The Employee provident fund act provides collection of pension and deposit fund, deposit linked insurance for the employees at factories and other establishments.Employee Provident Funds and Miscellaneous Provisions Act, 1952 came into effect on 4 March 1952, by the Government of India administered by Central Board of Trustees(CBT). The employment provident fund declares status of a person as soon as he retires.All the activities are being operated by the Central provident Fund Commissioner, presided by Union Labor Minister of India.Constitution of India under “Directive Principles of State Policy” states that the State shall provide effective provision for securing the right to work, education and public assistance in cases of unemployment, old age, sickness, disablement and undeserved want. The complete analysis of employee provident fund is done in the above topic.
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Employee Provident Fund and Miscellaneous Provisions Act, 1952
This act is an important fragment of Labor Welfare legislation enacted by the Parliament to provide social security benefits to workers. At present, the Act and Schemes framed provide 3 types if benefits:
- Contributory Provident fund.
- Pension benefits to employees/family members.
- Insurance cover to the members of Provident Fund.
The provisions of the Employee provident fund act extend to whole of India except the State of Jammu & Kashmir and also the State of Sikkim where it has not been notified so far after its annexation with the Union of India.
Ways to be accustomed for Employee Provident Fund Act
The following are the people applicable according to the Employee provident fund act
All establishments employing 20 or more persons (5(or) more for Cinema Theaters) are brought under preview of the Employee provident fund act from the very first date of setup are subjected to fulfillment of other conditions. The provisions of the Act are applicable on its own force independently. If the establishments don’t have the prescribed number of employees and are willing to obtain the benefits of this act, then they can register voluntarily with regional Provident Fund office.
2. Definition of wages:
In the Employee and provident fund act, wages include the sum of basic and dearness allowances, cash value of food concession and retaining allowances, if any
- An employee at the time of joining the employment and getting salary up to Rs 6,500/-
- He/ she is eligible for membership of fund from very first date of joining a covered establishment.
4. Pension Fund :
This is a fund that provides retirement.To avail pension benefit
To avail pension benefit, the member
- Should have completed 10 years of continuous service (or) attained age of 50 years or more.
- Doesn’t receive any EPF pension.
- Will receive pension amount on a monthly basis after attaining the age of 58.
5. Administrative Charges:
The administrative charges in the Employee provident fund act include
- Employer has to pay administrative charges at 1.10% of emoluments towards the provident fund fun charges and 0.01% towards ELDI Scheme
- Employee need not contribute anything towards these charges.
6. Annual Account Statement:
After end of each period of contribution, annual statements of accounts will be sent by PF department to each member last employed. The statement of accounts in fund will show
- Opening balance of contribution with interest of both employer and employee
- Total contributions and interest earned during the year by both employee and employer.
Withdrawal of Employee Provident and Pension Fund
- A member is eligible to apply for withdrawing his provident and pension fund only after 2 months from date of resignation, provided that he/she is not employed during the said 2 months.
- The member should submit Form 19 & 10C to withdraw his provident fund dues on leaving the service/retirement (get it signed by previous employer and submit it to provident fund office).
- Withdrawals are exempted from tax if the employee has rendered continuous service for more than 5 years.
Problems faced in withdrawing/transferring Employee Provident Fund Money and Remedies:
1. Mismatch of Signature of member:
If signature mismatches or changed, they need to inform the provident fund office through their employer (or) fresh application is to be submitted.
2. Mismatch of account number:
If account number is wrong then the application is returned to employer. The employee corrects the details and gets it counter signed by the employer.
3. Incorrect bank details furnished by the member:
Correct details filled with respect to account number, name of the bank, branch address, and MICR code of the bank.
4. Communication from PF department while processing the request would not have reached the employer:
Employer/employee needs to check with PF office and find the reason for not receiving communication. If un-traceable, request to be made to PF to resend the communication.
Advances of PF account
Members are eligible to withdraw monies as advances from their PF accounts for purposes like marriage, education, medical treatment etc. This is tax and interest free.
- Only to one’s self, son, daughter, brother & sister.
- A maximum of three times in the entire service.
- Marriage Invitation card is to be submitted along with a form as a proof for marriage through employer.
- Only to one self, son and a daughter.
- An authentic certificate indicating the fees payable from the educational institution.
3. For Medical Treatment:
- Only to one self, wife, son, daughter, dependent father & mother.
- Doctor of the hospital vouches that a surgical operation or hospitalization for 1 month or more is/was necessary.
- In case of TB or leprosy etc, a specialist doctor should provide the certificate.
Thus the employment provident fund act provides:
- Grant of impunity from operation of the schemes framed under the Act to an establishment or a class of employees and to an individual, on given conditions.
- Penalties to employers/trustees of exempted Provident Fund who contravenes the provision of the Act and the Scheme.
- Appointment of inspector to secure compliance under the Act and the Schemes framed there under.
- Mode of recovery of money which is right from the employers.
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