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Employee Provident Fund

The Employees' Provident Fund (EPF) Organization, a statutory body under the Ministry of Labour and Employment, Government of India administers social security schemes framed under the Employees' Provident Funds & Miscellaneous Provisions Act, 1952 Provident Fund, Pension and Insurance to industrial employees.

Who has to get registered under the Employees Provident Fund Act?

Any business/establishment with 20 or more employees working in any specified industries should register with EPFO. The establishments can get voluntary registration if the employee strength is less than 20. We at Balakrishna and Co., Bangalore help the entities to obtain new registration, voluntary registrations, amendment of existing registrations, filing of monthly and annual returns, etc. Our team is well versed with EPF Act matters. In case, you need these services, we would be glad to assist you. Please write to contact@balakrishnaandco.com. Secondly, based on our past experience, we have short listed the most commonly asked questions by the companies regarding Karnataka Shops Act. We are sure the following FAQs will answer most of your questions!

+ Should all the employees get covered under the Act?

Employees drawing basic salary upto Rs. 15000/- have to compulsory contribute to the Provident fund and employees drawing above Rs. 15001/- have an option to become member of the Provident Fund.

Once an employee becomes the member, he has to compulsorily continue to contribute to EPF, even if his basic pay crosses Rs.15001/- subsequently.

+ Suppose, an employee’s basic pay is Rs.50000, should he contribute 12% on this amount?

No. The Act prescribes to contribute PF on the basic limit i.e., Rs.15000. However, if the employer wishes to contribute on Rs.50000, there is no restriction.

+ Suppose, employer contributes his share of 12% on the basic limit of Rs.15000; can the employee contribute more?

Yes. Employee has the option of contributing more (upto a maximum of Basic Salary) as Voluntary Provident Fund (VPF).

+ What is the contribution to be made by the employer and the employees?

The Employee contributes 12% of his /her Basic Salary & the same amount is contributed by the Employer.

The breakup of the contribution including administrative charges (in %)

Particulars EPF EPS ELDI Admin Charges (EPF) Admin Charges (ELDI) Total
Employee 12.00 0.00 0.00 0.00 0.00 12.00%
Employer 03.67 8.33 0.50 1.10 0.01 13.61%
Total 15.67 8.33 0.50 1.10 0.01 25.61%

+ How to count the strength of employees?

Suppose, company XYZ has 18 employees and 3 security guards who are hired on contract basis through a House keeping agency. So, in this case, should the company compulsorily register under PF?

Here is how one can compute the number of employees for registration purpose –

  • Number of employees directly employed by the company (where the appointment letters are issued by the company) PLUS.
  • Number of employees who are working on contract basis in the premises of the company (like security guards).

By doing this, if the total strength is more than 20 employees, then the company has to compulsorily register under PF Act.

+ Are the following people considered as employees?

  • Casual labour – No
  • Apprentice / trainee – No
  • Directors, working partners, managing partners, domestic servants – No

+ What happens if the employee strength reduces to less than 20 employees?

Once the registration is done, it will continue, irrespective of the fact that the number of employees working therein has subsequently fallen below 20.

+ What are the tax benefits on EPF contributions?

This is an elaborate topic. However, the basics are –

  • Employee’s contribution is deductible from the taxable income u/s 80C of the Income Tax Act.
  • No tax on withdrawal of PF money (including interest earned), after service of 5 years.
  • Any withdrawal of PF money before completing 5 years, attract taxes.

+ Compliance ready reckoner under EPF Act

Particulars Compliance
Registration Within 15 days from the date of applicability
Amendments Within 15 days from the date of changes
Monthly payment of PF contribution 15th of following month
Annual Return 25th April every year

Other registration required to start the business :

Want to consult us?

  • Ph: 9845721255 / 9448080886,
  • Balakrishna & Co|Chartered Accountants,
  • # 24,3rd Floor, Above State Bank of India,
  • 10th Cross, Wilson Garden, Bangalore - 27.

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