Under the EPF and Miscellaneous Provisions law (1952), the Indian Central Government devised the Employee Provident Fund program. PF registration was introduced in 1951; it is available throughout India, except in Jammu and Kashmir. Employees’ Provident Funds have been recognized as one of the best investment mechanisms for salaried workers. EPF registration has been made mandatory by the Indian government by stipulating specific conditions.
The government’s long-term objective was to cultivate the habit of saving for every worker working for a public or private company. For government employees employed in state or federal offices, the same approach is followed.
Employees’ Provident Fund Applicability
Registration with the EPF is mandatory for:
* A commercial factory or manufacturing plant employs at least twenty people.
* During the previous year, any establishment had a minimum of 20 professionals.
* Employees with salaries below Rs15,000 per month
All employees who are employed by institutions eligible for the EPF scheme are required to contribute a substantial portion of their salary each month. A regular contribution schedule is in place. A savings account is used to collect employee contributions. The money is otherwise invested in the market. In retirement, the cumulative principal value and the tax surplus are credited to the individual. A person can also transfer these funds if he switches jobs for a better career opportunity.
EPF contribution needed
In addition to the basic pay, retaining allowance and dearness allowance, the employer must contribute 12% of the cumulative amount. Employees are even required to contribute the same percentage as well. If your business hires fewer than 20 professionals, the contribution rate drops to 10%. For this amendment to be applicable, there are specific PF registration requirements based on EPFO guidelines.
In accordance with the Indian government’s pension scheme, employees contribute 8.33% of their monthly wages (10% or 12%). It must be noted, however, that this calculation assumes that the salary is at least Rs. 15,000 per year. Every month, Rs. 1250 is credited to the EPS account of every professional with a monthly salary of at least Rs. 15,000. However, if the basic sum falls below Rs. 15,000, it gets shifted into the EPS by 8.33%. The remaining balance is deposited into the EPF account. Upon retirement, the employer pays the worker the amount saved in his EPF account as well as his EPS share.
EPF Employer Eligibility Criteria
PF registration is not required if an employer employs no more than 20 employees to run his business. A majority of professionals within an organization must also approve the exemption for it to be effective. Let’s say the latter scenario is true. As an employer, you may still have to undergo definite conditions where the government will ask you to complete various formalities. Form 1 may be used by employers when a group or individual receives PF perks that are as good as statutory provisions.
Employers recruiting fewer than 20 professionals: contribution rate
EPFO norms require establishments with less than 20 employees to give EPF at 10% of in-hand wages and a dearness allowance.
The following situations are covered:
* The number of employees in an office is as low as ten or even less
* At the end of the previous financial year, a firm incurred heavy losses
* The manufacturing industry includes brick factories, beedi factories, gum factories, and jute factories.
EPF Redeeming Process: What Is It?
Once the employee reaches 55 years of age or retires, he can redeem the accumulated funds from his EPF account. Employees are eligible to withdraw their entire EPF income, which includes their employer’s monthly contributions. Before reaching 55 years of age, the employee can redeem the entire amount from his EPF account. During the next two months, he must not be active in his employment status.
To help you redeem your EPF balance online without encountering any hassle, we have outlined the sub-processes in detail:
* Visit EPFO’s official website: unified portal-mem.epfindia.gov.in
* Use your password and UAN code to sign in.
* After successfully logging in, the first thing you need to do is review the KYC specifications.
* Click ‘Online Services’ and select ‘Claim (Form 31,10C & 19)’.
* The last four numbers of your registered bank account must be entered carefully by selecting ‘member’s details’ and then selecting ‘verify’.
* The undertaking certificate must now be signed.
* Online withdrawal applications can be submitted here.
* EPFO now checks bank details against KYC documents. A request for EPF money is processed by the administration, and the payment is sanctioned within 10-15 days, after which it is directed to the registered bank account.
* Employees may redeem their provident fund through this government-supervised online facility if their Aadhar IDs are linked to their Universal Account Numbers.
All public and private firms must register for PF. In certain cases, an employer’s contributions are exempted, which must be addressed by the businessperson via several forms. Online registration has simplified the process for employees, who can track their savings by entering their login credentials.