Frequently Asked Questions on EPF.

Transcription

1 Frequently Asked Questions on EPF. Q1.Who are required to be enrolled to PF? Any person employed directly or indirectly by the establishment, working in or in connection with the establishment, including those employed by or through a contractor is required to be enrolled to PF. The following categories of employees are required to be enrolled to PF. a. Permanent employees b. Temporary employees c. Daily waged employees d. Contract employees e. Trainees f. Retired Govt. employees (including Ex-Service Men) The following categories are excluded from enrolment. a. Those who are drawing more than Rs.6500/- at the time of joining. An employee who was drawing lesser amount at the time of joining and pay subsequently raised to more than 6500/- is required to continue as member irrespective of salary. b. Those who have withdrawn their benefit under the EPF Scheme on attaining the age of 55 years. c. Apprentices under the Apprentices Act or under the certified standing orders of the establishment. Note 1: Retired Government employees drawing Government pension are required to be enrolled to PF. Note 2 : Employees engaged through contractor eg:- Security Contractor, House Keeping Contractor or any Contractor/Sub-contractor engaged in any activity which is connected with the work of the establishment etc are also

2 required to be enrolled to PF. It is the duty of the Principal employer to enroll the contract employees, irrespective of any agreement executed with the contractor. The contributions in respect of the contract employees (both employer and employee share) are required to be deducted from the contractor s bill before releasing the bill. Note 3 : Note 4: The excluded employee can be enrolled to PF on joint application of both employer and employee. A declaration Form-11 is to be obtained from all employees joining the establishment. Q.2.. What is the minimum eligibility period for enrolment to PF? There is no minimum service period for enrolling an employee to PF. An employee is entitled and required to be enrolled to PF from the date of joining in the establishment. Q.3. Some employees are not willing to contribute to PF. What should the employer do? The employer is required to enroll the employee from the date of his joining and enrolment is mandatory. It is the duty of the employer to enroll all the eligible employees from the date of joining irrespective of their willingness. Q.4. Is there any age limit for enrolment under EPF? No, there is no age limit for enrolment under EPF. However, members of EPF Scheme who retired from service after 55 years of age and settled their EPF accounts in full need not be enrolled. Q.5.. What is the due date for remittance of PF contribution? 15 th of subsequent month i.e., the contribution based on salary for the wage month of October is to be remitted on or before 15 th of November. Belated remittance will attract Penal Damages and Interest up to 37% per annum. However, a grace period of 5 days is allowed for remittance without penalty.

3 Q.6. How the PF contribution can be remitted? The contribution is to be remitted in any branch of State Bank of India and its subsidiaries. Four copies of the prescribed chalan are to be filled and submitted to the Bank along with the Cheque/Demand Draft. Separate Chalans for each month should be used in case of payment of arrears. The Bank will retain the original and duplicate copies and return the other two copies. The Triplicate copy is to be submitted to EPF Office along with the monthly returns and the Quadruplicate copy is to be kept by the employer. Q.7. Is there any liability to pay the contribution if the salary is not paid to the employees? Yes. The employer is required to remit the contribution (employer and employee share) on the due date even if the salary is not paid. Q.8.. What if the contribution is not remitted within time? All belated remittances will attract Penal Damages and Interest ranging from 17-37% per annum. Besides, prosecution steps will be initiated against the employer before the Judicial First Class Magistrate. Default in remittance of employees share of contribution deducted from their salary constitutes Criminal Breach of Trust punishable under Section 406/409 of Indian Penal Code. Non-remittance of contribution will also lead to recovery proceedings such as attachment of bank account, attachment and sale of movable and immovable property of the establishment and employer and arrest and detention of the employer in civil prison. Q.9. Is there any punishment for non-submission of returns or violation of any other provision? Yes. Non-submission of returns in time or non-compliance with any provision of the EPF Act or the Schemes framed there under, including non-production of records before the Enforcement Officers is an offence under Section 14 of the Act read with para 76 of the EPF Scheme and is punishable. Q.10.. What are the benefits to the employees and how will they claim the benefits?

4 EPF Scheme provides various advances/withdrawal from the member s accounts for purposes like housing, education/marriage, sickness etc. On leaving the service the employee can get his account settled. The EPS provides pension to members and their family. Those members leaving service without completing the eligible service can either avail withdrawal benefit or Scheme Certificate. The EDLI Scheme provides deposit linked insurance benefit to the family of the members who die while in service. Various forms are prescribed for availing these benefits. The employer is duty bound to get the forms filled up by the beneficiaries and forwarded to EPF Office under his attestation. Q11. What are the other duties of the employer? a. The employer is required to maintain all the relevant records in the premises itself and produce it before the Enforcement Officer for inspection at any reasonable time, with or without notice. b. The employer is also required to attest the applications for advance or final settlement of the members account within 5 days of receipt of the application. The employer is also required to provide all information and assistance in identifying the beneficiaries, including the survivors of deceased employees, for speedy settlement of claims. Q12) What is the Contribution for Provident Fund both by the Employer & Employee? Ans : The Employee contributes 12% of his /her Basic Salary & the same amount is contributed by the Employer. Q13) Is it Compulsory for all the employees to contribute to the Provident Fund? Ans : Employees drawing basic salary upto Rs 6500/- have to compulsorily contribute to the Provident fund and employees drawing above Rs 6501/- have an option to become member of the Provident Fund. Q14) Is it beneficial for employees who draw salary above Rs 6501/- to become member of Provident Fund? Ans Yes because provident fund contribution by the employer & employee is not a taxable income for Income Tax purpose. Q15) What if an employee while joining establishment has a basic salary of Rs 4200 and after some period of time his basic salary increases above Rs 6501/-, does he have an option to terminate his member ship from the Provident fund act?

5 Ans : Employee who while joining the organisation has a basic salary above Rs 6501/- have an option to either become or avoid becoming member of Provident fund but employees whose basic salary while joining the organisation is less then Rs 6501/- but after some period of time their basic increases above Rs 6501/- have to compulsorily continue to be member of provident Fund. Q16) What is the contribution percentage to the Provident fund and Pension Scheme? Ans : Employers contribution of 12% of basic salary is totally deposited in provident fund account Whereas out of Employees contribution of 12%, 3.67% is contributed to Provident fund and 8.33% is deposited in Pension scheme. Q17) Which form has to be filled while becoming member of provident fund? Ans : Nomination Form No 2 has to be filled to become a member of the Provident fund, form is available with HR department. Q18) Is employee the only beneficiary of Fund? Benefit will be paid to him/her and in his/her absence to his/her family. Q19) What is meant by Family? Family means employees' spouse and children below 25 years of age. Q20) Suppose an employee does not have a Family and he/she dies before receiving benefit. Does his/her pension get lost? No, if he/she does not have a family, benefits will be paid to his/her nominee, who will receive the benefit in his/her absence. Q21) Suppose member has not nominated anyone. The pension / ROC will be paid to the dependent parents. Q22 ) Which form has to be filled while transferring provident fund deposit? Ans : You just have to fill form no 13 to transfer your P.F amount. Q23 ) What is the provision of the scheme in the matter of nomination by a member? Ans : Each member has to make a nomination to receive the amount standing to his credit in the fund in the event of his death. If he has a family, he has to nominate one or more person belonging to his family and none other. If he has no family he can nominate any

6 person or persons of his choice but if he subsequently acquires family, such nomination becomes invalid and he will have to make a fresh nomination of one or more persons belonging to his family. You cannot make your brother your nominee as per the Acts. Q24 ) When is an employee eligible to enjoy pension scheme? Ans : For an employee to become eligible for Pension fund, he has to complete membership of the Fund for 10 Years. Q25 ) What does it mean by continuous service of ten years? Ans : When we say continuous service of 10 years in Employee Pension Fund, we mean to say that during services, for e.g., an employee who has worked with X company for say 3 years, then he resigned from that organisation and joined Y company, wherein he worked for 2 years, then resigned from there to join establishment for 5 years but during these 10 years of service he has not withdrawn but transferred his Employee pension fund, then we say continuous service of ten years. Q26 ) When can an employee avail the benefit of Employee pension fund scheme which he has contributed during his ten years of continues service / Ans : An employee can avail the benefit after completion of 58 years of service. Q27 ) What happens to the provident fund & Employee Pension fund if an employee who wants to resign from the service before completion of ten years of continues service? Ans : Employee can withdraw the PF accumulations by filling Forms 19 & 10 C which is available with the HR department. Q28 ) What is this 19 & 10C form? Ans : Form No 19 is for Provident fund withdrawal & Form No. 10 C is for Pension scheme withdrawal. Q29 ) Do we get any interest on the amount which is deposited in the Provident Fund account? Ans : Compound interest as declared by the Govt. is given for every year of service. Q30 ) What is the accounting year for Provident fund account? Ans : Accounting year is from March to February. Q31 ) What are the benefits provided under Employee Provident Fund Scheme?

7 Ans : Two kinds of benefits are provided under the scheme- a) Withdrawal benefit b) Benefit of non -Refundable advances Q32 ) What is the purpose of the Employee s Pension Scheme? Ans : The purpose of the scheme is to provide for 1) Superannuation pension. 2) Retiring Pension. 3) Permanent Total disablement Pension Superannuation Pension: Member who has rendered eligible service of 20 years and retires on attaining the age of 58 years. Retirement Pension: member who has rendered eligible service of 20 years and retires or otherwise ceases to be in employment before attaining the age of 58 years. Short service Pension: Member has to render eligible service of 10 years and more but less than 20 years. Q33 ) How much time does it take to receive P.F & pension money if an employee resigns from the Service? Ans : Normally the procedure for receiving P.F & Pension money is, the employee has to fill 19 & 10 c Form and submit the same to PF Desk, which is then submitted to the P.F office after two months, this two months is nothing but a waiting period as the rules are that an employee should not be in employment for two months after resigning if he has to withdraw his P.F amount. After completion of two months the form is submitted to the regional provident fund Commissioner office after which the employee receives his amount along with interest within a period of 90 days. Q34 ) Do we receive money through postal order? Ans Previously there was a procedure wherein member use to get P.F through Postal order but now While submitting the P.F withdrawal form you have to mention your saving Bank account No. & the complete address of the Bank where you hold the account. Q35 ) How would I know the amount of accumulations in my PF account? Ans : PF office sends an annual statement through the employer which gives details about the PF accumulations. The statement contains details like, Opening balance, amount contributed during the year, withdrawal during the year, interest earned and the closing balance in the PF account. This statement is sent by the PF department on completion of the financial year. Q36 ) Which establishments are covered by the Act?

8 Ans : Any establishment which employs 20 or more employees. Except apprentice and casual laborers, every Employee including contract labour who is in receipt of basic salary up to Rs p.m. is covered by the Act. Q37 ) Is a trainee an employee under the Act? Ans : Yes, a trainee would be considered as an employee as per the Act but in case the trainee is an apprentice under the Apprentice s Act then he/ she will not be considered as an employee under this Act. Q38 ) In case after registering the establishment at any point in time, the number of employees working in it becomes less than 20 then will the Act apply? Ans : Any establishment which has been covered under the Act once, shall continue to be governed by the Act even if the number of persons employed therein at any time falls below 20. Q39 ) Is the Act applicable to a factory which is closed down but is employing a few employees to look after the assets of the establishment? Ans : No, Where the establishment is closed down and only four security men are employed for keeping a watch over the assets and properties of the establishments, the Act would not be applicable. Q40) Is it possible to appeal the orders of the Central Government or the Central Provident Fund Commissioner? Ans : Yes, there is a body called as Provident Fund Appellate Tribunal where an employer can appeal. Q41 ) Who is the authority to decide regarding the disputes if any? Ans : In case there is a dispute regarding the applicability of the Act or the quantum of money to be deducted etc. the authority to decide are the i)central Provident Fund Commissioner, ii)any Additional Provident Fund Commissioner, iii)any Additional Central Provident Fund Commissioner iv)any Deputy Provident Fund Commissioner v)any Regional Provident Fund Commissioner or vi)any Assistant Provident Fund Commissioner Q42 ) What in case there are workers involved as Contract labour? Ans : It is the responsibility of the Contractor to deduct the PF and submit a statement to the Principal Employer in the prescribed format by 7th of every month. The Company

9 becomes the Principal Employer would be responsible for the PF deduction of the workers employed on contract basis. Q43 ) Are the persons employed by or through a contractor covered under the Scheme? Ans : Persons employed by or through a contractor are included in the definition of employee under the Employee s Provident Finds Act, 1952, and as such, they are covered under the Scheme. Q44 ) In case if the Contractor fails to deduct and submit the PF amount from the contract workers then what is to be done? Ans : The Company being the Principal employer is responsible for the PF to be deducted from the Contract workers as well. In case the Contractors fails to deduct and submit the PF dues then the Company has to pay the amount and can later on recover the amount from the Contractor. Q45 ) Could the employer be punished in case the remittance of contribution by him is delayed in a Bank or post office? Ans : Employer cannot be punished or penalized in case there is a delay in the remittance of the contribution on account of delay in Bank or post office. Q46 ) What happens in case there is a salary revision and a raise in the basic salary of the employee and arrears need to be paid, Do we need to deduct PF from the arrears as well? Ans : Arrears are considered to be emoluments earned by the employee and PF is to be deducted from such arrears. Q47 ) Is it possible for an employee to contribute at a higher rate than 12 %? Ans : Yes, if an employee desires to contribute an amount at a higher rate than 12 % of basic salary then they can do so but it does not become obligatory for the employer to pay anything above 12 %.This is called voluntary contribution and a Joint Declaration Form needs to be filled up where the employer and the employee both have to give a declaration as to the rate at which PF would be deducted. Q48 ) What is the interest on the PF accumulations? Ans : Compound interest as declared by Central Govt. is paid on the amount standing to the credit of an employee as on 1st April every year. Q49) What is the mode of payment of Provident Fund and Employees' Deposit Linked Insurance dues?

10 Provident Fund & Employees' Deposit Linked Insurance dues is paid by money order/ by deposit in payees' bank a/c/ through employer/ by depositing the cheque in payees' name or part of amount in annuity scheme in any nationalised bank. Payment by money order is allowed where the amount is not more than Rs. 2000/-. Q50) What is the time taken for disposal of the application in the Provident Fund office? The claims received complete in all respects are disposed off within a maximum period of 30 days from the date of receipt of claims in the office. In case the member is not hearing anything about his application within 30 days, he can approach the Public Relation Officer. Q51) What are the modalities to be followed for payment through cheque? The member has to open an account in the nationalised bank, scheduled bank, urban bank or post office savings bank. He has to furnish the details of bank a/c no. with the full address of the bank in application form. An advance stamped receipt has also to be annexed in the form. For receipt of pension member/claimant has to open an account only in State Bank of India or Punjab National Bank. Q52) In case of returning of cheque what is the procedure to be followed? Generally the cheques are returned by the bankers when the a/c number is furnished incorrect or a/c has been closed. On receipt of the cheque from the bankers the Provident Fund office will write to the member & employer about the fact & request them to intimate the bank, a/c number & detailed address. In case, the member comes to know about returning of the cheque before this, he can write to the Provident Fund office through his former employer regarding his present address & bank a/c number. Q53) What is the procedure to be followed by the member if the employer is not attesting his claim forms? It is the duty of the employer under the Act & Scheme to help Employees' Provident Fund organisation to settle the Provident Fund dues of his employees. He has to complete the prescribed application within 5 days of receipt [para72(5)] forms & hand over it to the member when he leaves the service. When a member finds difficult to get the form attested by the employer, he can get the attestation of any of the following officer & send to the Provident Fund office 1. Manager of a bank. 2. By any gazetted officer.

11 3. Member of the Central Board of Trustees./ committee/ Regional Committee (Employees' Provident Fund Organization). 4. Magistrate/ Post/ Sub Post Master/ President of Village Panchayat/ Notary Public. Q54)What is the upper wage limit for calculating PF contribution? The statutory wage ceiling for calculating PF contribution is Rs.6500/- per month. However, the contribution can be made on higher salary at the option of the employee and employer. Contribution under EPS can be made on higher wage limit only from the date the wage exceeds the ceiling limit and not subsequently. Q55) What are the Contribution and Charges payable? Employee s contribution : 12% of wages Employer s contribution : 13.61% of wages The above amount is to be remitted in different heads as under Account head A/c No. I (EPF Contribution) 12.00% 3.67% A/c No. II (EPF 1.10% Administration Charges) A/c No. X (EPS 8.33% Contribution) A/c No. XXI (EDLI 0.5% Contribution) A/c No. XXII (EDLI 0.01% Administrative Charges) Total 12.00% 13.61% Note 1 : The rate of contribution is decided on the employment strength on the date of coverage. If the employment strength falls below 20 subsequently, the rate of contribution will remain unchanged. Note 2 : For those employees above 58 years of age the contribution towards EPS (A/c No. is not required to be diverted and this amount is also credited to A/c No. I.