Employees Provident Fund is a scheme for the Indian Employees that is controlled by the Provident Funds and Miscellaneous Provisions Act,1952. The Employee Provident Fund is regulated under the umbrella of Employees Provident Fund Organization popularly known as EPFO.
All establishments that have employed 20 or more than 20 employees can apply for PF registration in India. In some cases subject to the circumstances and the exemption establishments employing less than 20 are still eligible for PF registration. The Employee gets an amount that includes the self and employer’s contribution with interest on retirement or resignation.
PF Registration is mandatory for all the establishments-
Employees drawing less than Rs.15000 per month need to mandatorily become members of the EPF. According to the guidelines, employees whose basic pay is more than Rs. 15000 a month at the time of joining are not required to make any PF contributions.
But an employee who is drawing pay of more than Rs.15,000 can still be a member and make contributions with the employer and the Assistant PF commissioner.
The employer has to obtain the PF registration within 1 month of attaining the strength, in case of failure to abide by applicable penalties. A registered establishment continues under the purview of the Act even in case the No of employees falls below the required limit.
The employer has to contribute 12% of the (Basic Salary + Dearness Allowance + Retaining Allowance). An equal amount of contribution is to be made by the employee. If the establishment has engaged less than 20 employees the EPFO rules state that the contribution rate for both the employees and the employer is limited to 10 %. In most cases the employees who are employed in the private sector it is on the basic salary on which the whole contribution is calculated.
8.33% of the employer’s contribution is routed towards the Employees Pension Scheme that is calculated at Rs.15,000. The amount routed to the Employee Pension Scheme would be Rs.1250 in case the basic pay of the person is Rs.15,000. If the Basic Pay is less than Rs.15,000 then 8.33% of the amount will be routed and the balance will be retained in the EPF scheme. On superannuation, the employee would receive the full share with the employer's share reserved for credit in the EPF account.
The employer has to attach the following documents with the registration form:
PAN of the Partner, Proprietor, or the Director
Address proof (can be any utility bill but should not be older than 2 months)
Aadhar card of Proprietor, Partner, or Director.
Canceled Cheque Or Bank Statement
Digital Signature of the Proprietor/ Partner or Director.
Hired/ Rented or Leased Agreement If there is any.
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PF registration for businesses having less than 25 employees.
all inclusive fees
PF registration for businesses having less than 40 employees.
all inclusive fees
PF registration for businesses having more than 40 employees.
Before paying the Salary to the employees the employer must deduct the employee's contribution from his wages. Later, the employee portion and the employer’s share will be payable to the EPFO within 15 days of the close of every month.
The EPF stands tall in terms of returns from a debt instrument. The money is sovereign backed and the interest earned is tax-free. The PF enjoys EEE ( exempt, exempt, exempt) status as contributions are deductible from the income. Hardly any debt instruments provide such high returns with safety and assurance. Hence, it is better to transfer the PF account at the time of switching jobs and also avoid the temptation to withdraw the money.
PF registration has to be done with EPFO. The PF registration can be done online on the website.
For a salaried employee if the Basic and Dearness allowance is less than Rs.15,000 per month then it is mandatory to get the EPF registration by the employer.
Employees that draw less than Rs.15,000 per month need to get EPF registration mandatorily, and the employee drawing the Pay above the prescribed limit needs to get permission from the assistant PF commissioner to become a member.
PF registration is mandatory for all establishments with 20 or more persons, if the establishment has fewer than20 employees still a PF registration would be required. The employee can become eligible for PF right from the commencement of the employment and onus of deduction and PF payment is with the employer.
It requires 20-25 days to obtain PF registration in India.
Not every Private Limited Company is required to obtain PF registration.
If the employee does not want PF registration he can fill the Form 11 at the time of joining the job. The employee can also submit a letter addressing the employer stating that he wishes to opt-out of the Provident Fund Scheme.
The PAN issued in the name of the business entity is to be used for PF registration.
No, with IndiaFilings you can complete the whole procedure online, all you need to do to submit is the documents required.
The PF is directly related to the employee's pension. Apart from the employees contribution that is 12% towards the EPF, an equal amount is contributed by the employer, 8.33% from this goes towards the Employee Pension Scheme.
Last updated: June 30, 2021