8.33 0.5 1.10 0.01 25.61

 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
Benefits 1952
• 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

www.sanvelsinfo. 18
com
 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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 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
– PermanentRetirement
migrationScheme
from India
(VRS)to settle /
abroad employment taking
– 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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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 1
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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 Pensio
PF & Scheme at the time of joining the n
• 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 Provident Fund). (Voluntar
• Voluntary PF can be upto 100% of wages y
• 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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The Employees Pension Scheme
1995

Employees Pension Scheme

1995

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 The Employees Pension Scheme
Introduction1995
• 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 tomembers upon permanent total
during
disablement 1
service 8
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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 EDLI CALCULATION
sample calculation:
Mr. James drawing a monthly basic of INR15,000 and
the EPF balance was INR3,00,000. However in the last
12 months the EPF balance is INR2,00,000 only. Upon
sudden demise the EDLI is computed as per the
above:
(i). Monthly Wage x 30 times = 15,000 x 30 times : INR
4,50,000
(Wages can be considered for EDLI is maximum
INR15000)
(ii). 50% of average balance in EPF (INR2,00,000)= 2,00,
000/2 : INR 1,00,000
Total EDLI : INR 5,50,000
Nominee would get INR 3,00,000 (EPF) + 5,50,000
(EDLI) : INR 8,50,000
How is the EPF, EPS, EDLI contribution calculated
with example?

• Per month each employee/ EPF member of an

organization gets the following benefits to their
account
EPF - 15.67% of their salary drawn or maximum
Rs.2350.00 (contribution of Employee's 12% +
Employer's 3.67%)
• EPS – 8.33% of their salary drawn or maximum
Rs.1250.00 (fully contributed by Employer 8.33%)
• EDLI- 0.50% of their salary drawn or maximum Rs.
75.00(fully contributed by Employer 0.50%)
• All above calculations are applicable on the basic
salary + DA if any OR on the upper limits Rs.15, 000/-
per month for both employee and employer)

For example :
Krisha draws salary/wages per month Rs. 16000/-
(Basic Rs.12000/- + D.A Rs.2000/- + House
Rent(HRA)1000/-+ Travelling Allowance Rs.1000/-)
• Ram draws salary/wages per month Rs,25000/-
(Basic Rs.14000/- + D.A Rs.6000/- + House Rent(HRA)
3000/-+ traveling Allowance Rs.2000/-)
• Now let us see the EPF, EPS & EDLI monthly
calculation in case of both Krishna & Ram based on
their salary is drawn, as under:
In the case of Krishna, his monthly basic salary is
Rs.14000/-(Basic + D.A) which is within the limit Rs.15,
000/-
EPF contribution from Krishna's salary – Rs.1680.00
(12% of salary Rs.14000/-)
• EPF contribution from his company - Rs. 514.00 (
3.67%of salary Rs.14000/-)
• EPS contribution from his company - Rs.1166.00
(8.33% of salary Rs.14000/-)
• EDLI contribution from his company - Rs. 70.00 (0.50%
of salary Rs.14000/-)
• In the case of Ram, his monthly basic salary is Rs.20,
000/-(Basic + D.A) which is above the limit Rs.15,000/-.
Therefore
EPF contribution from Ram's salary – Rs.1800.00
(maximum /12% of salary limit Rs.15000/ )
• EPF contribution from his company - Rs. 550.00
(maximum /3.67%of salary limit Rs.15000/-
• EPS contribution from his company - Rs.1250.00
(maximum / 8.33% of salary limit Rs.15000/-
• EDLI contribution from his company - Rs. 75.00
(maximum/ 0.50% of salary limit Rs.15000/-)
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

13 For transferring the PF A/c of a member from one

(revised) establishment to another establishment covered under the
Act / Scheme

14 Application for financing a life insurance policy out of PF A/c

To be submitted by a member to withdraw his PF dues on

19
leaving
service / retirement / termination
In the event of death of member, this form is to be used by a
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nominee / family member to claim the member's PF
accumulation

31 To be used by PF members to avail advances / withdrawals39

 List of
Forms
Forms For Claiming Benefits Under Pension
Scheme

Form Purpose

For claiming :
- Refund of Employer share
10 C
- Withdrawal benefit
- Scheme certificate for retention of membership

To be submitted by the first claimant i.e.

- member
10 D
- widow / widower
- nominee

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 List of Forms
Forms For Claiming Benefits Under EDLI
Scheme

Form Purpose

To be submitted by the person eligible to receive the PF A/c

5 (I.F.) dues of
the deceased member who died while in services

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Thank you