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Employees' Provident Funds & Misc. Provisions Act. 1952

The Employees' Provident Funds & Misc. Provisions Act of 1952 provides social security to employees in India through a provident fund, pension scheme, and insurance scheme. The act applies to establishments with 20 or more employees and can also be applied to those with less than 20 via notification. It seeks to provide post-retirement benefits through funds and schemes. Key aspects include mandatory contributions from employers and employees to the provident fund, pension fund, and insurance scheme. Regulatory bodies manage and oversee the funds.

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Harshit Kumar Singh
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104 views21 pages

Employees' Provident Funds & Misc. Provisions Act. 1952

The Employees' Provident Funds & Misc. Provisions Act of 1952 provides social security to employees in India through a provident fund, pension scheme, and insurance scheme. The act applies to establishments with 20 or more employees and can also be applied to those with less than 20 via notification. It seeks to provide post-retirement benefits through funds and schemes. Key aspects include mandatory contributions from employers and employees to the provident fund, pension fund, and insurance scheme. Regulatory bodies manage and oversee the funds.

Uploaded by

Harshit Kumar Singh
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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EMPLOYEES’ PROVIDENT

FUNDS & MISC.


PROVISIONS ACT. 1952
Purpose the Act
EPF Act is a Social Security legislation with the intention to provide;

Post Retirement benefit to the employees and their dependents. By means of

◦ One time fund

◦ Pension Scheme

◦ Employee Insurance Scheme


Where does this Act Apply?
This Act applies to every establishment, which is a

◦ Factory, and

◦ To any other establishment employing 20 or more employees, which the Central


Government may by notification in the Official Gazette, specify in this behalf

◦ Central Government is empowered to apply this provisions of this act to any


establishment
◦ Employing less than 20 persons
◦ By giving notification at least 2 months before it intends to do so
Where this Act does not Apply?
Establishments registered under Cooperatives Societies Act 1912,
where employing < 50 persons operating without the aid of
power.

Central/State Government organizations, where there exist a


Pension Scheme (Old/New Pension Scheme) or any other Social
Security Schemes in practice.
How Can an Establishment not
covered under this Act – Can Avail this
Submit an Application to the Central Provident Fund
Commissioner

Stating that employer and the majority of the employees of


this establishment agree to the applicability of this Act to the
Establishment.
1. Employees’ Provident Fund Scheme
What does
this Act 2. Employees’ Pension Scheme

Include 3. Employees’ Deposit-Linked Insurance Scheme


Eligibility
Any person who is employed for work of an establishment or
employed through contractor in or in connection with the
work of an establishment.

Whose wage ceiling at Rs. 15000/Month.

There is no wage ceiling (₹ 15,000) for international workers.


Contributions
EPFO Scheme Employee’s Contribution Employer’s Contribution

EPF 12 % of Basic + DA 3.67% of Basic + DA

EPS N/A 8.33 % of Basic + DA

EDLI N/A 0.5% (subject to a maximum of ₹ 75)

• EPF Administration charges: 1.10%


• EDLIS Administration charges: 0.01%
Employee Provident Fund Scheme
Employees’ Provident Fund (EPF) is a retirement benefits scheme where the employee
contributes 12% of his basic salary and dearness allowance every month.

The employer also contributes an equivalent amount (8.33% towards EPS and 3.67% towards
EPF) in the employee’s account.

The employee can withdraw the accumulated corpus at the time of retirement and also during
the service period for specific purposes.
Employee Provident Fund Scheme
EPF Contribution consists of two parts depending on the entity that makes the contribution – Employee’s
contribution and Employer’s contribution.

The employee makes a contribution of 12% of basic salary + dearness allowance towards his EPF
account.

The employee has to make a lower 10% contribution in case the establishment has less than 20
employees or for industries such as (a) Jute (b) Beedi (c) Brick (d) Coir and (e) Guar gum Factories.

Employer contribute 3.67% towards Employee Provident Fund.


EPF Interest Rate
The EPF interest rate is reviewed every year by EPFO’s Central Board of Trustees after consultation with
the Ministry of Finance.

The review of the EPF interest rate for a financial year is set at the end of the financial year (most
probably in February but may go up to April or May).

The EPF interest rate;


2017-2018 was set at 8.55%
2018-2019 was set at 8.65%
2019-2020 was set at 8.50%
How do we calculate EPF Interest
Rate
EPF interest is calculated every month but is deposited in the account at the end of the financial year.

Example of Interest Calculation


Basic + DA = ?

Employee’s Contribution at 12% = ?

Employer’s Contribution at 3.67% = ?

The Interest Rate for 2018-2019 was set at 8.65% - Monthly Interest rate at ?
How do we calculate EPF Interest
Rate
Assume an Employee joined the service in April 2019. His contribution begins from April 2019

Total EPF contribution for April 2019 = ?

Interest for EPF contribution for April 2019 = NIL


(No interest for first month contribution)

Contribution for May 2019 = ?

Total EPF contribution = ?

Interest for EPF contribution in May 2020 = ?


Employee Pension Scheme
Employer contributes 8. 33% of Basic + DA.

For Employee to avail the pension benefits, he/she should complete 10 years of service.

The employer is not required to make the contribution when the employee reaches 58 years of age
and is still in service.

The employer need not pay EPS contribution when the pensioner is drawing a reduced pension and
re-joins as an employee.
Employees’ Deposit Linked Insurance
Scheme (EDLI)
It is an insurance cover provided by the Employees’ Provident Fund Organization (EPFO).

A nominee or legal heir of an active member of EPFO gets a lump sum payment of up to ₹ 6
Lakhs in case of death of the member during the service period.

All organizations covered under EPF and Miscellaneous Provisions Act, 1952 get enrolled for
EDLI automatically. This scheme works in combination with EPF and EPS.
Employees’ Deposit Linked Insurance
Scheme (EDLI)
An EPFO member is only covered by the EDLI scheme as long as he/she is an active member of the
EPF. His family/heirs/nominees cannot claim it after he leaves service with an EPF registered company.

There is no minimum service period for availing EDLI benefits.

The claim amount under ELDI is 30 times the average monthly salary in the past 12 months subject to
a maximum of 6 lakh (4.5 lakh basic + 1.5 lakh bonus).

The employer can opt out of the scheme in case he takes a higher paying life insurance scheme for
employees under Section 17 (2A).
Regulatory Bodies
Central Board

Executive Committee

Central Provident Fund Commissioner

Chief Accounts Officer

EPF Appellate Tribunal

Inspectors
UAN
Universal Account Number (UAN) is a 12 digit number which is provided to each member of
the Employees’ Provident Fund Organization (EPFO) through which he can manage his PF accounts.

This number is issued by the Ministry of Employment and Labour under the Government of India.

It helps the person to get all Provided Fund (PF) information in one place irrespective of the organization
he works for.
UAN Advantages for Employees
Less Employer Involvement in withdrawals of PF:  With UAN, the employer involvement has been
reduced as the PF of the old organization will be transferred to the new PF account once KYC verification
is complete.

Fund Transfer Not Required: The employee needs to give his UAN details and KYC to the new employer
and the old PF is transferred to the new PF account once the verification is done.

Easily Managed by SMS alerts: Employees receive SMS whenever a contribution is made by the
employer after registering at the UAN portal.

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