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Who has to register under Employee Provident Fund (EPF)

Employee Provident Fund (EPF) is a society security fund created for the purpose of providing financial security and stability during retirement. The employees will contribute a portion of their salary to this fund during his employment. The employer is also obliged to contribute an equal amount (as specified by the Act) towards EPF of the employees. The primary purpose of PF fund is to help an employee save a fraction of his salary every month so that he can use the same in the event that the employee is temporarily or no longer fit to work or at retirement.

 

Who has to register under EPF Act?
Every establishment with 20 or more employees should register under EPF Office.

 

I run a partnership firm with 30 employees. Should I register with EPFO?
Yes. Irrespective of type of organization (except the exempt categories) be it proprietorship, partnership firm, LLP or company, etc., if the number of employees exceed 20 during any time of the financial year, registration with EPFO is mandatory.

 

The employee strength is less than 20, but still can I get PF registration?
Yes. It is called voluntary registration.

 

What is the percentage of EPF contribution?
12% of basic pay and Dearness Allowance (DA) has to be contributed to the fund every month.
I am drawing a salary of Rs.50000 per month. Should I make PF contribution?
The employees drawing salary (Basic Pay + DA) exceeding INR 15,000 per month are excluded from the provisions of the PF Scheme. However, the employees who were contributing in the past, (when their salary was less) will continue to be covered under the Act.

 

As an employee, can I chose not to contribute to EPF?
NO. As per the provisions of the Act, no eligible employee has the option of staying away from the contribution. It is mandatory to contribute to the fund, if the organization and employee both are coming under the provisions of the Act.

 

How to apply for EPF registration?
One can apply online through EPF portal.

 

How to pay the contribution?
It is the obligation of the employer to get registered as establishment with EPFO. The employer has to deduct EPF contribution amount from the salary of the employees and contribute equal amount as his contribution and then remit to the EPFO on monthly basis on or before the specified due dates. Each employee gets EPF account number and he can also register himself on the Member Portal of EPF department, download his e-passbook having transaction wise details in PF Account.

 

What are the benefits of EPF contribution to employees?
Employee Provident Fund is a very important investment for the necessities of our future. The contribution towards the fund is eligible for tax deduction u/s 80C of Income tax Act. The interest and maturity value received from EPF is also exempt from tax. Secondly, Partial withdrawals are allowed for specific expenses such as house construction, higher education, marriage, illness etc. As part of the scheme, the employees are eligible for pension upon retirement.

 

What happens to an establishment which had more than 20 employees at the time of registration but later reduced to 10 employees?
Any establishment which has been covered under the Act once shall continue to be governed by the Act even if the number of persons employed therein at any time falls below 20.

 

Is a trainee an employee under the Act?
Yes, a trainee is considered as an employee as per the Act but in case the trainee is an apprentice under the Apprentice’s Act then he/ she will not be considered as an employee under this Act.

 

In case you want to know more about EPF registration, we can help you. Please write to us teams@simplifiedlaws.com

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About CA Prasad Chartered Accountant

CA Prasad Chartered Accountant
CA Prasad is a practicing Chartered Accountant and partner in Bangalore -based CA Firm.For further information or query, please email it to team@simplifiedlaws.com
  • Debashree

    nice article.With nw amendments, EPFO is all the more efficient and dedicated to employees. Kudos to govt for interest payment for the inoperative accounts

    If somebody starts working with a BSIC+DA more than 15,000, he/she not eligible to make EPF contribution under new system? http://www.mymoneystreets.com