What is Employee Provident Fund and miscellaneous Act, 1952?
EPF act 1952 is administered by Central Board of Trustees and Employees provident fund organization (EPFO) which comes under the Ministry of Labour and employment. There are 3 main schemes in the EPF act:
Employee provident fund scheme, 1952 (EPF)?
This scheme is meant to promote retirement savings for employees.
Employees pension scheme, 1995 (EPS)
This scheme is meant to provide post-retirement benefits to the employees. 8.33% of the employees salary is contributed by the employer into this scheme so that the employee or his/her nominee can receive pension later in the future. The employee’s basic salary should be a minimum 6500/- to be eligible for this scheme.
Employees deposit linked insurance scheme, 1976 (EDLI)
This scheme is meant to provide relief to the family members of the employee in case of untimely or sudden death.
Applicability of ESI Registration
Which industries and businesses are covered under the EPF act, 1952?
- All such industries that are covered under the schedule I of the EPF Act, 1952 are liable to get registered in the EPF scheme if their employee strength is 20 or more, even for one month of a financial year.
- For cinemas, the employee strength threshold is 5 or more.
Which employees are covered under the EPF act?
- All those employees whose salary (basic+DA) is more than INR 15000 are covered under the EPF act.
Benefits of Registration under ESI
- Tax free savings under section 80 of Income tax act if you withdraw your EPF amount after 5 years
- Lucrative interest rate of 8% per annum
- Post retirement benefits: FULL EPF and EPS amount can be withdrawn at retirement if you have completed 10 years of service.
- Your EPF amount can be used towards marriage expenses, death, home loan, construction, etc.
- You will get unemployment benefits if you stay jobless for more than 2 months.
- Life Insurance: EDLI is an insurance scheme meant to provide financial relief to the family members of an employee who died a sudden death.
- The ease of using and tracking the EPF contribution through UAN (Universal account number). Click here to know more about the Huge benefits of UAN number and How to activate your NOW.
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Mandatory EPF registration
- If the employee strength of any eligible organization hits the threshold of 20 even for one month in a financial year, then that organization is liable to apply for EPF registration to avoid several penalties in near future.
- If employer wishes to provide the benefits of EPF to the employees even if the employee strength is less than 20, then he/she can apply for voluntary EPF registration under the EPF act after taking consent from all the employees.
EPF registration process for employers:
- The revised process for EPF registration has been made somewhat easier than the previous method but it still is very complex and requires several documents from the employer including a digital signature and PAN.
EPF rates and Calculation:
As we have stated above, the EPF (employee provident fund) contribution goes into the following accounts:
- EPF (employee provident fund account)
- EPS (employee pension account)
- EDLI (employee deposit linked insurance scheme)
- ELDI Administration charges (employee deposit linked insurance scheme administration charges)
To understand EPF contribution rates, their breakdown among these four accounts and the salary considered for their calculation, please watch this short videol: Video link.
How we help with EPF registration
Act 13 Advisory can help your business obtain EPF Registration in a week, subject to Government processing time.