Employee Provident Funds
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This article is written by Aiswariya.R, a 4th-year student studying in School of Excellence in Law. This article deals with the Employee Provident Funds, 1952, its online process to get the PF amount and other benefits under this Act.

Introduction

The Employee Provident Funds, 1952 is a beneficial legislation enacted for the betterment of the future of industrial worker:

  1. On his retirement.
  2. For his dependents in case of death of employment.

This Act is enacted as a social security measure which falls under the ground of “retirement benefit”, the object of this Act is to inculcate, non withdrawable financial benefit, the sum is payable normally on retirement or on the death of the employee. Administration of the scheme given under this act is done by the central board, state board, and regional committee, a chief executive committee appointed and constituted by the central government.

  • Central board _ Section 5A
  • Executive committee – Section 5AA
  • State board – Section 5B
  • Regional committee

Boards under the Act

Constitution and position

Central board: Section 5

Central board – Central board is created by official gazette notification given by the Central government.

Functions

  1. Section 6 and Section 6C discussions how the central board should use their fund vested on them.
  2. Duty of the central board is to send an annual report to the Central government, of its work and activities.
  3. The central government will submit a report to the comptroller and Auditor General of India. Comments of Central board is laid down before parliament.

Constitution of the following a person as a member:

  • Chairman and a vice-chairman appointed by the central government
  • The central Provident fund commissioner, ex-official
  • Among Central government officials (not more than five-person)
  • A representative of states (not more than 50)
  • Representing the employer of the establishment (10 people)
  • Representing the employee of the establishment (10 people)

Executive committee: Section 5AA

State Board: section 5 B 

The central government, after consulting with any of the states constitute the state board in the following state, as provided for in the scheme. Constitution of the state board is done by the notification in the official gazette. Central government from time to time prescribes the duties to be performed by the state board and the powers exercised by the state government. The following scheme will provide the terms condition subject to which a member of state board is appointed, time place and procedure for conducting meetings etc. Every board of trustee constituted under this section is a Body Corporate, being a body corporate, it has perpetual succession, a common seal and right to sue or get sued in its name.

Regional committee 

Until state board is constituted, the Central Government may set up Regional Committee, which is under the control of Central Government, it works under the advice of the following person:

  1. Central board, when matters referred to it from time to time.
  2. All the matter regarding “administration of the Scheme”, such as the progress of recovery of PF, contribution and other charges, speedy disposal of prosecution, settlement of claims and sanctions of advances.
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Appointment of central fund commissioner

  • The central government shall appoint Central provident fund commissioner, deputy provident commissioner and regional provident fund commissioner by discharging his duty they will assist central provident fund commissioner. 
  • Chief executive officer is appointed by the central provident fund commissioner. 
  • Central Board will appoint other officers, employees for the efficient administration of various schemes.

EPF Features

The employer is under a statutory obligation to deduct a specified percentage of the contribution from the employee’s salary for provident fund. The employer should also contribute such percentage for provident fund. An employee who gets more than 15,000 is eligible for getting the provident fund.

This Act contains nearly 20 sections and four schedules. Section 7E, F, G, H, M, N is omitted, section 20 is repealed.

Applicability of the Act – section 1 of this Act deals with the application of the Act. This is applicable to “every factory engaged in any industry specified in schedule I”. 

  1. Every establishment in which 20 or more are employed. 
  2. Any establishment notified by the central government. 
  3. Any class of such establishment employing 20 or more. This Act is applicable to home workers held in the case Mangalore Gandhi Beedi workers V. U.O.I and P.M.Patel V. U.O.I. 
  4. This Act is applied when the establishment satisfies the two tests, namely:
  • Whether there is an establishment is a ‘factory’?
  • Whether 20 or more person is employed which is held in the case Andhra University V. Regional Provident Fund Commissioner.

Some workers will not come under this Act. They are Casual, or temporary workers can’t be considered as employee held in the case Bikar cold storage co. Ltd. V. Regional PF Commissioner.

Non-applicability of the Act

The Act does not apply to the following things. Any establishment registered under the co-operative society Act, 1912. Any state-related co-operative society employed less than 50 people and working without the aid of power. From the date on which the establishment is set up, where the establishment as:

  • Only 50 or more persons, after the expiry of 3 years.
  • Only 20 or more, but less than 50 people before the expiry of 5 years, which is held in the case V.K. Bhatt V. A.C.B & T. Mfg. Co.

Central Government also has the power to exempt any class of establishment, on such condition mentioned in the notification:

  • On the ground of financial position.
  • Other circumstances of the case which is held in the case Mohammed Ali V. U.O.I.

Eligibility For getting EPF- Any person is eligible, who is employed:

  • For work of the establishment.
  • Through contractor.
  • Connection with work of establishment is eligible for the benefit of the Act.

This Act was constitutionally challenged on the ground that it is:

  • Discriminative in nature.
  • Article 14 is violated because it is applied only to a particular class of industry, but the Supreme Court said that it doesn’t violate article 14, it is certain, classification of a certain class of industry falls in reasonable classification which is valid.

Schemes under EPF

Employees provident fund scheme 1952

Section 5 gives wholly unrestricted unguided direction to the central government to frame a scheme, and it appears on the other hand that the Act is full of carefully laid down principles to guide the central government which is held in the case R.P.F. Commr. V. L.R.F Works, A.I.R 1962 Punj. 507

When they say that this scheme has retrospective effect, the employer cannot be asked to pay the employees contribution for the period antecedent to the notification applying the scheme because he has no right to deduct the same for the future wages payable to the employee. The payment of employee contribution by the employer with the corresponding right to deduct the same from the wages of the employees could be only for the current period during which the employer also has to pay his contribution, which is held in the case District exhibitors Assn.,Muzaffarnagar & others V. Union of India (1991) II LLJ 115 (SC).

They were re-employment by the petitioner on a temporary basis. It was held that the employer cannot be asked to pay a contribution in respect of re-employed employees on a temporary basis which is held in the case Bombay printers LTD. & Others V. Union of India and others (1992)I LLJ 816 (BOM).

The fund shall be administered by the central board constituted under section 5A of the Act. The scheme shall take effect either prospectively or retrospectively.

Employees deposit linked insurance scheme, 1976

The scheme Established the purpose of providing life insurance benefits to the employees. The benefit under the scheme is to provide the incentive to the members to save more in the Provident fund account. The benefit under this scheme is linked to the amount of accumulation in the Provident fund account of the member. All the members of the employee’s Provident Fund Scheme are covered as members of the employee’s deposit linked insurance scheme also.

Employee’s family pension scheme, 1995

For the benefit of providing family pension and life insurance benefit. Following benefit package is:

  • Pension for life to the member, on retirement and invalidation
  • To the member of the family upon the death of the members.
  • Facility for capital return ( corpus accretion) on an option formula basis
  • Commutation if pension up to 1/3 Rd of pension amount.
  • Retention of membership of the scheme till attaining the age of 68 

Retirement pension under the new scheme will be payable on fulfilling minimum 10 years eligible service and on attaining the age of 58 years.

EPF Form

Form 20 EPF settlements in case of employee’s death

This form is submitted by the beneficiary if the employee is departed, to the benefit of EPF, EPS and EDLI. The amount is paid directly to the beneficiary account, or they will send through money order.

Form 31 Withdrawal of EPF

This form is submitted for partial withdrawals, used for purposes of house renovation, availing loans, for education, medical treatment etc. eligible criteria will vary depending on the purpose of withdrawal.

Form 10C EPS withdrawal

 This form is used to claim the withdrawal benefit:

  • Before completing 10 years of service.
  • Has attained the age of 58 years but not completed 10 years of service.

This form is also used by the family member of the employee in the following circumstances like:

  • Employee departed (after attaining the age of 58 years but has not completed 10 years of service).
  • An employee who is above 50 years old but less than 58 years, who don’t wish to opt for a reduced pension can also use Form 10C.

Form 5 Registration form for new employees for EPS and EPF

This form is used by employers for enrolling new employees for this scheme. The new employee will give his personal details. This form helps the EPFO to register individuals who are joining the first time for this scheme. The form should be submitted by the employer before the 15th of every month, the official website of the EPFO provides the form where we can download.

Form 5(IF) Employees’ Deposit Linked Insurance (EDLI) scheme claim form

An employee who is contributing to the EPF scheme is already eligible for the employee linked insurance scheme. In case an employee is departed, this form helps the beneficiary to get the benefit. By submitting this form, the beneficiary is eligible to get insurance benefit of rs.4.5 lakhs and bonus benefit of rs.1.5 lakh (maximum benefit of Rs. 6 Lakh).

Form 10D to apply for a pension after retirement

This form is used for withdrawal of pension on a monthly basis after retirement.

Form 11 Automatic transfer of EPF

The employee must fill this form while joining a new company. This is a self-declaration regarding the transfer of EPF, details regarding last EPF account must be filled in this form.

Form 14 LIC Policy

This form is submitted to pay the premium amount for the LIC policy; this form should be submitted to EPF Commissioner after getting an attestation from the employer.

Form 15 G to save Tax Deducted at Source (TDS) for any interest that is generated from EPF

This form is submitted to use to online withdrawal of EPF amount; this form is used to withdraw the EPF amount (above 50,000) before completing 5 years of service. Senior citizens must submit 15H for this facility.

Form 19 Settlement of EPF

This form is submitted by the member who is not having UAN number after 2014.

Form 2 Nominations for the EPF and Employees’ Pension Scheme (EPS)

The employee who is under the scheme shall submit this Form 2 for nomination. The nominated person will get the EPF fund amount if the employee (EPF member) is departed.

UAN- Universal Account Number

Universal account number (UAN) is number given to an employee by the Ministry of Employment and Labour under the government of India, who is maintaining PF account. It used to know information or track information done by his employer regarding his provided fund (PF). When an employee joined in the new organisation, he was assigned with new PF account, after UAN came into existence, the member of the assemble (employee) all his PF account associated with multiple Ids of difference organization at one place. So through UAN, difficulties faced by the employee when he/she joins the new organization is overcome, with UAN they can track the activities if there are any payment issues.

Uses of UAN 

  • It is a unique number given to an employee, which is independent of employers.
  • UAN is used to link all the PF account when the employee is switching his company.
  • An employer can authenticate his employee by verifying this number and KYC documents.
  • EPF passbook can be verified by sending SMS EPFOHO UAN ENG TO 7738299899 from the mobile number which is registered under employee provident fund organization.
  • An employee can check his deposit done by his employer through online using UAN number, and you can also get a monthly update regarding your deposit done by the employer.

Transparency Through UAN

  • Through UAN employee can check the employer is depositing his PF amount periodically, by registering on EPF member Portal using his UAN.
  • The employee would be able to find out whether his employer is deducted or hold back his PF.

EPF Calculation and Example

Contribution for EPF is two parts, one is by the employee, and the other is by the employer.

Contribution by the employee is, including basic wage and dearness allowance is -12%.

Contribution on the part of the employer is-

  • 8.33% (for Employees Pension Scheme Account of Employee)
  • 3.67 % (for Employee Provident Fund Account of Employee)
  • 0.50% ( for Employees Deposit Linked Insurance Account of Employee) 
  • 0.50% ( is Employer has to pay an additional charge for an administrative account- minimum 500 rupees and if there is no contribution by the employer that month, an employer must pay rupees 75)
  • The interest rate for every month is 8.65%, which may differ every year (interest rate is calculated every month, but it is deposited in the account at the end of the financial year)

Example

For example, the employee is getting a basic salary and dearness allowances at rupees 15, 000.

Employee’s contribution to EPF is 12% of 15,000 that is 1,800. 

Employer’s contribution to EPF is 8.33 % of 15,000 that is 1,250.

  • Employers contribution for EPF is subtracted from employees contribution that is (1800-1250=550)
  • Total EPF contribution every month is 1800+550=2,350
  • Interest for every month is 8.65%/12= 0.7083% (4,700)

Online EPF Submission

https://www.epfindia.gov.in/site_en/For_Employees.php

Online claim process reduces the time from 20 days to 10 days, follow the below-given steps for EPF online submission.

  1. Activate UAN.
  2. Make sure mobile no. used to activate the UAN, is in use.
  3. By seeding your adhaar details, e-KYC take place through a onetime password- Aadhaar authority will send.
  4. Enter your bank account details, where the claim amount will appear.
  5. You should enter (PAN) permanent account number if you’re not an EPFO member for at least 5 years.

EPFO Claim status

EPF claim status can be checked through online or offline, 

The status of withdrawal/transfer claim submitted.

Online- Member can check the online claim status by visiting the UAN portal or through visiting the official website of EPFO.

Offline- Any of the PF office by accessing the EPFO website can track the status of the claim made.

Conclusion

Employees Provident Fund Scheme,1952 came to India through Para 83 of the government of India notification in 2008, October 1. Employee Pension Scheme.1995 was created by a special provision in respect of international workers as mentioned in para 43-A. After 2014 it became easily accessible through EPFO website portal. This Act is created mainly for the purpose of encouraging saving during the period of employment, where they use it in their old age, sickness or for any emergency purposes. 


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