About
Provident Funds
- Employees
questions about Provident Funds
1.1.
What is the interest allowed on PF contributions?
1.2.
Is the interest on PF taxable?
1.3.
Can I know the PF balance standing to my credit?
1.4.
What happens to my PF contribution if I leave my present
employer?
1.5.
Can I transfer my PF accumulations from another trust /
RPFC to present Employer's trust? Why should I do it?
1.6.
Can I make voluntary contribution to the PF? What is the
benefit of it?
1.7.
Can I change my voluntary contribution at any time?
1.8.
Can I withdraw only my voluntary contribution?
1.9.
Can I withdraw some of the balance lying in my PF account?
1.10.
Can I get a loan against my PF accumulated balance?
1.11.
What are Non-refundable Loans?
1.11.1.
Housing Loans
1.11.2.
Marriage / Education of Children and dependants
1.11.3.
Medical treatment
1.11.4.
Death of a family member
1.11.5.
Handicapped persons
1.11.6.
Closure of employer
1.11.7.
Non-payment of wages by employer
1.11.8.
Legal Expenses regarding retrenchment and termination
of employment
1.12.What
are refundable Loans and on what terms are they given?
1.12.1.
Medical treatment
1.12.2.
Performance of Last Rites
1.12.3.
Marriage
1.12.4.
Expenses for Legal Proceeding connected with employment
1.13.
How
much time does it take after resignation to settle my PF account?
1.14.
What happens in case of death of an employee?
1.15.How
often can I change my nomination?
1.16.Can
I nominate more than one person as my nominees under PF?
1.17.Is
my PF accumulation safe in my employers managed PF trust?
About
Provident Funds Employees Questions
What
is the interest allowed on PF contributions?
The
current rate of interest allowed on PF contributions is 9.5% p.a.
Is
the interest on PF taxable?
No,
interest earned by an employee on his Provident Fund balance is not taxable
to Income Tax.
Can
I know the PF balance standing to my credit?
Yes.
A statement will be issued every year from the trust showing the contributions
and interest credited along with other details like transfers received, loans
availed etc.
Top
What
happens to my PF contribution if I leave my present employer?
In
case you leave your present employer, you can either transfer your accumulated
balance with the present employer to the new employer or you can withdraw
the funds.
Can
I transfer my PF accumulations from another trust / RPFC to present Employer's
trust? Why should I do it?
In
case your present and past employers are with the PF Organisation, you ______
You
can transfer your PF accumulations from another trust / RPFC to trust / RPFC
by submitting Form 13.
In
case you are not planning to take up another job, you can also withdraw the
accumulated balance in your account. Such withdrawals are however, subject
to certain tax deductions.
Top
Can
I make voluntary contribution to the PF? What is the benefit of it?
As
an employee, you can contribute voluntarily over and above the stipulated
rate of contribution. However, the contribution to VPF will have to be a fixed
% of wages and not a fixed amount. Once an employee decides to contribute
a certain percentage to his PF account, he must continue to do so till end
of the financial year. The Employer does not have to make matching contribution.
Voluntary
contributions are also available for Tax rebates. Interest on Voluntary contributions
is also exempt from income tax.
Can
I change my voluntary contribution percentage at any time?
You
can change your voluntary Contribution only at the start of the financial
year.
Top
Can
I withdraw only my voluntary contribution?
Voluntary
contributions alone cannot be withdrawn.
Can
I withdraw some of the balance lying in my PF account?
Under
the Provident Fund Scheme, you can avail of Refundable and Non-refundable
Loans for specific purposes by making an application in this regard.
You
can only do this one year before the age of Superannuation.
Can
I get a loan against my PF accumulated balance?
Depending
upon the purpose of the loan, you can get two types of Loans against your
PF accumulated balance Non-refundable Loans and Refundable Loans.
Refundable
loans have to be repaid via monthly instalments.
Top
What
are Non-refundable Loans?
Non-refundable
Loans are like withdrawals. These loans are not to be paid back.
Housing
Loans
4
types of Housing Loans are given for this purpose
Purchase
of Site for Construction of House
Loan
Value is the least of:
(i)
24 months value of members last drawn basic and DA
(ii)
Amount standing to the credit of the Members Contribution Account
(iii)
Actual Cost of site
However,
for this the person must have been a member of the fund for at least 5 years
prior to the loan, the site must be free from all encumbrances and the site
should be in name of the member or spouse and no third person.
The
documents to be submitted are:
Original
sale deed from the seller.
Agreement
for sale
Latest
non-encumbrance certificate.
Layout
approval from the relevant authority
Purchase
of a built-up house / Construction of House / Flat
Loan
Value is the least of:
(i)
36 months value of members last drawn basic and DA
(ii)
Amount standing to the credit of the Members Contribution Account
(iii)
Actual Cost of acquisition or cost of construction
However,
for this the person must have been a member of the fund for at least 5 years
prior to the loan, the site must be free from all encumbrances and the site
should be in name of the member or spouse and no third person.
The
documents to be submitted are:
Original
sale deed from the seller.
Agreement
for sale
Latest
non-encumbrance certificate.
Layout
approval from the relevant authority
Estimated
cost certified by an Architect or Civil Engineer
Additionally,
the construction should commence within 6 months of first withdrawal and it
should be completed within 12 months of the final withdrawal. Purchase
of the house / flat should be completed within 6 months of withdrawal of the
amount.
Additions
or Modifications to the house
Loan
Value is the least of:
(i)
12 months value of members last drawn basic and DA
(ii)
Amount standing to the credit of the Members Account for his own Contribution
and Interest thereon
(iii)
Actual Cost of alteration
This
additional withdrawal is allowed only after five years from date of completion
of dwelling house.
Repayment
of loan taken by member from a State Government, Co-operative society, NHB
or Municipal Corporation or any other Financial Institution.
Loan
Value is the least of:
(i)
36 months value of members last drawn basic and DA
(ii)
Amount standing to the credit of the Members Account for his own Contribution
and Interest thereon
(iii)
Amount of loan to be repaid.
However,
you must have completed at least 10 years as a member of PF. Member
will have to submit latest statement of account by the concerned FI confirming
the outstanding Loan Balance (Loan + Interest). The payment is made
directly to the agency whose loan is being repaid.
Top
Marriage
/ Education of Children and dependants
Loan amount
restricted to 50% of his own share of Contribution, with interest thereon.
For
being eligible for this loan, the person must have been a member of the fund
for 7 years; the balance of his own contribution in his account should be
more than Rs 1000/-. Not more than 3 advances shall be admissible in
lifetime.
Medical
treatment
Hospitalisation
lasting for one month or more; or a major surgical operation in a hospital
or person suffering from TB, Leprosy, Paralysis, Cancer, Mental Derangement
or Heart ailment and having been granted leave by employer for the said illness.
Loan
amount shall be the lower of 6 months member's pay (Basic + DA) or credit
balance in his own share of contribution account.
However,
to be eligible for such loan, benefits under Employee State Insurance Scheme
should not be available to the member. The member will have to submit
a Medical Certificate from a Doctor or specialist.
Top
Medical
treatment or Death of a family member
Loan
amount is lesser of 3 months member's pay (Basic + DA); or 50% of his own
contribution standing to his credit in the fund.
Member
has to submit Medical Certificate from a medical officer authorised
by the company; or from the Employees State Insurance (ESI) Doctor where the
ESI Scheme exists. This proof has to be submitted 1 month in advance
to prove rightful use of advance.
Performance
of Marriage or Last Rites that member is incumbent to perform
Loan
amount shall not exceed 6 months member's pay; 50% of his own contribution
standing to his credit in the fund
For
this purpose, the minimum membership period of the fund should be at least
1 year.
Expenses
for Legal Proceeding connected with employment
Loan
amount shall not exceed 3 months member's pay; 50% of his own contribution
standing to his credit in the fund
For
this purpose, the minimum membership period of the fund should be at least
1 year.
Top
Members
who are Handicapped persons
Such
members can draw loans for their treatment or purchase of equipment for their
betterment.
This
loan is limited to six months (Basic + DA) or the members own contribution
+ interest or cost of equipment, whichever is less.
Certificate
from medical practitioner needs to be submitted. No second advance permitted
for a period of 3 years from date of last advance.
Closure
of employer establishment
In
case the employer establishment is closed or more than 15 days or when the
member does not receive wages for a continuous period of 2 months, the member
can draw amount standing to the credit of the employees' portion of the contribution
including interest.
In
case the employer establishment is closed for more than 6 months and the member
is unlikely to get employment and receive compensation, the member can draw
the entire amount as a recoverable loan. The amount is repayable in
maximum of 36 instalments from the start of first salary of new employment.
In case the establishment remains closed for more than 5 years, the refundable
loan can be converted to non-refundable loan.
Top
Legal
Expenses regarding retrenchment and termination of employment
The
amount of advance shall not exceed 50% of his own contribution standing to
his credit in the fund. This amount can be disbursed in one or more
non-recoverable Loan.
What
are refundable Loans and on what terms are they given?
Refundable
loans are advances given to members. Members have to pay interest on
these loans at rate of interest that is 1% more than the rate that is payable
by PF on members contribution. The repayment of these loans is to be
made in a maximum of 24 instalments starting from the month succeeding the
month of loan. Such loans can be given only if the minimum balance of
his own contribution in the Fund account is Rs. 1,000/-.
How
much time does it take after resignation to settle my PF account?
Settlement
can be done only after a waiting period of two months from the date of resignation
but in cases of members leaving abroad, settlements can be done immediately
and settlements are immediate in case of female members who resign from the
services for the purpose of getting married.
Top
What
happens in case of death of an employee?
In
case the employee has filed a nomination form, settlement is made according
to the last filed nomination form on record.
In
case no nomination has been filed, the accumulated balance is divided equally
among the following family members in equal shares
1.
Sons who have not attained majority.
2.
Sons of a deceased son who have attained not majority.
3.
Married daughters, whose husbands are not alive.
4.
Married daughters of a deceased son, whose husbands are not alive.
Top
How
many trustees can a trust have?
An
Exempted trust shall consist of not less than two and not more than six representatives
each from employer and employees.
Can
an employer contribute more than the statutory rate of contribution?
Yes,
an employer can contribute more than statutory rate. However, the Employer
would not get any tax benefits for the same.
Can
a trust credit interest less than the statutory rate of interest stipulated
by the PF Authorites?
An
Exempted trust cannot credit interest less than the statutory rate of interest
stipulated by the PF authorites even if the trust is not able to earn the
minimum interest.In case of shortfall, the Company has to make good the deficit.However,
An Excluded Employees' trust / Private trust can declare interest based on
the earnings of the trust.
Can
an employee withdraw the contributions made towards Employees' Pension Scheme,
1995?
An
employee can withdraw the contributions made towards Employees' Pension Scheme,
1995, on leaving service before becoming eligible for members pension, by
submitting Form 10-C only, if he has NOT completed 10 years of service.
For
the purpose of membership to PF, is previous service with ex-employer counted?
If
an employee brings in a transfer from another approved Provident Fund trust
or RPFC then the service rendered with such ex-employer is counted.
Is
settlement from the trust immediate in case of resignations?
Settlement
can be done only after a waiting period of two months from the date of resignation
but in cases of members leaving abroad, settlements can be done immediately
and settlements are immediate in case of female members who resign from the
services for the purpose of getting married.
Is
there any tax deduction at the time of settling the PF accumulations from
the trust?
There
is no tax deduction if the member has put in five years of continuous service
with the employer (includes period of past membership with previous employer/s
if there is a transfer recd). Otherwise, the member is liable for deduction
of tax.
- Is
PF applicable to us as an employer?
- How
do we apply for a PF Code Number?
- Since
PF is applicable to us, what payments do we make to the RPFC?
- Can
we as an employer contribute more than the statutory rate of contribution?
- Can
we form our own trust? What do we need for it?
- What
are the advantages of forming our own trust?
- What
is the minimum number trustees that a trust can have? What is the maximum?
- What
happens if the income of the trust is less than the minimum stipulated
payable by the trust?
- Can
we pay a higher interest than what is stipulated under the PF rules?
- Are
all trusts of the same type?
- What
laws are applicable to trusts?
- Employers
questions about Exempted trusts
- When
can an Establishment opt for setting up their Exempted trust?
-
What are the membership details of the trust?
- Upon
exemption, what are the payments made to the RPFC?
- Can
the EPS deduction (to be paid to the RPFC) be made from the Employee's
contribution?
- Is
the employer's contribution deducted from the employee's wages?
- Can
a member finance his LIC Policy through the trust?
-
How does one go about availing these Non-Recoverable Advances/Withdrawals?
-
What are the Recoverable Advances that an employee can avail as per the IT
Rules?
- When
can an employee withdraw or apply for settlement?
- Can
withdrawals be made one year before retirement?
-
What
happens to settlements in case of the member's death?
Top
- About
Exempt Provident Fund trusts
When
can a company opt for having an Exempted trust?
After
being covered under the provisions of PF Act and if it is a profit making
Company with 200 employees it may pass a Board Resolution and apply to the
IT Dept for recognition of a trust and thereafter file for exemption with
the RPFC. On receipt of the approval from RPFC the trust can comply as Exempt.
What
are the membership details of the trust?
Every
member employed, as regular staff (other than excluded employee) will become
a member of the fund from the date of joining the establishment and will
continue to remain a member till he withdraws his PF accumulations from
the fund. An excluded employee shall, on ceasing to be such an employee,
be entitled to and required to become a member of the fund from the date
he ceases to be such an employee.
Upon
exemption, what are the payments made to the RPFC?
Out
of 12% of Employer's contribution, 8.33% (on capped wages up to Rs.6500/-)
transferred to EPS A/c
EDLI
@ 0.5% (on capped wages upto Rs.6500/-)
EDLI
Administration charges @ 0.01% of Basic and D.A(^ 6500/-)
PF
Inspection charges @ 0.18% of Basic and D.A.
Can
the EPS deduction (to be paid to the RPFC) be made from the Employee's contribution?
No,
the EPS deduction of 8.33% can be made only from the employer's contribution
of 12% of Basic and D.A. and it is capped at Rs.6500/-.
Top
Is
the employer's contribution deducted from the employee's wages?
No,
the employer's contribution cannot be deducted from the employee's wages
and is shown as cost in the company's books.
Can
a member finance his LIC Policy through the trust?
A
member may, by an application made to the Board, finance the annual premium
due on his own Life Insurance Policy through his Provident Fund account,
subject to an adequate balance together with interest thereon available
to the credit in his members contribution account. And where the payment
is to be made on the first premium, the balance should be sufficient to
pay the premium for two years. However, this can be done only if the
policy is assigned to the trust by the member.
How
does one avail these Non-Recoverable Advances/Withdrawals?
An
Application as per the prescribed format needs to be made to the Board and
the same shall be sanctioned as per the trust Rules.
Top
What
are the Non-Recoverable Advances that an employee can avail as per the IT
Rules?
NON-REFUNDABLE ADVANCES
Purpose:
Purchase
of site for Construction of House.
Quantum:
24 months member's basic & DA.
Credit in Member's Contribution Account with interest thereon.
Actual
Acquisition Cost of the Site; whichever is least.
Eligibility:
Member should have completed 5 years membership in the Fund.
Credit in Member's Contribution Account with interest thereon shall not
be less than Rs.1000.
The
dwelling site or house/flat is free from encumbrances.
Site
should be purchased in the name of the Member or spouse or jointly in the
name of the member and the spouse only.
Documentation:
Original
sale deed from the seller.
Agreement
for sale.
Latest
non-encumbrance certificate.
Layout
approval.
Other
Details:
Where
the purchase is through an agency, withdrawals in one or two instalments
payable directly to the agency.
Purpose:
Purchase
of a ready built house/flat or construction of a house/flat.
Quantum:
36 months member's pay (Basic+DA);or
Credit in Member's Contribution Account with interest thereon;
Cost of acquisition of property or cost of construction, whichever is least.
Eligibility:
Member should have completed 5 yrs membership of the Fund.
Credit in Member's Contribution Account with interest thereon shall not
be less than Rs.1000.
The
dwelling site or house/flat is free from encumbrances.
Property
should be in the name of the member or spouse or jointly in the name of
the member and the spouse.
Documentation:
Agreement for sale.
Latest
non-encumbrance certificate.
Layout
approval.
Estimated
cost certified by an Arc/Civil Engineer.
Conditions:
In case of construction of a dwelling house, the construction shall commence
within 6 months of first withdrawal and shall be completed within 12 months
of final instalment.
In case of purchase of a dwelling house/flat or acquisition of a dwelling
site, the same shall be completed within 6 months of withdrawal of the amount.
Other
Details:
No of instalments sanctioned as per the trustees- If purchase is made on
an ownership basis from a promoter, then withdrawals paid in one or two
instalments to member as per the Promoter's requirement.
Purpose:
Additions/Alterations/Improvements
to the dwelling house owned by the member or their spouse or jointly owned
by both.
Quantum:
12 months basic wage + DA,
members' own share of contribution with Interest thereon
Cost of alteration whichever is less.
Eligibility:
Additional
withdrawal admissible only after a period of five years from date of completion
of dwelling house.
Purpose:
Repayment
of loan by any member taken from a State Government, Co-operative society,
NHB or Municipal Corporation or any other Financial Institution.
Quantum:
36 months' pay
Credit in members' contribution Account with Interest thereon
Outstanding principal and Interest, whichever is least.
Eligibility:
10 years PF membership.
Members balance + interest thereon is equal to or in excess of Rs. 1000/-
Documentation:
Latest statement of accounts by the concerned FI confirming the outstanding
Loan Balance (Loan + Interest).
Other
Details:
The
payment shall be made directly to the agency only, on receipt of proper
authorization.
Purpose:
Grant
of advance when the establishment is closed for more than 15 days or when
the member does not receive wages for a continuous period of two months.
Quantum:
Advance
to be paid out of the amount standing to the credit of the employees' portion
of the contribution including interest.
Purpose:
Grant
of advance when the establishment is closed for more than 6 months or when
the member is still unemployed and unlikely to receive compensation.
Quantum:
100%
of Company's Contribution in one or more recoverable loans.
Top
Other
Details:
Interest Free Loan.
Repayable in maximum of 36 instalments payable from the first salary paid
after restart of the Company and as per trustees' discretion.
Provision
If the Company remains closed for more than 5 yrs, refundable loans can
be converted to non-refundable loans on application to the trustees.
Purpose:
The
cost of legal proceedings instituted by the employee against the Company
for discharge or dismissal or retrenchment.
Quantum:
Shall
not exceed 50% of his own contribution standing to his credit in the fund
paid in one or more non-recoverable Loan.
Purpose:
Advance
from the fund for marriages / post-matriculation education of children.
Quantum:
Non-Refubdable
loan not exceeding 50% of his own share of Contribution, with interest
thereon.
Conditions:
Member has 7 years' of membership in the fund
Amount of his own share of contribution is more than Rs 1000/-
Not
more than 3 advances shall be admissible.
Purpose:
Advance
for illness of the member or his family in case of the following
Hospitalization lasting for one month or more or
Major surgical operation in a hospital or
Sufferings
from TB, Leprosy, Paralysis, Cancer, Mental Derangement or Heart ailment
and having been granted leave by employer for the said illness.
Quantum:
Shall
not exceed 6 months member's pay or credit balance in his own share of contribution
account, whichever is lower.
Conditions:
Benefits under Employee State Insurance Scheme not available or ceased to
be available.
Medical Certificate from a Doctor or specialist.
Purpose:
Grant
of advance under abnormal circumstances- destruction of member's property
due to floods, cyclone, earthquakes or other convulsion of nature or riots.
Quantum:
Rs.
5000/- or 50% of members contribution including interest standing to his
credit on the account, whichever is less.
Documentation
& Conditions:
Declaration that the calamity has affected the general public.
Certificate of damages caused by such calamity from appropriate authority.
And
the application for the advance is made within a period of 4 months from
the date of declaration.
Purpose:
Grant
of Advance when member is affected by cut in the supply of Electricity.
Quantum:
The
amount of wages or Rs.300 or amt standing to the credit of employee's own
contribution account and interest thereon, whichever is less.
Eligibility:
Total
wages for any one month commencing from the month of January 1973 is ¾ th.
or less than ¾ th. of wages for a month.
Documentation
& Conditions:
Certificate
from the State Government that electricity supply cut was in an area in
which the establishment was located and the fall in member's pay was due
to such cuts.
Other
Details:
Only
one advance is admissible under this rule.
Purpose:
Grant
of advance to members who are physically handicapped.
Quantum:
Six
months (Basic+DA) or the members own contribution + interest or cost of
equipment, whichever is least.
Documentation
& Conditions:
Certificate
from medical practitioner. No second advance permitted for a period of 3
years from date of payment of such advance.
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What
are the Recoverable Advances that an employee can avail as per the IT Rules?
REFUNDABLE
LOANS
Purpose:
Illness
of a member or member of his family or for passage of a member.
Quantum:
Shall
not exceed
3 months member's pay; or
50% of his own contribution standing to his credit in the fund.
Eligibility:
Member is employed with the established for atleast one year.
And, has a minimum of Rs.1000 in his own share of the contribution account.
Documentation:
Medical
Certificate -from a medical officer authorised by the company ;or
from the Employees State Insurance (ESI) Doctor where the ESI Scheme exists.
Conditions:
Member
shall indicate the date of event for advance is applied for and furnish
in one-month proof or certificate showing the rightful usage of such advance.
Other
Details:
Interest
at the rate of one percent above that payable for the time being on the
member's balance shall be chargeable on such loans
Repayment
in 24 instalments form the wages of the month succeeding the month in which
the advance is granted; or in case of a member on leave without pay, form
the month succeeding the month in which he returns.
Purpose:
Expenses
pertaining to Marriages, Funerals or Funeral ceremonies which by religion
the incumbent is bound to perform.
Quantum:
Shall not exceed 6 months member's pay.
50% of his own contribution standing to his credit in the fund.
Eligibility:
Member is employed with the established for atleast one year.
And, has a minimum of Rs.1000 in his own share of the contribution account.
Conditions:
ConditionsMember
shall indicate the date of event for advance is applied for and furnish
in one-month proof or certificate showing the rightful usage of such advance.
Other
Details:
Interest
at the rate of one percent above that payable for the time being on the
member's balance shall be chargeable on such loans.
Purpose:
The
cost of legal proceedings instituted by the employee for vindicating his
position in regard to allegations made against him in respect of any act
done while discharging his official duties.
Quantum:
Shall not exceed 3 months member's pay; or
50% of his own contribution standing to his credit in the fund.
Eligibility:
Member is employed with the established for atleast one year.
And, has a minimum of Rs.1000 in his own share of the contribution account.
Conditions:
Employee
should not institute proceedings in any court of law either in respect of
Any matter unconnected with his official duties; or
Against the employer in respect of any conditions of service.
or
penalty imposed on him.
Other
Details:
Interest
at the rate of one percent above that payable for the time being on the
member's balance shall be chargeable on such loans
Repayment
in 24 instalments form the wages of the month succeeding the month in which
the advance is granted; or in case of a member on leave without pay, form
the month succeeding the month in which he returns.
Purpose:
Second
and subsequent loan.
Quantum:
50%
of his own contribution standing to his credit in the fund.
Eligibility:
Member is employed with the established for atleast one year.
And, has a minimum of Rs.1000 in his own share of the contribution account.
Also,-
Advance earlier drawn is fully repaid(Non-refundable loans taken, if any,
disregarded and not accounted for this purpose)
Other
Details:
Interest
at the rate of one percent above that payable for the time being on the
member's balance shall be chargeable on such loans
Repayment
in 24 instalments form the wages of the month succeeding the month in which
the advance is granted; or in case of a member on leave without pay, form
the month succeeding the month in which he returns.
Top
When
can an employee withdraw or apply for settlement?
On
retirement from services after attaining the age of Superannuation or if
he attains the age of Superannuation before the payment is authorized.
On retirement on account of permanent and total incapacity for work due
to bodily or mental infirmity duly certified by a Medical Practitioner.
On
migration from India for permanent settlement abroad or on taking employment
abroad.
On
termination of employment under a voluntary scheme or retirement by mutual
consent of the member and the Employer.
On termination of employment in case of mass or individual retrenchment.
Can
withdrawals be made one year before retirement?
Yes,
On application to the trustees, 90% of the accumulations can be withdrawn
at any time after attainment of the age of 54 years by the member or within
one year before his actual retirement on Superannuation whichever is later.
What
happens to settlements in case of the member's death?
Payment
of accumulations standing to the credit of the member to be made in accordance
to the nomination form submitted by the member. -In the absence of any nomination
relating to a part or whole of the accumulations of the member, such part
is to be divided among the members of his family in equal shares.
Sons who have not attained majority.
Sons of a deceased son who have attained not majority.
Married
daughters, whose husbands are not alive.
Married daughters of a deceased son, whose husbands are not alive.
Top
- Employers
questions about Excluded trusts
-
What is an Excluded trust?
- Who
is an Excluded employee?
- What
are the conditions for membership to the trust?
- What
are the contributions to the trust?
- When
can an employee withdraw or apply for settlement?
- What
happens to settlements in case of the member death?
- What
are the regulations pertaining to the Excluded trusts?
Top
What
is an Excluded Employees' trust?
An Excluded Employees' trust is one, which does not come under the purview
of the PF Department, but its policies are framed based on the PF Act. The
regulatory Authorities are the Income Tax department.
Who
is an Excluded employee?
An
"Excluded Employee" shall mean an employee of the Company to whom
both of the following two conditions apply at the time of the coverage of
the Company under the Employees' Provident Funds and Miscellaneous Provisions
Act, 1952 or at the time of his joining the services of the Company, whichever
is later. i
His pay at the relevant time as above is more than Rs 6500/- per month.
ii
Does not have any current PF Balance.
What
are the conditions for membership to the trust?
He
should be an Excluded Employee within the meaning of the Act.
What
are the contributions to the trust?
Employee
and Employer contributes 12% of his Basic + DA. An employee has the option
to voluntarily contribute a higher percentage towards PF without any matching
contributions from the employer. There are no contributions towards EDLI
or EPS. Employer and Employee contribution can be technically lower than
the statutory rate as well.
When
can an employee withdraw or apply for settlement?
On retirement from services after attaining the age of Superannuation or
if he attains the age of Superannuation before the payment is authorised.
On retirement on account of permanent and total incapacity for work due
to bodily or mental infirmity duly certified by a Medical Practitioner.
On
migration from India for permanent settlement abroad or on taking employment
abroad. On
termination of employment under a voluntary scheme or retirement by mutual
consent of the member and the Employer.
On termination of employment in case of mass or individual retrenchment.
What
happens to settlements in case of the member death?
Payment
of accumulations standing to the credit of the member to be made in accordance
to the nomination form submitted by the member.
In the absence of any nomination relating to a part or whole of the accumulations
of the member, such part is to be divided among the members of his family
in equal shares i
Sons who have not attained majority. ii
Sons of a deceased son who have attained not majority. iii
Married daughters, whose husbands are not alive. iv
Married daughters of a deceased son, whose husbands are not alive.
What
are the regulations pertaining to the Excluded trusts?
The
regulatory authority is the Income Tax Department. And policies framed based
on the PF Act. This
trust includes all employees with Salary (Basic and DA) exceeding Rs.5000
at the time of initial appointment and who do not have any prior PF balance
(either with the Govt. or any other trust). And included in the purview
are Apprentice (as per the Apprenticeship Act) The
employer and employee make the matching contributions at the rate of 12%
into the trust. There are no contributions towards EPS or EDLI.
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When
does a Company comply as an Unexempt Establishment? Once
the Company crosses the 20 employees' mark, it is covered under the Act
and has to apply to the RPFC for Allotment of Code Number .And should remit
the PF contributions from the date of coverage.
How does the Company apply for a Code Number?
The
Company has to apply for Coverage and code number in the prescribed proforma
provided by the PF department along with the ownership return (Form 5A).
What
are the payments made to the RPFC by an Unexempt Establishment?
Employee
contribution of 12% of Basic, D.A , Leave Encashment and cash value
of food concession, if any,
Employer contribution of 12% of Basic, D.A , Leave Encashment and cash value
of food concession if any, out of which 8.33%
with a cap of Rs.5000/- to be paid towards EPS a/c. EDLI
@ 0.5% (on capped wages at Rs.6500/-) EDLI
Administration charges @ 0.01% of Basic and D.A. PF
Administration charges @ 1.1% of Basic and D.A.
All Voluntary Contributions.
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