2. Introduction
Salary consists of two parts i.e. earnings &
deductions
Provident Fund is one of the statutory deduction
done by the employer at the time of salary payment
Provident Fund is governed by the Employee’s
Provident Fund Act 1952
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3. Contd..
• Provident Fund has come into force to give better
future to employees on their retirement & his
dependants in case of his death during employment
• The Employees Provident Funds Act 1952 is
compulsory contributory fund for the future of an
employee after retirement or for his dependents in
case of his early death
• Act is applicable to all states of India except Jammu
and Kashmir
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4. Who can apply?
• Every industry employing 10 or more persons (180
industries are specified in Schedule 1 of the Act)
• Every industry employing 10 or more persons which the
Central Govt. may notify
• Any other establishment notified by the Central
Government even if employing less than 10 persons
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5. Eligibility & Entitlement
• Every employee employed directly / through a contractor who is in
receipt of wages are eligible to become a member of the fund
(exception-Apprentice under the Apprentices Act and casual
laborers)
• Irrespective of permanent / probationary employees, all employees
are eligible for joining the PF scheme from the date of joining the
service
• Minimum 10% of the basic pay for establishments employed less
than 10 persons; sick industries declared by necessary authority;
Jute, Beedi , Brick, Coir & Guar Gum Industries / Factories
• Other industries maximum 12% of the basic pay
• A member can contribute voluntarily more than statutorily
prescribed rate (upto 100% of basic salary) which will be
transferred to his PF A/c
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6. Calculation
• 12% contribution by the employee is directly transferred to
his Provident Fund A/c
• 12% is contributed by the employer out of which 8.33% is
credited to Employee Pension Fund and the balance 3.67% is
transferred to PF A/c of the employee
• 1.10% Administration charges on total wages are payable by
the employer
• 0.50% EDLI calculated on total EDLI slab (Rs. 6500) wages and
payable by the employer towards EDLI fund
• 0.01% EDLI Administration charges calculated on total EDLI
slab wages are payable by the employer
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7. Benefits
• Employees can take advances / withdraw the PF in case of
retirement, medical care, housing, family obligation, education of
children & financing of life Insurance Polices
• Upto 90% of the PF amount can be withdrawn at the age of 54
years or before one year of actual retirement
• PF amount of the deceased member is payable to nominees / legal
heirs
• Immediate income tax exemption under Sec 80C of IT Act
• Equal contribution by the employer
• Interest rate is usually higher than the prevailing market rate
(present interest rate @ 8.5%)
• PF A/c can be transferred if any member changes from one
establishment to other where the PF Scheme is applicable
• Totally tax free returns
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8. Interest
• Interest is credited to the members PF A/c on
monthly running balance
• Interest rate is fixed by the Central Government in
consultation with the Central Board of trustees of
EEPF every year during March / April
• The present rate of interest is 8.5%
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9. Nomination
• The member can nominate other person / persons to
receive the Fund amount in the event of his death
• The nomination details provided by the members are
maintained at the Regional Provident Fund Office for
use in the event of death of the member
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10. Annual Statement of Account
• After the close of each year of contribution, annual statement of
account will be sent to each member through establishment where
the member was last employed
• The annual statement of fund account will show the opening
balance at the beginning of the year, contributions during the year,
the amount of interest credited at the end of the period and the
closing balance at the end of the year
• If any error is noticed in the annual statement, the member shall
bring the same to the notice of the PF Office through employer
within 6 months from the date of receipt of the statement
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11. Advances / Withdrawals
• Purchase of site for construction of house / construction of House /
purchase of flat
• Additions / alterations / improvements to the house
• Repayment of loan
• Hospitalization for more than a month / major surgical operation /
suffering from TB, Leprosy, Paralysis, Cancer, Heart ailment etc
• Marriage of self / son / daughter / sister / brother
• Education of son / daughter
• Abnormal conditions like natural calamities
• Physically handicapped member for purchasing an equipment to minimize
the hardship due to handicap
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12. Full Settlement
• PF A/c settled immediately under the circumstances;
– Retirement after 58 years
– Retirement on account of permanent incapacity
– Termination of service on retrenchment
– Voluntary Retirement Scheme (VRS)
– Permanent migration from India to settle abroad / taking
employment
– For female members leaving service for getting married
• PF A/c settled after two months under the circumstances;
– Resignation from the services
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13. EMPLOYEE ROLE & RESPONSIBILITY
What should we do as an employer?
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14. • Provide details of self & nominees (Form-2) for PF & Pension
Scheme at the time of joining the establishment
• In case of already having PF A/c, apply for transfer of previous A/c
to the present A/c
• If willing to increase contribution, inform the same to the employer
to deduct the amount from the salary (Voluntary Provident Fund).
• Voluntary PF can be upto 100% of wages
• Understand that the employer is not liable to pay any contribution
on voluntary PF
• Periodically verify the details maintained by the employer
• Don't allow employer to deduct his share of contribution/
administrative charges payable by him from the wages
• Understand that Employees' Provident Fund Organization does not
have any agent / middlemen
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