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Contributions under Employees Provident Fund Scheme

As per the terms and conditions laid in the Employees’ Provident Fund Scheme, the employer and the employee have to make contributions towards the fund. A contribution needs to be 12% of the Basic Dearness Allowance, along with which an employee retaining allowance and a cash component of food allowance needs to be made, provided this contribution is limited to under INR 6,500 per month. The employee has the choice to increase their contribution voluntarily, on condition that both the employee and employer agree for the same.

This contribution has been set lower at 10% for companies covered before 22nd September 1997, employing fewer than 20 employees. Sick industrial companies, companies which suffer financial losses equal to their net worth and those who are in the business of manufacturing bricks, beedi, jute, coir and guar gum products also have a lower contribution limit of 10%.

Physical Applicability of Scheme

The Employees’ Provident fund Scheme is in implementation throughout the boundaries of the country, with the exception ofthe state of Jammu and Kashmir. This ensures that every eligible person is covered by the Scheme, regardless of his/her place of residence or work, making it acomprehensive scheme for the Indian public.

Cover offered by Employees Provident Fund Scheme

The EPFO members are allowed to withdraw cash as advances from their PF Account for purposes like education, marriage, medical care etc., subject to the terms and conditions as mentioned below.

In recent times, the dynamics of an employer-employee relationship has changed a lot. Retaining employees has become a difficult task for the company. The employee not only looks out for his/her present status and growth, but also for their future stability. Due to this, companies have started to provide various employee welfare schemes. Another reason for implementing such schemes is the rules and regulations of the country (India) in which a company is established. One of the employee welfare initiatives is the Provident Fund.

The EPFO members are allowed to withdraw cash as advances from their PF Account for purposes like education, marriage, medical care, etc., subject to the terms and conditions as mentioned below.

Marriage

  • Only for self, daughter, son, brother, and sister.
  • The member needs to have completed at least seven years of service (not essentially with the same organisation, but should have transferred the PF fund from previous employers for a successive period of seven years).
  • Allowed for a maximum of three times in the whole service term.
  • The member should apply for the same in Form 31 through the current organisation.
  • The applicant needs to submit marriage invitation card as a proof of marriage with the form.

Education

  • Only for self, daughter, son, brother, and sister.
  • The member needs to have completed at least seven years of service (not essentially with the same organisation, but should have transferred the PF fund from previous employers for a successive period of seven years).
  • Allowed for a maximum of three times in the whole service term.
  • The member should apply for the same in Form 31 through the current organisation.
  • The member is required to submit a bonafide certificate duly indicating the fees payable for the education course.

For Medical Treatment

  • Only for self, daughter, son, brother, dependent parents.
  • Allowed for a surgical operation in a hospital and one month more hospitalisation for a patient suffering from serious illnesses as prescribed.
  • No condition of minimum service term is required.
  • The member will need to submit a doctor certificate verifying the medical care requirement.
  • The maximum amount allowed is full employee share or 6 times of salary, whichever is less.
  • Form 31

For Purchase of Site and Construction there on

  • The member should have completed 5 years of services.
  • The employee or member’s contribution with interest in the account should not be lower than INR 20000.
  • The site location should be free from legal issues.
  • The site needs to be in the name of the member or spouse or in joint name.

FAQs on Employee Provident Fund Scheme 1952

What is Employee Provident Fund Scheme 1952?

Employee Provident Fund Scheme 1952 is a vital piece of Labour Welfare legislation endorsed by the Parliament to provide social security benefits to the workforce of the country. Currently, the Act and the Schemes framed provide for three types of benefits to the members:

  • Contributory Provident Fund.
  • Retirement assurance benefits to the employees and his/her dependent family members
  • Life Insurance coverage to the members of the Provident Fund.

Who is eligible for employee provident fund?

All organisations employing 20 or more persons come under the purview of the Act from the very date of set up, subject to completion of other terms and conditions. Those organisations which do not have the prescribed number of employees, but are willing to register themselves under the Act to provide the benefits of Provident Fund to their employees, can register voluntarily with the local or regional provident fund office.

What is Employees Provident Fund Scheme?

Employees Provident Fund Scheme is a welfare scheme for the workforce of the country. In this scheme, acontribution is made to the fund by the employer and employee both which shall be claimed by the employee during the time of his retirement. A pre-decided part of the salary is transferred to the Provident Fund Account of the employee. The scheme was implemented to build retirement savings a salaried individual and provide his/her family financial protection.

Is it mandatory to deduct PF from salary more than INR 15000?

No, it is not mandatory to deduct PF from salary more than INR 15000.

Can employer contribute more than 12% for PF?

The employer can’t contribute more than 12% per cent. Employer's contribution is fixed at 12%, even if the employee decides to increase his/her contribution more towards the PF.

What is the meaning of claim against para 69 2?

The meaning of claim against para 69 2 in PF is withdrawn by the member due to resignation, leaving service etc.

Is PF mandatory for employers?

A company or organisation is required legallytodeduct PF, both on behalf of itself and its employees, if it fulfils the requirement of coverage under the Employees' Provident Funds and Miscellaneous Provident Act, 1952. The basic requirements are mentioned below-

  • If the company employs more than 4 employees in case of Cinema theatres.
  • If the company employs more than 49 employees in case of Co-operative Societies working without the aid of power.
  • If the company employs up to 20 employees in factories and other organisation notified by the Central Government.
  • It is for all companies and organisation covered under the Employees' Provident Funds and Miscellaneous Provident Act, then the employee strength does not matter.

How PF is calculated on salary?

In order to calculate the Provident Fund amount, one can use a number of online Provident Fund Calculators. These online calculators are user friendly, easy and free of cost. For calculating using an online calculator, add the investment amount and duration of PPF in the respective column. To calculate your PPF interest, one can follow these steps: F = P[{(1+i)n-1}/i], F (Maturity Amount) P (Annual Instalments paid) n ( No. of years or Tenure of PF) i ( Rate of Interest) It is to be noted that the interest on PF is compounded on a yearly basis.

Can I withdraw employer share in PF?

As per the current rules, you can withdraw up to 90 per cent of your entire Provident Fund accrued balance (employee share + employer share) on reaching 54 years of age or within 1 year left before actual retirement, whichever is later. Employer contribution will continue to accumulate and can only be withdrawn after reaching 58 years of age.

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