The government has introduced various schemes for the retirement benefits of the employees, one such scheme is Employee Provident Fund i.e., EPF. The EPF is more of a retirement benefit plan for the employees.
In EPF, the employer contributes 12% of the Basic Salary and the employee contributes the same 12% of the Basic Salary. This provident fund contribution is paid to the government through the monthly challans and the amount is deposited in the PF Passbook of an employee. The PF is deposited in monthly ECR i.e., Electronic Challan cum Return. Universal Account Number (UAN) is entered for depositing PF for every employee.
The time required for the submission of the documents is 10-15 days.
The employer is required to register under EPF Act in the following cases:
• Factory having 20 or more employees.
• Establishment other than factory having 20 or more employees.
• Establishment having less than 20 employees but choose to apply voluntarily.
• Establishment having less than 20 employees but choose to apply through Central Government’s two months’ notice.
The Registration is valid throughout the life of the organization.EPFCode is 15-digit code.
The following are the contribution rates:
• Employer contributes 12% of the basic salary.
• Employee contributes 12% of the basic salary.
Employer contribution is divided into the following components: • Pension Contributionis 8.33% of the basic salary.
• PF Contribution is3.67% of the basic salary.
The interest rate for FY 2020-21 is 8.5% which employee gets on the accumulated balance in PF Passbook.
The following employees are excluded from EPF:
• Retired Employee.
• Permanently Migrating Abroad.
The employer is responsible for the following:
• Monthly ECR filing.
• Updating the KYC of the employees.
• Approving the request for changes in any particulars of employees.
• Approving the request for transfer of PF amount from old employer.
No, the employee must have only one UAN otherwise he needs to migrate the UAN.
The PF works on exempt model, i.e., contribution is exempt u/s 80C of the Income Tax Act, Interest earned on employee’s contribution up toRs. 2.5 Lakhs is exempt, interest earned on employer contribution is exempt without any limit and amount withdrawn is also exempt.
The employer must apply for registration of EPF within 30 days of its applicability to the organisation.
The EPF is deposited monthly. The due date for depositing the EPF challan is 15 days from the end of the month to which the contribution relates. Late depositing of EPF challans attract interest rate of 12% p.a. each day of default and disallowance of EPF contribution while computing income tax.
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