EMPLOYEE’S PROVIDENT FUND (EPF)

DEFINITION

The Employees Provident Fund (EPF) is a scheme which falls under and is controlled by the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. It is regulated under the umbrella of Employees’ Provident Fund Organization (EPFO). A provident fund (PF) registration is applicable for any company/organization/entity that employ 20 or more people. There are certain circumstances and exemptions to this ruling, where a said entity/ company/ organization which employ less than 20 employees also falls under the purview of this act. Under an EPF scheme, an employee must pay a certain contribution towards the scheme. An equal contribution is paid by the employer. The employee gets a total amount including self/employer’s contribution with interest, on retirement or resignation from the company.

ELIGIBILITY FOR PROVIDENT FUND

It is compulsory that employees’ making less than INR 15,000 per month, to become members of the employee provident fund (EPF). As per the guidelines laid down in EPF, an employee, whose ‘basic pay’ is more than INR 15,000 per month, at the time of joining, is not required to make a PF contribution. However, an employee who is drawing a pay of more than INR 15,000 is still eligible to become a member and make a PF contribution, with the consent of the Employer and Assistant PF Commissioner.

AMOUNT OF PF CONTRIBUTION

The PF contribution paid by an employer is 12% of (basic salary + dearness allowance + retaining allowance). An equal amount is paid by the employee. In case of establishments which engage less than 20 employees/or meet certain other conditions, as per the EPFO rules, the PF contribution rate for both employee and the employer is curtailed to 10%. For any employee working in the private sector, the contribution is calculated on the basic salary

EMPLOYEES PENSION SCHEME

From the amount of employers’ contribution, 8.33% is directed to the Employees Pension Scheme, which is calculated at INR 15,000. The amount directed to EPS will be INR 1250 for an employee whose basic pay amounts to INR 15,000 or more. However, if the basic pay is less than INR 15000, then 8.33% of this amount would be directed to EPS. The balance amount will be kept in the EPF scheme. On superannuation, an employee would receive the full share plus the balance of employer’s share reserved for his credit in EPF account.

CALCULATION OF PF CONTRIBUTION

The rate of 12% is based explained below

  • 3.67% of contribution towards the Employees’ Provident Fund
  • 1.1% of contribution towards the EPF Administration Charges
  • 0.5% of contribution towards the Employees’ Deposit Linked Insurance
  • 0.01% of contribution towards the EDLI Administration Charges
  • 8.33% of contribution towards the Employees’ Pension Scheme

EMPLOYEE PROVIDENT FUND CHARGES

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.

  • The monthly payable amount liable to EPF administrative charges is rounded to the nearest rupee and a minimum of INR 500/- is payable. If an establishment/company has no member in the month, the minimum administrative charge will be charges at INR 75/-
  • The monthly payable amount under EDLI administrative charges is rounded to the nearest rupee and a minimum of INR 200/-is payable. If the establishment has no member in the month, the minimum administrative charge will be INR 25/-
  • In case, an establishment/company is exempted from PF scheme, Inspection charges at the rate of 0.18%, minimum INR 5/- is payable in place of administrative charges
  • In case the Establishment is exempted under EDLI scheme, inspection charges at the rate of 0.005%, minimum Re 1/- is payable in place of administrative charges

DUE DATE FOR PROVIDENT FUND FILING WITH EPFO

An employer before paying an employee’s salary has to minus the employee’s contribution from his or her salary. Then, the employee portion and employer portion are payable to the EPFO, within 15 days before the end of every month.

DOCUMENTS NEEDED FOR PF REGISTRATION

Based on the type of entity/company structure seeking PF registration, the list of documents required for PF registration would be as follows

FOR A PROPETIORSHIP

  • The name of the applicant
  • The pan card of proprietor
  • Identity proof of the proprietor like Driving license/Passport/Election card/Aadhar card
  • The address proof of proprietor
  • The address proof for the business premises
  • The complete details of the applicant with their residential address/telephone number

FOR A PARTNERSHIP FIRM/ LLP / COMPANY

  • The name of the partnership firm/ LLP/Company
  • The certificate of registration in the case of a partnership firm. The incorporation certificate in the case of an LLP/Company
  • The partnership deed in case of partnership firm/ LLP
  • The identity proof of Partners such as Pan card /Election card / Passport/Driving license/Aadhar card in the case of a partnership firm/LLP. The identity proof of the directors in case of a company
  • The list of all partners with telephone number/address proof of all partners in case of a partnership firm/LLP. The list of all directors with contact details in the case of Company.

FOR A SOCIETY/TRUST

  • In the case of Society/Trust, the registration of the organization must be done with the concerned authority
  • The certificate of incorporation of society/trust
  • The MOA and bylaws of the society/trust
  • The identity proof of the president and all members of society/trust
  • The complete details of president/all members with their complete address and telephone number
  • The pan card of society/trust

COMMON DOCUMENTS NEEDED FOR PF REGISTARTION FOR ALL ENTITIES

  • The first sale invoice
  • The first purchase invoice of raw material and machinery
  • The GST registration certificate, if entity is registered under GST
  • The name of the bankers and address of the bank
  • The record of a monthly strength of the number of employees.
  • The register of salary and wages/all vouchers/all balance sheets from day one to current date of provisional coverage
  • The date of joining of employees/their fathers name/their date of birth
  • The salary and PF statement
  • A cross cancelled bank cheque from the said entity’s bank account

ACE ALLIANCE offers different packages for PF registration

BASIC PACKAGE: This PF registration package is ideal for businesses having less than 25 employees.

STANDARD PACKAGE: This PF registration package for businesses having less than 40 employees.

PREMIUM PACKAGE: This PF registration package for businesses having more than 40 employees.