EPFS ACT 1952

1. The Employee's Provident Fund Act
[EPF Act], 1952
Introduction
 Salary consists of two parts i.e. earnings & deductions
 Provident Fund is one of the statutory deduction done by the employer at the
time of salary payment
 Provident Fund is governed by the Employee’s Provident Fund Act 1952
SCHEMES UNDER THE ACT.
EMPLOYEES PROVIDENT FUNDS SCHEME, 1952
EMPLOYEES DEPOSIT LINKED INSURANCE SHEME, 1976
EMPLOYEES PENSION SCHEME, 1995

2. 1. The Employee's Provident Fund Act, [EPF]1952
 Provident Fund has come into force to give better future to employees on
their retirement & his dependants in case of his death during employment
 The Employees Provident Funds Act 1952 is compulsory contributory fund for
the future of an employee after retirement or for his dependents in case of his
early death
 Act is applicable to all states of India except Jammu and Kashmir
OBJECTIVE
 The Employees’ provident Funds and Miscellaneous provisions Act, 1952 is
enacted to provide a kind of social security to the industrial workers.
 The Act mainly provides retirement or old age benefits, such as Provident
Fund, Superannuation Pension, Invalidation Pension, Family Pension and
Deposit Linked Insurance.
 The Act provides for payment of terminal benefits in various contingencies
such as retrenchment, closure, retirement on reaching the age of
superannuation, voluntary retirement and retirement due to incapacity to
work.

3. APPLICABILITY OF THE ACT
 To every factory employing 20 or more persons.
 Any establishment to which the Act applies shall continue to be governed by
the Act even if the number of persons employed therein at any time falls
below.
Eligibility /Applicability
Every industry employing 10 or more persons (180 industries are specified in Schedule
1 of the Act)
 Every industry employing 10 or more persons which the Central Govt. may
notify
 Any other establishment notified by the Central Government even if employing
less than 10 persons
Every employee employed in or in connection with the work of a factory or other
establishment covered by the schemes other than an excluded employee is entitled
and required to become a member of the fund from the date of joining the factory or
establishment.
Excluded Employee :
o An employee who, having been a member of the fund, has withdrawn the full
amount of his contribution in the fund
(a) on retirement from service after attaining the age of 55 years or
(b) before migration from India for permanent settlement abroad; or for taking
employment abroad
o An employee whose pay at the time he is otherwise entitled to become a
member of the Fund, exceeds Rs. 6,500/- per month.
o A person who, is an apprentice, or who is declared to be an apprentice by the
authority specified in this behalf by the appropriate Government.

4. Eligibility & Entitlement
 Every employee employed directly / through a contractor who is in receipt of
wages are eligible to become a member of the fund (exception - Apprentice
under the Apprentices Act and casual laborers)
 Irrespective of permanent / probationary employees, all employees are
eligible for joining the PF scheme from the date of joining the service
 Minimum 10% of the basic pay for establishments employed less than 10
persons; sick industries declared by necessary authority; Jute, Beedi , Brick, Coir
& Guar Gum Industries / Factories
 Other industries maximum 12% of the basic pay
 A member can contribute voluntarily more than statutorily prescribed rate
(upto 100% of basic salary) which will be transferred to his PF
PF SCHEME CONTRIBUTIONS:
EMPLOYEES @ 12%
EMPLOYER @ 12% FAMILY:
 In case of Male: wife, children, dependent parents and deceased sons widow
and children
 In case of Female: Husband, children, dependent parents and hus dep. Parents
and deceased sons widow and children
PF SCHEME RATE OF INTREST:
9.5 % P.A. VOLUNTARY CONTRIBUTION: In multiples of Hundreds (Max. limit of
one month basic+ da]
Benefits

5.  Employees can take advances / withdraw the PF in case of retirement, medical
care, housing, family obligation, education of children & financing of life
Insurance Polices
 Upto 90% of the PF amount can be withdrawn at the age of 54 years or
before one year of actual retirement
 PF amount of the deceased member is payable to nominees / legal heirs
 Immediate income tax exemption under Sec 80C of IT Act
 Equal contribution by the employer
 Interest rate is usually higher than the prevailing market rate (present interest
rate @ 8.5%)
 PF A/c can be transferred if any member changes from one establishment to
other where the PF Scheme is applicable
 Totally tax free returns

6.  PF SCHEME WITHDRAWALS:
For purchase of a dwelling house/flat or for construction of house including
purchase of siteMin. Criteria: 5 years of Contributory period.

7.  Incase of Construction: 24 months/employers & employee share together with
interest or actual cost of const.
 Whichever is lower
 Incase of acquisition of ready built house/flat:36 months
contributions/employers & employee share together with interest or actual cost
of construction whichever is lower
 No withdrawal is allowed if it is for joint family except jointly with spouse.
PF A/c settled immediately under the circumstances;
 Retirement after 58 years
 Retirement on account of permanent incapacity
 Termination of service on retrenchment
 Voluntary Retirement Scheme (VRS)
 Permanent migration from India to settle abroad / taking employment
 For female members leaving service for getting married
PF SCHEME WITHDRWALS Grant of Advances in special cases
o Incase factory is locked up or closed down for more than 2 months
o Advance for illness
o Hospitalization is lasting for more than one month or major surgical operation
or suffering from TB/ Leprosy etc.
o Resignation from the services
o Grant of Advances for Marriages or post matriculation edu of children ( 15% of
own share)
o Incase of own marriage or son/daughter/ sister/ brother or for post
matriculation study of children.
o Min criteria: 7 years of contributory period.
o Grant of adv. In abnormal conditions
o Movable /Immovable property has been damaged by nature calamity.

8. PF SCHEME WITHDRWALS Withdrawal which one year before retirement
 90% of amount standing in his account.
 Circumstances which lead to payable to a member
 On retirement
 On retirement on account of perm disablement
 Immediately before migration
 On Retrenchment.
2. The Employees Pension Scheme [EPS] 1995
Introduction
 To give long term protection / financial security to employee upon retirement
and his family in case of his pre-mature death, family pension scheme has
come into force by diverting 8.33% contribution made by employer towards
PF scheme
Purpose:
The purpose of the scheme is to provide for
(1) superannuation pension, retiring pension or permanent total disablement pension
to employees covered by the Employees’ Provident Funds and Miscellaneous
Provisions Act, and

9. (2) widow or widower’s pension, children pension or orphan pension payable to the
beneficiariesof such employees.
Application
 Scheme is compulsory for all the existing members who become members of
the Employees Provident Fund Scheme
Eligible
 Monthly pension to employees on retirement
 Widows on death of the member
 Children of the member below 25 years age
 Monthly pension to members upon permanent total disablement during
service
EPS SCHEME PENSIONABE SALARY:
 Avg. of 12 months salary
 Non contributory days be excluded
 Max wage limit is RS. 6500/-
Monthly Pension:

10. Retirement Pension: 20 yrs or more of service on attaining 58 yrs.
Short Service Pension: 10-20yrs service.
EPS SCHEME WITHDRAWALS:
Employees who put in less than 10 yrs service are eligible incase not employed
elsewhere.
 employee has option to obtain “Scheme Certificate” instead of withdrawal
PENSION AT AN EARLY DATE: (3% less for every year of short fall of 58 yrs.)
Emp who put in 10 yrs service and ceased to be in employment may opt from 50 yrs
of age.
3. The Employees Deposit-Linked Insurance Scheme 1976 (EDLI)
Objectives:
For providing life insurance benefits to the employees.
Purpose
To provide life insurance benefits to the employees of the establishments covered by
the EPF & MP Act, 1952
Application
 EDLI scheme is compulsory for all the existing members who become
members of the PF Scheme
 Life insurance benefit (death coverage) of the employee is availableunder this
scheme while in service
Calculation

11.  EDLI is calculated on EDLI slab – Rs. 6500/-
 0.50% EDLI calculated on total EDLI slab (Rs. 6500) wages and transferred to
EDLI fund
 0.01% EDLI Administration charges calculated on total EDLI wages
 EDLI / administration charges are payable by the employer
Eligible
 Person who is eligible to receive PF dues of deceased member who died while
in service is only eligible to receive EDLI fund
Exemption
 Employer can seek exemption from the Scheme if similar / better benefits are
provided other than the Scheme with the consent of majority of employees

14. Benefits of Employees’ Provident Fund (EPF)

15.  Universal Access: Due to digitalisation, EPF account can be assessed
easily anytime and anywhere through Permanent Account Number (PAN).
 Tax-Free Savings Benefit: The EPF savings so accumulated in the EPF
account is exempted from all taxes only if the amount is not withdrawn
before five years of service. The interest earned on this account is also free
from income tax.
 Insurance Benefit: The employer’s contribution of 0.5% towards EDLI,
provides a life insurance coverage of ₹ 600000 to the employee and his
family.
 Pension Benefit: Under the EPS, the employee is liable to receive a
pension after retirement for his survival.
 Post-Retirement Benefit: Every month at least 24% of the employee’s
basic wages + commission + dearness allowance + retaining allowance is
deposited in the EPF account. It becomes a lump sum amount till the time
of retirement and can be used to serve primary financial needs.
 Post-Death Benefit: In the incident of employee’s death, the beneficiary
(nominee) will get the accumulated sum of the EPF account.
 Withdrawal Benefit: The Employees’ Provident Fund (EPF) amount can
be withdrawn if the employee is jobless for a few months and facing
financial problems.
 Additional Benefits: After a particular period of deposits in EPF account,
the employee can withdraw it partially for in case of medical emergency of
the employee or any family member (dependent parents, spouse or
children), further education or marriage of children or siblings, repayment
of house loan, purchase of property or house and repair of the present
house.
Conclusion
Employees’ Provident Fund (EPF) has been the most
popular investment platform in India. It is also one of the most trusted options
since the Central Government backs it.
The rate of interest on Employees’ Provident Fund (EPF) is better than that of
savings account and fixed deposits. Moreover, it provides a financial backup to
the salaried employees to live a quality life after retirement. EPFO’s initiative of
digitalising the EPF process has made it more convenient for the members to
access their savings cum investment.