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Employees Provident Fund (EPF) is a scheme controlled by the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. It is regulated under the umbrella of the Employees’ Provident Fund Organisation (EPFO). PF registration is applicable for all establishment which employs 20 or more persons, subject to certain circumstances and exemptions even if they engage less than 20 employees. Under the EPF scheme, an employee has to pay a certain contribution towards the scheme and an equal contribution is paid by the employer. The employee gets a total amount including self and employer’s contribution with interest, on retirement or resignation.
Who is Eligible for PF?
It is obligatory that employees’ drawing less than Rs 15,000 per month, to become members of the EPF. As per the guidelines in EPF, employee, whose ‘basic pay’ is more than Rs. 15,000 per month, at the time of joining, is not required to make PF contributions. Nevertheless, an employee who is drawing pay of more than Rs 15,000 can still become a member and make PF contributions, with the consent of the Employer and Assistant PF Commissioner.
Amount of PF Contribution
The PF contribution paid by the employer is 12% of (basic salary + dearness allowance + retaining allowance). An equal contribution is payable by the employee. In case of establishments which engage less than 20 employees or meet certain other conditions, as per the EPFO rules, the contribution rate for both employee and the employer is restricted to 10%. For most employees working in the private sector, it’s the basic salary on which the contribution is calculated.
Employees Pension Scheme
Out of employers’ contribution, 8.33% will be routed to the Employees’ Pension Scheme, which is calculated at Rs 15,000. The amount routed to EPS would be Rs. 1250 for employees whose basic pay amounts to Rs 15,000 or more. However, if the basic pay is less than Rs 15000, then 8.33% of such amount would be routed to EPS, the balance will be retained in the EPF scheme. On superannuation, the employee would receive the full share plus the balance of the employer’s share reserved for his credit in EPF account.
The breakup of PF Contribution
We arrive at the rate of 12% based on the following sub-division:
3.67% of contribution towards Employees’ Provident Fund
1.1% of contribution towards EPF Administration Charges
0.5% of contribution towards Employees’ Deposit Linked Insurance
0.01% of contribution towards EDLI Administration Charges
8.33% of contribution towards Employees’ Pension Scheme
- The contribution is rounded to the nearest rupee for each employee, for the employee share, pension contribution and EDLI contribution.
- The Employer Share is the difference between employee Share (payable as per statute) and Pension Contribution.
- Monthly payable amount liable to EPF Administrative charges is rounded to the nearest rupee and a minimum of Rs. 500/- is payable.
- If the establishment has no member in the month, the minimum administrative charge will be Rs. 75/-
- The monthly payable amount under EDLI Administrative charges is rounded to the nearest rupee and a minimum Rs 200/-is payable.
- If the establishment has no member in the month, the minimum administrative charge will be Rs. 25/-
- In case, the establishment is exempted from PF Scheme, Inspection charges @0.18%, minimum Rs. 5/- is payable in place of Admin charges.
- In case the Establishment is exempted under EDLI Scheme, Inspection charges @ 0.005%, minimum Re 1/- is payable in place of Admin charges.
Due Date for PF Filing with EPFO
The employer before paying the employees salary must deduct the employee’s contribution from his wages. Then the employee portion and employer portion are payable to the EPFO, within 15 days of the close of every month.
Applicability of PF Registration
PF registration is mandatory for all establishments with 20 or more persons. Some establishments having less than 20 employees would also be required to obtain PF registration. All employee becomes eligible for a PF right from the commencement of employment and the onus of deduction & payment of PF is with the employer. The 12% rate of PF contribution should be equally divided between the employee and employer. If the establishment houses less than 20 employees, the rate for PF deduction is 10%.
Documents Required or PF Registration
Based on the type of entity seeking PF registration, the list of documents required for PF registration would vary as under:
- Name of the applicant
- Pan card of proprietor
- Id proof of the proprietor like Driving license/Passport/Election Card
- Address proof of proprietor.
- Address proof for the premises.
- Complete details of the applicant with their residential address and telephone number
For Partnership Firms / LLP / Company
- Name of the partnership firm or LLP or Company
- Certificate of Registration Firms in case of Partnership firm. Incorporation Certificate in case of LLP or Company.
- Partnership deed in case of partnership firms or LLP.
- Id proof of Partners –Pan card /Election Card / Passport/Driving license in case of Partnership Firm or LLP. ID proof of Directors in case of company.
- List of all partners with telephone number and address proof of all partners in case of Partnership Firm or LLP. List of all Directors with contact details in case of Company.
- In case of Society, Trust etc, Registration of the organization needs to be done with concerned authority.
- Certificate of incorporation of society/trust.
- Moa and Bye Laws of society and trust.
- Id proof of president and all members of society
- Complete details of president and all members with their complete address and telephone number.
- Pan card of society/trust
Common Documents Required for All Entities
- First sale bill.
- First purchase bill of raw material and machinery.
- GST Registration certificcate, if registered under GST.
- Name of the bankers, address of the bank.
- Record of a monthly strength of the number of employees.
- Register of salary and wages, all vouchers, all balance sheets from day one to current date of provisional coverage.
- Date of joining of employees, fathers name and date of birth.
- Salary and PF Statement.
- Cross cancelled cheque.
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