1. What does the coverage mean?
Employees' Provident Fund Organisation (EPFO) is managing three Schemes viz., EPF Scheme 1952, EPS 1995 and EDLI Scheme 1976. Coverage under the EPF Act means simultaneous coverage under all three Schemes, unless exemption is granted from a particular scheme. The date on which the establishment is brought under the coverage of EPF &MP Act and the Code number (starting with KR/) is indicated in the coverage notice. The PF code number allotted is permanent and should be quoted in all returns and communications with the PF office.
2. What should an employer do on receipt of the coverage notice?
An employer is required to submit initial returns (please see annexure for details) within 15 days from the date of receipt of coverage notice. The employer is also required to remit the contribution from the date of coverage to the month prior to the date of issue of coverage notice within 15 days of receipt of the notice. The employer is also required to submit all monthly and annual returns (please see annexure for details) from the date of coverage.
3. What are the Contribution and Charges payable?
a. If the employee strength at the time of coverage is 20 or more
Employee's contribution : 12% of wages
Employer's contribution : 13.61% of wages
b. If the employee strength at the time of coverage is less than 20
Employee's contribution : 10% of wages
Employer's contribution : 11.61% of wages
The above amount is to be remitted in different heads as under
Account head | Employee's share | Employer's share | ||
A/c No. I (EPF Contribution) | 12.00% | 10% | 3.67% | 1.67% |
A/c No. II (EPF Administration Charges) | 1.10% | 1.10% | ||
A/c No. X (EPS Contribution) | 8.33% | 8.33% | ||
A/c No. XXI (EDLI Contribution) | 0.5% | 0.5% | ||
A/c No. XXII (EDLI Administrative Charges) | 0.01% | 0.01% | ||
Total | 12.00% | 10.00% | 13.61% | 11.61% |
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. X) @8.33% is not required to be diverted and this amount is also credited to A/c No. I.
4. What emoluments constitute wages for calculation of PF contribution as above?
All emoluments including Basic pay, dearness allowance and cash value of food concession. Allowances such as House rent allowance, Traveling allowance and Overtime allowance paid, over and above minimum wages applicable to the establishment, as per pay structure of the establishment can be excluded from the calculation. It may be noted that no such bifurcation is permissible below minimum wages.
5. 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.
6. 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 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 : The excluded employee can be enrolled to PF on joint application of both employer and employee.
Note 4: A declaration Form-11 is to be obtained from all employees joining the establishment.
7. 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.
8. 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.
9. 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.
10. What is the due date for remittance of PF contribution?
15th of subsequent month i.e., the contribution based on salary for the wage month of October is to be remitted on or before 15th 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.
11. 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.
12. 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.
13. 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.
14. 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.
15. What are the benefits to the employees and how will they claim the benefits?
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.
16. 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.