EPF ACT

THE EMPLOYEES PROVIDENT FUND AND MISCELLANEOUS PROVISIONS ACT, 1952

1. DR. BHIMRAO AMBEDKAR UNIVERSITY, AGRA INSTITUTE OF SOCIAL SCIENCES DEPARTMENT OF SOCIAL WORK SEMINAR ON THE EMPLOYEE’S PROVIDENT FUND AND MISCELLANEOUS PROVISIONS ACT, 1952 SUBMITTED TO SUBMITTED BY DR. R. K. BHARTI DIKSHA YASH (PROF. DEPTT. OF SOCIAL WORK) M.S.W. 3 RD SEM ROLL NO. - 10

2. INTRODUCTION Employees Provident Fund (EPF) Scheme is one of the most popular forms of long term retirement savings in India. It is managed by the Employees Provident Fund Organization (EPFO) and is covered under the Employees’ Provident Funds and Miscellaneous Provisions act, 1952. Under the scheme every establishment with 10 or more employees, has to contribute a certain percentage of an employees salary to the scheme with an equal matching contribution by the employer. On retirement the, the employee gets a lump sum which includes the amount contributed by employee himself and that by the employer along with the interest earned on this money.

3. DEFINITIONS 1. “APPROPRIATE GOVERNMENT” means – In relation to an establishment belonging to, or under the control of the Central Government or in relation to an establishment connected with a railway company, a major port, a mine or an oilfield or a controlled industry, or in relation to an establishment having departments or branches in more than one State. 2. “EMPLOYER” means – In relation to an establishment which is a factory, the owner or occupier of the factory, including the agent of such owner or occupier, the legal representative of a deceased owner or occupier and, where a person has been named as a manager of the factory.

4. 3. “EMPLOYEE” means – Any person who is employed for wages in any kind of work. Manual of otherwise in or in connection with the work of [an establishment], and who gets his wages directly or indirectly from the employer. 4. “FACTORY” means – Any premises, including the precincts thereof, in any part of which a manufacturing process is being carried on or is ordinarily so carried on, whether with the aid of power or without she aid of power. 5. “MEMBER” means – A member of the fund.

5. Employees’ Provident Fund (EPF)

6. ELIGIBILITY FOR MEMBERSHIP OF EPF SCHEME Employees need to become an active member of the scheme in order to avail benefits under this scheme. Employees of an organization are directly eligible for availing Provident Fund, insurance benefits as well as pension benefits since the day they join the organization. Any organization employing a minimum of 20 workers is liable to give EPF benefits to the workers. This scheme does not cater to the needs of people residing in Jammu and Kashmir.

7. APPLICABILITY OF THE ACT Applicable all over India except Jammu and Kashmir. Any establishment to which the Act applies shall continue to be governed by the act even if the number of persons employed therein at any time falls below. If act is applicable on any establishment, then the provisions will be automatically applicable on all Branches etc. I f this act is applicable on S ahara then wherever Sahara opens its Branches (irrespective of no of members in that branch), this Act will be applicable on it.

8. EMPLOYEE’S CONTRIBUTION TOWARDS EPF The Employee’s Provident Fund is a fund where both the employer as well as the employee contributes a part of salary. These contribution are made regularly on a monthly basis. The interest rate fixed depends upon the employee’s basic pay along with the dearness allowance in his salary. In general the contribution rate for the employee is fixed at 12%. However the rate is fixed at 10 % for the below mentioned organizations: Organizations or firms employing a maximum of 19 workers. Organization suffering annual loss much more compared to their net valsue . Organizations operating under wage limit of rs. 6,500.

9. EMPLOYER’S CONTRIBUTION TOWARDS EPF The minimum amount of contribution to be made by the employer is set at a rate of 12% of rs. 15,000 (although they can voluntarily contribute more). This amount equals to rs. 1800 per month. It means that both the employer as well the employee has to contribute rs. 1800 per month towards this scheme. Initially, this amount was set at 12% of rs. 15,000 which would equal to rs. 780 to be contributed both by the employer and the employee.

10. IMPORTANT POINTS RELATED TO EPF CONTRIBUTION The contribution made by the employee goes totally towards the provident fund of the employee. The contribution made by the employer is divided into different parts. Total contribution made by the employer is distributed as 8.33% towards Employees’ Pension Scheme and 3.67% towards Employees’ Provident Fund. Apart from the above made contributions, an additional 0.5% towards EDLI has to be paid by the employer. Certain administration costs towards EDLI and EPF standing at the rate of 0.50% and 1.085% respectively also have to be incurred by the employer. This means that the employer has to contribute a total of 13.61% of the salary towards this scheme.

11. INTEREST RATE ON EPF The interest rate for the financial year 2017 - 2018 is 8.55%. The interest rate for the following financial year 2018 – 19 is schedule to be declared in the month of January 2019. The accumulated fund in the PF account attract certain interest which is 100% tax exempted. The interest earned is directly transferred to the Employees’ Provident Fund account and is calculated depending upon the rate which is pre-decided by the GOI along with the Central Board of Trustees (CBT). The year in which the new interest rates are announced stays valid for the next financial year from the year starting on 1 st April of one year to the year ending on 31 st March to the next year.

12. LATEST CHANGES

13. LATEST CHANGE IN EPF WITHDRAWAL RULES Under the new PF withdrawal rules, there is an option to withdraw 75% of accumulate PF after one month of unemployment, keeping the account achieve at the same time. This is to say that EPFO subscribe will have an option to withdraw their PF in two parts ,75% after the competition of one month of unemployment and remaining 25 % of their funds after completion of two months of unemployment, this setting the account.

14. EPF WITHDRAWL Post Retirement : When an individual retires from employment after attaining the per- determined retirement age, he can withdraw the entire amount of EPF which includes employer’s contribution along w ith the interest earned. Unemployment : EPFO subscribers an option to withdraw their PF in two parts; 75% after the completion of one month of unemployment and the remaining 25% of their funds after completion of two months of unemployment; thus setting the account. They can also withdraw their PF kitty directly after two months of unemployment and settle the account in one go. A subscribe can withdraw full PF amount and the interest earned over it.

15. EPF WITHDRAWAL

16. If WITHDRAWAS ANYTIME AFTER 10 YEARS OF SERVICE REASON EPF WITHDRAWL LIMIT MINIMUM YEARS OF SERVICE REQUIRED Marriage Up to 50% of employee’ share 7 years Education Up to 50% of employee’s share 7 years Purchase of land/construction of a house Up to 36 times of monthly pay + DA 5 years Home loan repayment Up to a max. of 90% from both emp. empl . 10 years Renovation of house Up to 12 times of the monthly pay 5 years After 57 years of age Up to 90% of accumulated balancev with interest 57 years of age

17. BENEFITS OF THE EMPLOYEES PROVIDENT FUND TAX-FREE SAVINGS : EPF scheme provides certain interest on the deposits at a specific rate which is pre- decided by the organization. Both the amount of interest received on the deposited and the actual deposits amount is deemed to be tax free by the Indian Government. LONG TERM FINANCIAL SECURITY : Funds deposited in this account cannot be withdrawn easily and hence, helps in ensuring savings. RETIREMENT PERIOD : The accumulated fund under this scheme may be used at the time of retirement of the employee. This provides relief to retired employee in the form of monetary scheme.

18. 4. UNSEEN CIRCUMSTANCES : The accumulated fund can be used by the employee in case of any kind of emergency. The employee may choose the withdraw his/her fund prematurely. The scheme provides for such pre-term withdrawals in special cases. 5. UNEMPLOYMENT/ INCOME LOSS : In case where the employee loss his/her current job owing to any reason then these funds may be used to meet expenses. 6. RESIGNATION/ QUITTING OF JOB : The employee post-resignation is free to withdraw his/her 75% of the EPF fund after one month of the date of having quit the job and remaining 25% after 2 months of unemployment. 7. DEATH : In case of death of the employee, the collected amount along with the interest is given to the employee’s nominee thus helping the family tide through difficult times. 8. DISABILITY OF THE EMPLOYEE : If the employee is no longer in the position to work then he/she may use these funds to help him/her get over the difficult times. 9. LONG RUN SAVINGS : A safe and full proof saving scheme for individuals wishing to have long run investments.

19. ESTABLISHMENT TO INCLUDE ALL DEPARTMENT AND BRANCHES For the removal of doubts, it is hereby declared that where an establishment consists of different departments or has branches, w hether situate in the same place or in different places, all such department or branches shall be treated as parts of the same establishment.

20. 5A. CENTRAL BOARD The Central Government may, be notification in the Official Gazette, constitute, with effect from such date as may be specified therein, a Board of Trustees for the territories to which this Act extends (herein after in this Act referred to as the Central Board) consisting of the following [persons as members], namely: The terms and conditions subject to which a member of the Central Board may be appointed and the time, place and procedure of the meetings of the Central Board shall be such as may be provided for in the scheme.

21. 5B. STATE BOARD The Central Government may, after consultation with the Government of any State, by notification in the Official Gazette, constitute for that State as Board of Trustees in such manner as may be provided for in the scheme. A State Board shall exercise such powers and perform such duties as the Central Government may assign to it from time to time.

22. 5E. DELEGATION The Central Board may delegate to the Executive Committee or to the Chairman of the Board or to any of its officers and a State Board may delegate to its chairman or to any of its officers subject to such conditions and limitations, if any, as its may specify, such of its powers and functions under this Act as it may deem necessary for the efficient administration of the Scheme and the Insurance Scheme.

23. 6A. EMPLOYEES’ PENSION SCHEME The Central Government may, by notification in Official Gazette, frame a scheme to be called the Employees’ Pension Scheme for the purpose of providing for: Superannuation pension, retiring pension or permanent total disablement pension to the employees of any establishment or class of establishments to which this Act applies Widow or widower’s pension, children pension or orphan pension payable to the beneficiaries of such employees.

24. 6C. EMPLOYEES’ DEPOSIT LINKED INSURANCE SCHEME The Central Government may, by notification in the Official Gazette, frame a Scheme to be called the Employees’ Deposit Linked Insurance Scheme for the purpose of providing life insurance benefits to the employees of any establishment or class of establishments to which this act applies. There shall be established, as soon as may be after the framing of the Insurance Scheme, a Deposit-Linked Insurance Fund into which shall be paid by the employer from time to time in respect of every such employee in relation to whom he is the employer, such amount not being more than one per cent of the aggregate of the basic wages, dearness allowance and relating allowance for the time being payable in relation to such employee as the Central Government may, by notification in the Official Gazette.

25. EDLI OR EMPLOYEE’S DEPOSIT LINKED INSURANCE SCHEME

26. 7F. RESIGNATION The PRESIDING officer may, by notice in writing under his hand addressed to the Central Government, resign his office. The Presiding Officer shall not be removed from his office except by an order made by the President on the ground of proved misbehavior or incapacity after an inquiry made by a judge of the High Court. The central Government may, by rules, regulate the procedure for the investigation of misbehavior or incapacity of the Presiding Officer.

27. I 4. PENALTIES (1) Whoever, for the purpose of avoiding any payment to be made be himself under this Act [the Scheme, the [Pension] Scheme] or the Insurance Scheme or of enabling any other person to avoiding such payment knowingly make or causes to be made any false statement or false representation shall be punishable with imprisonment for a term which may extend to one year or with fine of five thousand rupees or with both.

28. REFERENCE The bare Act The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (2) https://www.myloancare.in/info-bank/epf-india (3) www.com/library/bareacts/employeesprovidentfunds/index