Employees Provident Fund is established in 1952 with as object to ensure the employees better future on his retirement and of his dependents on his death.
Provident fund is a welfare scheme for the benefits of the employees. Under this scheme both the employee & employer contribute their part but whole of the amount is deposited by the employer. Employer deducted the employee share from the salary of the employee. The interest earned on this investment is also credited in pf account of the employees. At the time of retirement, the accumulated amount is given to the employees, if certain conditions are satisfied. The Employee Provident Fund (EPF) is one of the most widely-used investment schemes by the salaried class in the country.
EPF Act applies to
- The act is applicable to whole India except Jammu & Kashmir.
- To any establishment / industry employing 20 or more persons
- Cinema Theatres employing 5 or more persons
- Every employee, including the one employed through a contractor, shall be eligible for becoming a member of the funds. The condition of three months’ continuous service or 60 days of actual work
- Any employer who wish to give such benefits to his employee can also join the scheme Voluntarily
EPF Act does not apply to (as per section 16 of EPF Act)
- Co-operative societies registered under co-operative societies act 1912 employing less than 50 working without power.
- Central or state government establishment or establishment set up under any Central, Provincial or State Act, providing such equivalent benefit like contributory provident fund or old age pension
Types of Provident Fund:
- Statutory Provident Fund (SPF)
- Public Provident Fund (PPF)
- Recognized Provident Fund (RPF)
- Unrecognized Provident Fund (URPF)
Public Provident Fund (PPF):
PPF is covered under Public Provident fund Act, 1968. Any member of the public weather employed or not can invest in PPF. Minimum Contribution in this fund is Rs. 500 & Maximum amount is 1, 50,000 per year. The contributions made to the scheme along with the interests are repayable after 15 years unless extended. The rate of interest, at present, under the scheme is 8% per annum.
Recognized Provident Fund (RPF):
This Scheme is registered under Employee’s Provident Funds and Miscellaneous Provisions Act, 1952. According to the act, any person who employees 20 or more employees is under an obligation to register himself under this Act. Any person can register himself by their choice weather they had less than 20 employees.
Unrecognized Provident Fund (URPF):
A scheme started by the employer and the employees in an establishment, whether approved by the commissioner of Income Tax is called an unrecognized provident fund.
Breakup of EPF Contribution:
12% of the employee’s salary goes towards the EPF.
Whereas the employer’s contribution is 13% divided as below:
3. 67% goes towards contribution for EPF
8. 33% goes towards contribution for EPS
0. 5% goes towards contribution for EDLI
0. 5% goes towards contribution for EPF administration charges
