The Government introduced the Employees Provident Fund, through the Employees Provident and Miscellaneous Provision act, 1952. It was enacted to provide compulsory benefits to the retired employees or benefits to the family of the employee who died other than natural death.
Retirement is a part of human life. Life doesn’t end after retirement rather a person requires more financial support after his or her retirement.
The Act extends to the whole of India except the State of Jammu and Kashmir. According to Section 3 of the Act, it applies to the industries which are specified in Schedule 1 of the Act. And every industry where at least 20 or more than 20 employees are employed.
Who will benefit from the Employees Provident Fund
The principal purpose of the Employees Provident Fund Act was to shield the intrigue and welfare of the representatives by the foundation of the necessary contributory Provident Fund to the workers to which both boss and the worker will contribute the recommended level of wages.
Employees employed in an industry who receives wages up to 6500/- per month will be eligible for the fund. Casual Labors or an apprentice working under the apprentice act will not be eligible for the employee’s provident fund.
The limit of 6500/- is extended up to 15000/- after an amendment brought by the Central Government, which was enforced on the 1st of September, 2014.
There was a rule where a worker needed to be working for three months first and then after they would be eligible for the fund. However, this rule has been omitted from the Act.
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- Maternity Benefits Act, 1961
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- Industrial Employment (Standing Orders) Act 1946
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The Administration of the Act and framing of the schemes is done by a Central Board of trustees and the person’s appointed by the Government, Employees, and employer.
To Whom It is Applicable
Any Industrial Establishment where there are more than 20 workers employed (permanent or temporary). Even if the Establishment has workers less than the required amount, then also the employer can get its establishment registered for the benefit of its employee’s.
The employee can voluntarily register themselves in the provident fund office to get the benefits of provident fund.
The employee provident fund will be kept adding on a monthly basis, except in these cases-
- The person attains the age of 58 years.
- Early Withdrawal of pension
- Is Dead
- Received the full pension
According to the current standards, the commitment payable by the business under the plan will be at the rate of 12 % of the essential wages, dearness recompense (counting the money estimation of any nourishment concession) and holding stipends, assuming any.
Then again, commitment payable by the worker under the plan will be equivalent to commitment payable by the business.
Given that in regard of any worker to whom the plan applies, the commitment payable by him, in the event that he so wants, be a sum surpassing 12% of his fundamental wages, dearness remittance and holding stipend (assuming any) subject to the condition that the business will not be under a commitment to pay commitment well beyond his commitment payable under the plan.
Advantages of Employees Provident Fund
Interest Rate – 8.65% of interest rate is added per annum on the provident fund.
Tax reduction – The business commitment to the Provident Fund is tax exempt and the commitment is charge deductible under area 80C of the Income Tax Act, 1961. Consequently, the cash put resources into the Provident Fund, the premium earned and cash, in the end, pulled back are tax exempt.
Early Withdrawal from PF Account
An Employee can withdraw money from their Employee Provident Fund account at an early stage in special cases. An employee can withdraw money from the PF accounts in cases like marriage, education, building/purchase of houses and medical treatment.
Non – compliance is dealt seriously. The employer has to pay heavily in the cases where the employer default’s in a payment made by him or any payment made through an agent employed under him. It can result in imprisonment for a term not exceeding one year or a fine of a thousand rupees or both.
Solved Example on Employees Provident Fund
Question: What is the minimum number of labors required to enforce Employees Provident Fund in an industry?
Answer: The correct option is A. The Act applies in industries where there are 20 or more 20 labors employed, according to section 3.