Provident Fund Registration (PF)

Provident Fund (PF)

Employees’ Provident Fund is a social security scheme that helps employees save a small portion of their salary for future benefits.

Every company has to offer its employees an EPF or Employees Provident Fund which is akin to a retirement fund. EPF comes under the purview of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. EPF registration is mandatory for organizations with total employee strength more than 20.

Eligibility for EPF Registration:

For Employer-

     ♦ A factory with the total employee strength of 20 or more.

     ♦ An establishment that employs more than 20 persons. Here, the Central Government defines the class of such firms.

     ♦ An establishment that has less than 20 workers and has been notified of compulsory registration for not less than 2 months.

Companies with less than 20 employees (Note: Such companies must issue a notice to the Employees Provident Fund Organization in 2 months or less than that). The employer and the employees of an establishment must mutually agree to apply for PF to the Central PF Commissioner. A notification has to be sent to the Official Gazette from the date of the agreement. Every employee is eligible for PF right from the beginning of his employment. The responsibility of PF contribution and deduction is of the employer’s.

For Employee-

     ♦ Employees’ drawing less than INR 15,000 per month, to become members of the EPF. As per the guidelines in EPF, employee, whose ‘basic pay’ is more than INR 15,000 per month, at the time of joining, is not required to make PF contributions. Nevertheless, an employee who is drawing a pay of more than INR 15,000 can still become a member and make PF contributions, with the consent of the Employer.

Benefits of PF Registration

Pension Coverage

Besides the contribution of the employee to EPF, the employer adds an equal amount which is inclusive of Employee Pension Scheme (EPS). Therefore, EPF saves you a robust pension.

Cover Of Risk

In case of instances like illness, demise or retirement, Provident Fund helps the dependents of the employee by covering the financial risks they face in such situations.

Single Account/One EPF Account

The PF account can be transferred while switching jobs. Universal Account Number(UAN) linked to the Aadhar will start to facilitate the linking of the previous accounts. It can be carried forward to the new employer instead of being closed down. This uniformity ensures that the rate of return is compounded over the years.

Emergency Fund

Emergencies are bound to happen at any point of time in life. EPF amount can be of great help during mishaps, illnesses, weddings and educational expenses. Employee can make claims online.

Employee Deposit Linked Insurance Scheme

Any person who has PF account is eligible for this insurance scheme that requires only 0.5 % of the salary deduction as premium.

Extended Goals

The PF account can be extremely helpful for long-term goals like buying a property or setting up a fund for children.

RATES OF CONTRIBUTION:

Employee Contribution to EPF is 12% of salary

Employer Contribution to EPF is 3.67% of salary

Employer Contribution to EPS is 8.33% of salary subject to a ceiling of INR 15,000 salary

Employer Contribution to EDLI is .5% of salary

Employer Contribution to EPF admin charges is .5% of salary

Limit Under EPF

The contributions are payable on maximum wage ceiling of INR 15000/-

For an International Worker, wage ceiling of INR 15000/- is not applicable.

Limit Under EPS

Contribution is payable out of the employer’s share of PF and no contribution is payable by employee

Pension contribution not to be paid:

When an employee crosses 58 years of age and is in service (EPS membership ceases on completion of 58 years). When an EPS pensioner is drawing Reduced Pension and re-joins as an employee.

Documents Required for PF Registration

PAN card of establishment

Certificate of incorporation

Cancelled cheque of establishment

Address proof that is in the name of the establishment. It can be:

Rent agreement

Water

Electricity

Telephone bill

Specimen signature of directors and authorized signatories

Digital signature of the authorized applicant

In case of voluntary registration, consent of the majority of employees

Time-period

Around 2-3 Days after providing all the documents.

PF Interest Rates of the Last 10 Years

 

Financial Year

Rate of Interest P.A.

2020-2021

8.50%

2019-2020

8.50%

2018-2019

8.65%

2017-2018

8.55%

2016-2017

8.65%

2015-2016

8.80%

2013-2015

8.75%

2012-2013

8.50%

2011-2012

8.25%

2010-2011

9.50%

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