EPF REGISTRATION

INTRODUCTION

  • The “EPFO” is known as the Employees’ Provident Fund Organisation of India covered under Ministry of Labour & Employment.
  • The EPFO Registration governed by The Employees’ Provident Fund and Miscellaneous Provisions Act 1952.
  • EPFO registration applicable on all the Factories & Establishment covered under the Schedule I of the EPF & MP Act 1952.
  • The EPF covered the benefits to the employee during his retirement time from the organisation.
  • The EPFO consist of the Provident fund (EPF) & Pension Scheme (EPS).
  • The EPFO is the world’s largest social security of employee organisation concerning its size & volume of financial Transaction.

APPLICABILITY OF EPFO REGISTRATION

  • All the Factories/Establishment employ 20 or more worker/labour/ employees are mandatorily required to have EPF registration under EPF & MP Act 1952.
  • Any other Establishment voluntarily registered himself in the EPF & MP Act 1952.
  • If the Central Government (CG) wants any Factories/Establishment registered under EPF & MP Act 1952 which employ worker/labour/ employees less than 20 then CG gives 2 months advance notice for compulsorily EPFO registration.
  • If Employer & employee can register their organisation under the EPF & MP Act 1952 by mutual consent & send the agreement with the Central Government.
  • Any Factories/Establishment registered under the Co-operative Societies Act 1912 and employing 50 or more worker/labour/employees & Working without aid of power then EPFO registration is mandatory.
  • The Exempted Factories/Establishment who employ contractual labour directly or Indirectly then they need to register under EPFO.

EXEMPTED ESTABLISHMENT FROM EPFO REGISTRATION

  • The Factories/Establishment which belongs or control or set up under the Central Government or Provincial Act or State government AND
  • They entitled to get benefits of contributory provident fund or Pension or old-age pension under the scheme set up or framed under the governing act for such benefits.
  • If CG opinion that the financial position is not adequate then exempt the newly setup Factories/Establishment for the period of 3 years from the date of setup &
  • Merely change in the location of Factories/Establishment doesn’t amount to be newly set up.

WAGES LIMIT FOR EPFO REGISTRATION

  • The employees covered under EPF scheme having a salary up to Rs. 15000/- per month.
  • IF employee wants to covered under EPF scheme with the mutual consent between employer & employee &
  • Whose salary exceeds the Rs. 15000/- per month then-employer contribution is not mandatory but the employer needs to pay administrative charges (0.50%) on the salary above Rs. 15000/-.
  • The Salary threshold limit of Rs. 15000/- does not apply to the International worker.

EMPLOYEE & EMPLOYER CONTRIBUTION AFTER EPFO REGISTRATION

10% RATE APPLICABLE ON

  • Any Factories/Establishment employed less than 20 employees.
  • The sick industrial company which is declared by the Board for Industrial & Financial Reconstruction.
  • The Factories/Establishment whose accumulated loss equal to or exceeding the entire Net worth (Assets minus Liabilities) at the end of the financial year AND
  • The Factories/Establishment involves in the following sectors are:-
  1. Jute;
  2. Beedi;
  3. Brick;
  4. Guar gum &
  5. Coir Sector.

12% RATE APPLICABLE ON

  • Any Factories/Establishment employed 20 or more employees.
  • The Factories/Establishment is not declared as a sick industrial company by the Board for Industrial & Financial Reconstruction.
  • The Factories/Establishment who have positive Net worth (Assets minus Liabilities) at the end of the financial year.

IMPORTANT POINTS TO REMEMBER

  • Both employer & employee need to contribute 10%/12% to EPFO respectively.
  • The EPFO includes the Provident fund (EPF), Pension Scheme (EPS) & Employee Deposit Linked Insurance Scheme (EDLI).
  • The Factories/Establishment is required to pay Administrative charges (0.50%) subject to minimum Rs. 500 payable.
  • If there are no contributory members during the month then Administrative charges shall be Rs. 75/-.
  • The Factories/Establishment is exempted under Provident fund (EPF) then Inspection charges payable @ 0.18% of Basic wages plus Dearness Allowance (DA) & other allowances AND The Admin charges minimum to Rs. 5/-.
  • The Factories/Establishment is exempted under Employee Deposit Linked Insurance Scheme (EDLI) then Inspection charges payable @ 0.005% of Basic wages plus Dearness Allowance (DA) & other allowances AND The Admin charges minimum to Rs. 1/-.

DIVERSION OF EMPLOYEE & EMPLOYER CONTRIBUTION

CONTRIBUTION DIVERSION RATIO

EMPLOYEE CONTRIBUTION

  • The Employee entire (10%/12%) share directly contributed to the Provident fund (EPF).

EMPLOYER CONTRIBUTION

  • The 8.33% of Employer contribution (10%/12%) diverted to the Pension Scheme (EPS),
  • 0.50% to Employee Deposit Linked Insurance Scheme (EDLI) &
  • The balance amount (1.17%/3.17%) is Invested in Provident fund (EPF).

CONTRIBUTION UNDER EMPLOYEE PENSION SCHEME (EPS) BY EMPLOYER

  • The only employer need to contribute to the Pension Scheme (EPS) out of total contribution &
  • No employee need to make any contribution to the Pension Scheme (EPS).
  • There is no need to make any contribution to the pension scheme in the following cases are:-
  • An employee attain or completed the age of 58 years of age in service or
  • Employee withdrawing the Reduced pension from the scheme & re-joins as employee or
  • The person joins the Factories/Establishment after crossing age of 50 years & he is not eligible for pension due to not completed 10 years of service (The maximum age for retirement is 58 years as per pension scheme).
  • The 8.33% is contributed by the employer to the pension scheme (EPS) is diverted to the Provident fund (EPF) account in the above cases.

CONTRIBUTION UNDER EMPLOYEE DEPOSIT LINKED INSURANCE SCHEME (EDLI) BY EMPLOYER

  • The contribution made by the employer up to the threshold of Rs.15000/- even if Provident fund (EPF) payable on a higher amount.
  • The Employer needs to make 0.50% of the contribution amount to the Employee Deposit Linked Insurance Scheme (EDLI).
  • The Employee Deposit Linked Insurance Scheme (EDLI) payable even if the employee crossed the age of 58 years & he doing service in the Factories/Establishment.
  • The contribution amount is rounded off to nearest integer.

BENEFITS OF EPFO REGISTRATION

TAX BENEFITS

  • The EPFO pay 8.75% interest on the amount deposited in the Provident Fund (EPF) account & it’s not taxable under the Income Tax Act.
  • The employee contribution amount under Provident Fund (EPF) account is not taxable or exempt under section 80C of Income Tax Act.
  • The EPFO pay interest on dormant or Inactive Provident Fund (EPF) account for the continuous period of 3 years.
  • The withdrawal of Provident Fund (EPF) is not taxable after the continuous service of 5 years unless Factories/Establishment closed its business or the person voluntarily quits his or her job.

LIFETIME PENSION BENEFITS

  • The employer required to contribute 10%/12% of employee Basic pay plus Allowance in the EPFO account &
  • 8.33% out of 10%/12% employer share deposited in the Employee Pension Scheme (EPS).
  • The employee needs to work for a minimum of 10 years in the Factories/Establishment to take the benefits of Lifelong Pension Scheme (EPS).
  • For the removal of doubt, the period of 10 years included works in different Factories/Establishment.
  • If the employee attains or completed the age of 58 years then no contribution made by the employer in Employee Pension Scheme (EPS).

INSURANCE BENEFITS

  • The EPFO provides Insurance benefits to all the employee registered with EPFO.
  • The Employer contributes 0.50% of employee basic pay plus allowance or Maximum Rs. 75 per month per employee to the Employees Deposit Linked Insurance (EDLI) Scheme.
  • The Employee or registered Nominee get the benefits of Insurance in the event of Death or Injury or Disablement.
  • The EPFO provide the Minimum assistance of Rs. 2.5 Lakh and Maximum Rs. 6 lakh through the Employees Deposit Linked Insurance (EDLI) Scheme.
  • The employee no need to make a contribution to Employees Deposit Linked Insurance (EDLI) Scheme, he automatically becomes the beneficiary of this Scheme.

PREMATURE WITHDRAWAL OPTION BENEFITS

  • The Provident Fund (EPF) account is not like a bank account of an employee because of its social Security scheme &
  • The withdrawal of amount after the period of 5 to 10 years of employment after meeting special needs or contingency expenses.
  • The Provident Fund (EPF) withdrawal in case of Medical expenses or home loan repayment or unemployment or marriage or education etc.
  • The following limit for the Employee for withdrawal of money from employee Provident Fund (EPF) account are:-
  1. Maximum 50% for Marriage or Education purpose of employee share;
  2. Maximum 36 times of Basic pay plus allowance of the employee for House construction;
  3. Maximum 90% for repayment of home loan;
  4. Maximum 75% for continuous unemployment for more than 1 month & balance 25% withdrawal after continuous unemployment for more than 2 months.

HIGHER RETURNS

  • The 8.75% Interest paid by the EPFO on the amount deposited in the Provident Fund (EPF) account of the employee.
  • The 5% to 15% amount of Provident Fund (EPF) account invested in Exchange Traded Funds (ETFs).
  • The reflect of Exchange Traded Funds (ETFs) is not shown or affect on the Employee Provident Fund (EPF) account.
  • The EPFO invest around the amount of employee Provident Fund (EPF) account in the following Instruments are:-
  1. 45% to 50% in the Government Securities (Treasury Bills);
  2. 35% to 45% in the Debt Instruments (Debentures or Bonds);
  3. 5% in Money market Instruments (Govt. Bonds) &
  4. 5% in Infrastructure Trusts.
  • The Employee has a right to invest their money in different proportions.

WAGES CALCULATION FOR EPFO REGISTRATION

For the calculation wages of the employee worked in the Establishment & the list of an allowance included & excluded from wages for EPFO contribution as follows:-

ITEMS INCLUDED IN WAGES

  1. Matinee allowance (Paid to employees in Cinema Houses).
  2. Shift allowance (worked in ODD shifts).
  3. City/Location/Area allowance (Addition to Dearness Allowance due to high house rent.
  4. Compensation allowance.
  5. Cash handling allowance.
  6. Supervisory Allowance.
  7. Additional allowance for giving training to staff.
  8. Charge allowance.
  9. Steno/Typist allowance.
  10. Plant allowance.
  11. Honorarium for looking after the hospital/dispensary
  12. Computer allowance.
  13. Gestetner/Photocopier/Printer allowance.
  14. Personnel/Special allowance.
  15. Machine allowance.
  16. Canvassing allowance.
  17. First-aid allowance.
  18. Personal allowance (Dearness allowance for skill, efficiency or past good records).
  19. Ex-gratia payment if payment is made within an interval of two months.

ITEMS EXCLUDED FROM WAGES

  1. Payment made on account of unavailed leave at the time of discharge.
  2. Commission on advertisement secured for Newspapers, if not paid to the regular employee.
  3. Fuel allowance/Petrol allowance.
  4. Entertainment allowance.
  5. Shoes allowance.
  6. Payment made on account of gratuity on discharge/retirement.
  7. Payment made on encashment of leave.

DOCUMENTS REQUIRED FOR EPFO REGISTRATION

DOCUMENTS FOR INDIVIDUAL/SOLE PROPRIETORSHIP

  • Name of Sole Proprietorship Firm/Individual.
  • Pan Card of Individual.
  • Identity Proof (Driving License or Passport or Voter ID).
  • Address Proof (Mobile Bill or Electricity bill or Bank Statement) & Not Older than 2 Months.
  • Registered Office.
  • Property Owned (Sale Deed or Electricity Bill) OR Property Rented ( Rent Agreement).
  • Area Of Business.
  • Bank Accounts Details.
  • Group photo of all Employees.
  • Wage Sheet of all Employees.

DOCUMENTS FOR COMPANY/LLP/SOCIETY/BODY CORPORATE/FIRM

  • Name of the Company/LLP/Society/Body Corporate/Firm.
  • Passport Size Photo of all Promoter/Members/Directors/Partners.
  • Identity Proof (Driving License or Passport or Voter ID) of all Promoter/Members/Directors/Partners.
  • Address Proof (Mobile Bill or Electricity bill or Bank Statement) of all Promoter/Members/Directors/Partners & Not Older than 2 Months.
  • PAN Card (Mandatory).
  • Passport is mandatory for Foreign National or Non-Resident India (NRI).
  • Area Of Business.
  • Registered Office proof.
  • Property Owned (Sale Deed or Electricity Bill) OR Property Rented ( Rent Agreement).
  • Bank Accounts Details.
  • DSC of Authorised Person.
  • Group photo of all Employees.
  • Wage Sheet of all Employees.

EMPLOYEE CONSIDER FOR EPFO REGISTRATION

The following person included in the list of the employee as per the EPFO Act are:-

  • The person Directly or Indirectly employed in premises or department or branch or office or other premises of the factory/establishment (Principal Employer) on wages.
  • The person employed outside the premises of the factory/establishment but that premises supervised by Principal employer or his agent.
  • The contractual employees working in Factories/Establishments.
  • The Part time employees.
  • Directors/managers/Managing Directors/officer of the company.

But Excluded the following person from the list of an employee are:-

  • An Apprentice or Trainee.

PROCESS OF EPFO REGISTRATION

PREPARATION OF DOCUMENTS

  • Collection of documents as per Checklist.
  • Attestation & Notarization of all the Documents.
  • Preparation & signing of Authorisation Letter.
  • Preparation of Digital Signature of Authorised person.
  • Check the Jurisdiction of EPFO regional Register office.

APPLICATION FOR EPFO REGISTRATION

  • Application made in E-Form EPFO department.
  • Submission of various Return of Declaration as required.
  • Preparation & fill the details of the establishment.
  • Fill the data of all employees.
  • Fill the details of an authorised person.
  • Attachment of Address proof, Identity proof & other relevant documents.
  • Attachment of Digital signature of principal employer & Authorised person.

ALLOTMENT OF EPFO CERTIFICATE

  • Follow up with EPFO regional Department;
  • Submission of documents, if required.
  • Verification of Employer & employee details.
  • Issuance of a Registration certificate.
  • The Registration certificate has 21 Digit EPFO Code number.
  • EPFO Code number is used for further communication with the department.

REGISTRATION OF EMPLOYEE

  • All the Employee submit their family photo.
  • Employer Collect all the Identity & Address proof of Employee.
  • Preparation of Wages sheet of the employees.
  • Employer submits all details along with Wages sheet.
  • After submission, the EPFO Department issued Insurance Certificate to the employees.

ISSUANCE OF IDENTITY CARD

  • The Temporary identity card is future reference No.
  • Registration of employee provides all EPFO registration benefits.
  • Temporary convert to the permanent Identity card after 3 months of employment.
  • It’s one-time registration of employee & No need to change if there is a change in employment.
  • The same registration transferred to other employment.

FORMAT OF EPF REGISTRATION NUMBER

  • The EPF number is issued by the EPFO department after checking all documents filed.
  • The EPFO department issued the 21 digits alphanumeric number to Factories/Establishments after successful registration under EPF & MP Act 1952.
  • The format of EPF number is “HR PAS 094110 000 1054321” & consist of the following Information are:-
  1. “HR” represent the state of registration (Eg. Haryana “HR”);
  2. “PAS” represent the EPFO regional office in whose jurisdiction Factories/Establishments falls;
  3. “094110” represent the unique ID of the Factories/Establishments issued by the EPFO department;
  4. “000” represent the extension code of Factories/Establishments (It’s used for big organisation);
  5. “1054321” represent the original EPF number issued to Factories/Establishments & its employee-specific.

PROCEDURE OF EPF WITHDRAWAL

The employee wants to withdraw any amount from Provident Fund (EPF) and there is two way to do so are:-

  • Physical Submission of Withdrawal application with EPFO department or
  • Online Submission of Withdrawal application through EPFO portal.

PHYSICAL APPLICATION

  • The employee made a physical application through the new composite form (Aadhar) or Composite form (Non-Aadhar) for Provident Fund (EPF) with EPFO department.
  • In the case of the new composite claim form (Aadhar) the employee made a physical application without approval or attestation of the employer with the EPFO department in whose jurisdictional falls.
  • The employee filed a physical application to respective jurisdiction of EPFO department through Composite claim form (Non-Aadhar) & he also needs approval or attestation of the employer for EPF withdrawal.
  • For the partial withdrawal of Provident fund (EPF) amount by the employee then he needs to furnish an only Self-declaration or Self-certification to EPFO department.

ONLINE APPLICATION

  • The person can also apply for online withdrawal of Provident Fund (EPF) by submitting an online application to the EPFO department.
  • To make online application employee required to have the following two things are:-
  1. UAN (Universal Account Number) with registered Mobile number &
  2. The UAN of the employee is Linked to KYC or Link to Aadhar card along with Bank account Details.

PROCEDURE OF ONLINE EPF WITHDRAWAL

  • The Person go to the EPFO portal;
  • The Employee need to login into the EPFO portal with UAN & Password or
  • If the employee is login first time then he needs to register himself on the portal.
  • Then click on manager tab & click on KYC and verify & correct the following details are:-
  1. Name;
  2. Date of Birth;
  3. KYC update;
  4. Bank Account;
  5. PAN number & etc.
  • Then employee clicks on “Online Service” & select the “Claim” option from the drop-down menu.
  • Then check all details mention in the claim performs & fill it online.
  • Then select the option whether partly or fully withdrawal of Provident fund (EPF).
  • Then Select “Proceed the Claim”.
  • The EPFO department transferred the amount after verification of all details.

Amendment Due to Covid-19

  • The Union labour ministry of India allowed the employee to withdraw part of their pension held with the Employees’ Provident Fund Organisation because of the pandemic.
  • Subscribers can withdraw 75% of their savings or 3 months basic pay and dearness allowance, whichever is lower.

 

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