Provident Fund

Who Is Eligible For PF Registration?

Employees’ Provident Fund scheme is mandatory for all organisations executing business operations in India with minimum workforce strength of 20 employees. The PF registration process is now completely online. To read and learn about your EPF eligibility as an employer, read this blog.

EPF, or Employee Provident Fund, is a program devised by the Indian Central Government under the EPF and Miscellaneous Provisions law (1952). PF registration came into force in 1951; this facility is available all over India, excluding Jammu and Kashmir. Employee’s Provident Fund has been recognised as one of the best investment mechanisms for all salaried working professionals. The Indian government has started EPF registration and declared it mandatory by stipulating particular conditions. 

The long-term objective of the Government was to cultivate the practice of saving for each worker who is at present employed in a public or private firm. The same approach is maintained for those employed in offices undertaken by the Central or State government.

If you’re an leader with a company that employs twenty folks or more, it’s obligatory for you to register under the EPF scheme. If your organization employs not up to 20 people, you’ll still prefer to register under the scheme.

Applicability of Employees’ Provident Fund

EPF registration is compulsorily recommended for:

  • Any factory or manufacturing plant commercial employs twenty or more workers and staff.
  • Any establishment with at least 20 or more professionals during the previous year.
  • Every employee whose monthly salary is less than ₹ 15,000.

Every employee hired by any institution entitled to the EPF scheme has no choice but to contribute a substantial portion of his monthly salary. Contributions are demanded at regular intervals. The contribution furnished by staff is collected in an account intended for saving. Otherwise, this money is invested in the market. The cumulative principal value and the tax surplus are credited to the person concerned in their retirement. These funds can also be transferred if that person switches his current job position for a better career opportunity.

Contribution needed for EPF

The employer must contribute 12% of the cumulative amount derived by adding the following elements of the salary structure: (Basic pay + retaining allowance + Dearness allowance). The employee is even required to contribute the same margin in terms of percentage. If your business recruits less than 20 professionals, the contribution rate drops to 10%. Again this is true for both the employer as well as the employee. Here the major catch is that there are particular PF registration prerequisites to be met based on the EPFO guidelines for this amendment to be applicable. 

Employees’ pension scheme as designed by the Indian Government gets funded with 8.33% of the worker’s contributed EPF submission (10% or 12% of their monthly wages). However, this calculation is based on a salary of ₹ 15,000 or more. Therefore for every professional getting an in-hand salary of ₹ 15,000 or more, the EPS account of that particular individual gets credited with Rs. 1250 every month. On the other hand, if the basic sum happens to be less than ₹ 15,000, we witness 8.33% of the entire salary getting shifted into the EPS. The EPF account is filled with the remaining balance. Once the worker retires, the employer pays him the entire money saved in the EPF account along with the total share stored in his EPS profile.

Employer Eligibility Criteria for EPF

If an employer resorts to employing no more than 20 employees to run his business, then he will be exempted from enrolling for the PF registration. This rule also becomes active when the majority of the professionals within the organisation voice their approval for exemption. Suppose the latter scenario happens to be true. In that case, you as an employer may still be subjected to definite conditions where the government will ask you to undergo various formalities. When a group or an individual receives PF perks that are as good as statutory provisions, then the employer may request for exemption via Form 1.

Contribution Rate For Employers Recruiting Less Than 20 Professionals

Based on the EPFO norms, the establishments working with less than 20 staff need to grant EPF at 10% of in-hand wages along with a dearness allowance.

This is applicable for:

  • Offices with only ten workers or even less than that
  • A firm that has incurred heavy financial loss at the ending of the previous financial year
  • Some highlighted sectors of the manufacturing industry like a brick factory, beedi factory, gum factory and jute factory.

Use Vakilsearch’s EPF Calculator to find out how much money you have left in your EPF account before you retire.

How To Redeem The EPF Amount?

Staff can redeem the accumulated money from his EPF account once he reaches 55 years of age or at retirement. The employee is eligible to withdraw the entire income from the EPF account through EPF form 15g; this includes monthly contributions from his employer. The employee may redeem the whole sum from his EPF account before reaching 55 years of age. He must not be active in employment status for two months.

The withdrawal procedure has been simplified as the entire method can be executed online. We have jotted down the sub-processes step by step to help you redeem your EPF balance online without encountering any hassle:

  • Visit the genuine web page of EPFO: unified portal-mem.epfindia.gov.in/ 
  • Sign in by using your password and the UAN code that has been assigned to you.
  • The foremost duty after a successful login is to check the KYC specifications, which are already provided at the online portal.
  • Navigate to the ‘Online Services’ option and choose ‘Claim (Form 31,10C & 19)’ from the dropdown box.
  • Carefully enter your registered bank account’s last four numbers by choosing the ‘member’s detail’ option and selecting ‘verify’ to approve all the bank-related inputs.
  • Now you must sign the issued certificate of the undertaking.
  • Proceed to submit the withdrawal application form online.
  • Now the EPFO scrutinises the bank particulars against the KYC documents. The administration processes the request for EPF money, and the payment gets sanctioned within 10-15 days, after which the transaction is directed to the registered bank account.
  • Staff may use this government-supervised online facility for redeeming the employee’s provident fund only when his Aadhar ID is connected to his Universal Account Number.

Conclusion

PF registration is mandatory for all public as well as private firms. The contributions from an employer’s end get exempted under certain situations that need to be addressed by the businessperson via several forms. The registration process is now possible online; this has minimised the hassle for the employees who can track their savings by entering the correct login credentials.

Vakilsearch has discussed the withdrawal process of EPF funds in detail through this article. To learn more about the contribution rates and monthly compliances, we suggest you read our handcrafted blogs on employees’ provident funds.

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