Employees’ Provident Fund Act / Scheme
1) Employees’ Provident Fund is set up under the Central Act viz., Employees’ Provident Fund and Miscellaneous Provisions Act, 1952, in the year 1952.
2) It is applicable throughout the country (except Jammu & Kashmir).
3) It is applicable to almost all establishments falling under the industries / class of establishments, wherein 20 persons are employed.
4) In the case of cinema theatres workers it is applicable to such establishments wherein 5 persons are employed.
5) Benefits to an employee are provided through the schemes framed under the Act.
6) Provident Fund benefits are provided under the Employees’ Provident funds Scheme, 1952
7) Pensions benefits are provided under the Employees’ Pension funds scheme, 1952
8) Insurance benefits are provided under the Employees’ Deposit Linked Insurance Scheme, 1976 (Minimum Benefit ₹ 2,50,000/- & maximum benefit up to to ₹ 6,00,000/-)
9) A member of Employees’ Provident fund is automatically eligible for pension and Insurance benefits without paying any additional amount of contribution.
i) Every establishment which is a factory engaged in any industry specified in Schedule 1 and in which 20 or more persons are employed and
ii) Any other establishment employing 20 or more persons which Central Government may by notification, specify in this behalf (Infancy period of 3 years has been withdrawn by ordinance, w.e.f. 22-9-1997)
iii) Any establishment employing even less than 20 persons can be covered voluntarily u/s. 1(4) of the Act.
iv) Any establishment registered under Co-operative Societies Act, 1912, or any State Act of Co-operative Societies, employing 50 or more employees and working without the aid of power.
v) The Employees’ Provident Fund act is applicable to the cinema theatre employing 5 or more workers.
A. If an establishment consists of different departments / branches, whether located in the same place or in different places, all such departments or branches are treated as part of the same establishment.
B. The Act continues to apply even if the number of employees fall below 20.
1. Any person who is employed for work of an establishment or employed through contractor in or in connection with the work of an establishment where salary is less than ₹ 15,000/-p.m. and optionally covered where salary exceeds ₹ 15,000/- p.m. (w.e.f. 1st Sept., 2014).
2. Any person who is classified as disabled employee under new para 82 of the Employees’ Provident Fund Scheme, 1952 and working in the private sector, with monthly wages up to ₹ 25,000/- p.m. provided they are appointed on or after 1-4-2008.
3. Any person who is classified as International Worker under new para 83 of the Employees’ Provident Fund Scheme, 1952.
A contribution of P.F is to be deducted on
1. Basic Wages.
2. Dearness Allowances. (Special Allowance in Maharashtra).
To compute 20 or more employees following employees are counted
The permanent, temporary, full time, part time, casual, time – rated, piece – rated employees, contract employees, persons employed in various departments, head office, branches, sales offices, godowns or any other different places etc. and sales representatives are counted for computing the employment strength. Apprentices engaged under the Apprentices Act, 1961 are not counted for the purpose of applicability.
Contribution rates w.e.f 1st April 2017
Employee’s Contribution 12% and
Employer’s Contribution 12% plus 1.00% = 13.00%
From employers contribution out of 12% contribution 8.33% is deposited in the Employees’ pension Fund subject to a ceiling that the contribution payable by the employer be limited to the amount payable on his pay of ₹ 15,000/- pm hence maximum contribution under Employee’s Pension Fund will be ₹ 1,250/-. And balance 1.00% includes administrative charges and EDLI Contribution.
Provident Fund Challans consist following Accounts and Rate of Contribution w.e.f 1st June 2018
Liable to be arrested without warrant being a cognisable offence
Defaults by employer in paying contributions or inspection/administration charges attract imprisonment up to 3 years and fines up to ₹ 10,000/- (S.14).
For any retrospective application, all dues have to be paid by employer with damages up to 100% of arrears. Contribution payment liability upon the employer for both the shares payable, but for restrictive provisions contained in para.32 of the EPF scheme 1952, the employer is RESTRAINED from recovering “EMPLOYEE SHARE” of contribution for the past period.
Rules & Regulations for Loan, Advance & Withdrawal from Employees’ Provident Fund Scheme
Minimum Service Limit for EPF Loan
Did you find yourself eligible for partial withdrawal of EPF? Do you have one of the above reasons? Yes? Still, you may not get the PF money. There is minimum service condition for each cause.
No Minimum Service Limit
• Medical Treatment
• Pre retirement
Minimum 5 Years of Service
• Home or Plot Purchase
• Construction of House
• Alteration or Addition in Home
Minimum 7 Years of Service
Minimum 10 Years of Service
• Home Loan Repayment
• Home Repair
Rules of PF withdrawal before leaving the job
You can take the non-refundable loan from the EPF account. But it does not mean that you should prefer this option. Never try to touch the retirement fund.
You can withdraw the PF money if you leave the job and remain unemployed for 2 months. Even in some circumstances you can get PF money just after leaving the job. But to withdraw amount from EPF during the job, you have to fulfil many conditions.
1. You have to fulfil the minimum service need. The best part is the duration of the service is total. Duration of each job is added to this calculation, given you have transferred your PF account to the new job. Now you can transfer the PF amount easily with the introduction of UAN.
2. There is a limit on the amount you can withdraw. It can be up to 36 times of your wages (basic+DA). The maximum amount for withdrawal depends upon the reason of PF withdrawal.
3. You need to give proof of the reason you have mentioned.
Let us see the conditions of partial PF withdrawal for each purpose
PF withdrawal for marriage
• You can withdraw from the EPF account on the occasion of marriage. The marriage can be of yourself, sister, brother, son or daughter.
• The minimum service period for this advance is 7 years.
• You can withdraw up to 50% of the total employee contribution. You can use this reason 3 times in your life.
• Marriage invitation card along with the application should be submitted through the employer.
PF withdrawal for education
• You can withdraw fund for the education of self and children.
• You should have completed a total service of 7 years.
• You can get up to 50% of the employee contribution.
• This option can be used 3 times in a lifetime.
• You should attach bona fide certificate duly indicating the fees payable from the educational institution.
PF Advance for Medical Treatment
• You can take an advance from PF account for the treatment of self, spouse, children and parents.
• There should be hospitalisation for more than a month. If the claimant is an employee, he should have taken leave from the organization.
• You can avail advance in case of TB, leprosy, paralysis, cancer, mental derangement or heart ailment without the hospitalization.
• You have to give the certificate from the doctor stating the hospitalization need. In case of above mentioned disease you need to give the certificate from specialist doctor.
• You can take 6 times of wages (basic+DA) or total employee share, whichever is less.
• There is no limit on the frequency.
Purchase Home or Construction using PF Money
• Buying home or plot is one of the most important decisions of life. We invest most of our savings on this. But do you want to compromise with your retirement years. Think about this before applying for PF withdrawal.
• You can withdraw from PF for the purchase of a home or construction of the house only once.
• You must have completed 5 years in service.
• Property should be registered in the name of self or jointly with spouse.
• There should not be any joint owner of property other than the spouse.
• You can get 36 times of wage (basic+DA) for this purpose.
• You need to give a filled declaration form with the application.
EPF Loan for buying a Plot
• PF money can be also used for buying a plot.
• You can avail the withdrawal facility for purchase of plot only once.
• You must have completed 5 years in service.
• There should not be any co-owner of the property other than the spouse.
• You can get 24 times of wages (basic +DA).
• You need to give a copy of the purchase agreement.
• You should give a declaration with the application.
Alteration or addition in the House
• You must have completed 5 years in service.
• At least 5 years after the construction of house.
• You can get 12 times of wages.
• Property should be owned by you or jointly with the spouse. Only once in service.
• Alteration proof is required.
• Repair of House.
• All the conditions are similar to the alteration of house except you have to wait at least 10 years after the construction of house.
Lockout of the Company
• If you are not getting wage for last two months and your company is locked out or closed for at least 15 days, you can take a loan from EPF.
• You can get the amount equal to your unpaid wages.
• There must have a balance in employee contribution.
• You can check your PF balance through various methods.
• If closure has been for more than 6 months, you can also use the employer’s contribution. (Do you wait for such a long time)
Withdrawal Prior To Retirement
• You must have completed 57 years of age
• Retirement should be after one year.
• You can get up to 90% of the total provident fund balance.
• You need to give a certificate from the employer stating the date of retirement.
In case of Calamity
• There is no condition of minimum service.
• You have to give certificates of damage from competent authority. You can get up to 50% of the employee share.
• No other condition.
The Form and process of applying for PF Advance
To get the partial amount of EPF you have two ways to apply. The first way is the preferred one. In both the method you need to attach a declaration form with the application if you are taking advance for the following purposes.
• Flat or plot purchase
• House construction
• Alteration or addition
• Repair of the house
Now, you have a very easy way to partially withdraw the EPF amount. The EPFO has come with a simple new EPF withdrawal Form 31 (new). This form requires very little information.
The best thing about this form is that it does not require the approval from the employer. Yes! You can directly submit this form to the regional PF office. But to use this easy
facility, you need UAN activated and KYC done.
If you can’t get advance through the first method, you can apply through the employer.
You should use form 31 for the advance through the employer. You can download this form from the EPFO website.
Time to get the PF Advance
The application submitted through the first method would take less time. You can expect money within a week. But the second method can take up to one month. It depends upon your employer’s promptness. Some regional PF offices take more time.