A Brief Insight into Employees’ Provident Fund Scheme

Formed under the Employees' Provident Funds & Miscellaneous Provisions Act, 1952, the Employee’s Provident Fund (EPF) Scheme is one of the best intentioned schemes as far as security for employees is concerned. It is administered by Employees’ Provident Fund Organization, which is under the Labour and Employment Ministry of the Indian Central Government. The EPF covers the entire stretch of the country with the notable exception of Jammu and Kashmir. Any establishment with more than 20 people on its payroll falls under the purview of this act. Establishments with lesser workforce also fall under it, albeit, in a curtailed manner. Every employee is eligible for registration from the day he/she joins an establishment, and is thus, eligible for provident fund, retirement, and insurance benefits. For more information on this segment, one may contact one of the reputed labour law consultants in Delhi.

Contribution of Employer and Employees

The primary purpose of the EPF scheme is to ensure the economical security of a professional, in case of temporary or permanent termination of his/her job. The scheme helps to save a certain percentage of the person’s income on a regular basis. The savings start from the day a person joins a company. Both the employer and the employee contribute 12% of the wages towards the fund. Furthermore, the employer also contributes an additional 1.11 percent towards the administration of those funds. There are certain exceptions in this case where the organization has to contribute not 12 but 10% of the wages. Establishments hiring less than 20 people, an industry declared as sick by the Board for Industrial and Financial Reconstruction, and industries which have incurred more loss than their net worth in the financial year, are all a part of this exception. Disputes arising from these finer points in PF cases can be settled in courts across the country.

Benefits

The importance of the Provident Fund can hardly be overstated. The money accumulated in the fund can be used in case of emergencies. Being tax free, the growth of the capital is tremendous and interest is also provided as per the norms of the Government of India. Sudden heavy expenses can be met by the PF as partial withdrawal is permitted in case of marriage, illness, construction of house, among many others.

In case of any further clarifications or grievances, one may seek the services of Bhasin Consultancy, which specializes in Provident Fund as well as ESIC cases.

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