PROVIDENT FUND

For PF formalities the company must be 3 years old. After that only it can be registered
with the PF department. Even for this Act also the minimum number of employee should
be 20.

Employees drawing basic salary upto Rs 6500/- have to compulsory contribute to the
Provident fund and employees drawing above Rs 6501/- have an option to become
member of the Provident Fund .

It is mandatory for employees completing 10 years of service to opt for Pension.

Employee completing 10 years of service can not withdraw entire PF (employer
and employees contribution). They are allowed to withdraw their contribution
12% and Employers contribution of 3.67% to PF. Balance amount i.e. Employer
contribution amounting to 8.33% will be paid by way of pension (calculation
done by PF office basis no of years of service and some ratios, all details not
known).

Therefore it is advisable not to withdraw PF and continue with the same by

transferring old PF no to new employer.
Every employer of an establishment to which the Employee Provident Fund Act applies,
should submit in Form 5A(in duplicate) to the commissioner, particulars of all the
branches and departments, owners, directors, partners if any or any other person who is
controlling its affair within 15 days of its applicability of the scheme.

On receipt of Form 5A, the commissioner shall verify the particulars submitted and after
been satisfied shall allot an Establishment Code No.

Form 5A of EPF is a return of Ownership which is normally submitted to the EPFO at

the time the company is covered by EPF Schemes for the first time. This form shows who
are the owners/ partners or Directors of the company and who is responsible for the
conduct of the business of the company. In form 5A details of employers only is given
though the company may be managed by the Manager or the person who looks after the
PF and related matters is the Personnel Manager/ HR Manager of the company. It is on
the basis of the information given in form 5A that the PF authorities will initiate
prosecution or criminal case against an employer who fails to remit the contributions in
time.

Whenever any change takes place in the constitution or the board of Directors, a fresh
form 5A showing the new owners/ directors should be submitted to the EPFO.

What all PF office requires at inspection

1. Statement of staff strength to check the no of employees are below 20 during

the time the benefit of PF was not extended.
(year and month wise statement since the commencement of business giving no of
employees on payroll, name, designation etc are not needed)

2. Muster since commencement of business.

3. Certificate of Incorporation

4. Certificate of Commencement of business

5. Shop & Establishment license

6. Memorandum of Articles of Association

7. Salary Sheet for 3 previous months.

8. List of Directors with address

9. List of employees to be covered with reference to date of joining to allot PF

numbers to individual employee.
Scheme Name Employee Employer Paid to A/c No
contribution contribution
Employee provident 12% 3.67% 1
fund
Employees’ Pension 0 8.33% 10
scheme
Employees Deposit 0 0.5% 21
linked insurance
EPF Administrative 0 1.1% 2
charges
EDLIS Administrative 0 0.01% 22
charges

Sick industries like beedi, jute, guar gum factories, coir industry other than
spinning sector

Scheme Name Employee Employer Paid to A/c No

contribution contribution
Employee provident 10% 1.67% 1
fund
Employees’ Pension 0 8.33% 10
scheme
Employees Deposit 0 0.5% 21
linked insurance
EPF Administrative 0 1.1% 2
charges
EDLIS Administrative 0 0.01% 22
charges

Let us calculate the contribution of an employee who is getting a basic salary of Rs

3500/-

Contribution Towards Calculation Amount

EPF Employees share 3500 x 12% 420
EPS Employer share 3500 x 8.33% 292
EPF employer share 3500 x 3.67% 128
EDLI charges 3500 x 0.5% 18
EPF Admin charges 3500 x 1.1% 39
EDLI Admin charges 3500 x 0.01% 0.35 ( round up to Rs 1/-)

The above calculation is easy .

Calculation of EPF for employees getting a basic salary over and above the ceiling
limit 6500/-

In such cases companies uses different method for calculation as per their pay roll policy.

Consider an employee getting a basic salary of 7500/-

We can calculate it in different ways. The only thing you should take care is, EPS is
calculated only up to 6500/- that means the maximum amount is fixed to Rs 541.00. The
three methods mentioned below are based on the above example.

Method-1

If your company consider total basic salary above the limit fixed 6500.00 for PF
calculation

Contribution Towards Calculation Amount

EPF Employees share 7500 x 12% 900
EPS Employer share 6500 x 8.33% 541
EPF employer share 7500 x 12% (-) 541 359
EDLI charges 6500 x 0.5% 32.5
EPF Admin charges 6500 x 1.1% 71.5
EDLI Admin charges 6500 x 0.01% 0.65 ( Round up to Rs 1/-)

I will explain how Employer contribution of EPS and EPF is calculated.

Employer is decided to contribute on total basic salary which is 12 % on 7500.00 equal to

900.00

EPS Share is fixed to 541.00

Balance (900-541) goes to EPF account 359.00

Total share 900.00

Out of Rs 900.00 EPS share is RS 541/- which is fixed for a basic salary greater than
6500/-. The balance amount is 900-541 = 359.00 which willgo to EPF account.

You may be thinking that, what about 3.67%?, Here you don’t need to care about it.
Method2

Some companies follows the below method in which employee share is calculated on
7500/- and employer share is calculated on up limit Rs 6500/-

Contribution Towards Calculation Amount

EPF Employees share 7500 x 12% 900
EPS Employer share 6500 x 8.33% 541
EPF employer share 6500 x 3.67% 239
EDLI charges 6500 x 0.5% 33
EPF Admin charges 6500 x 1.1% 72
EDLI Admin charges 6500 x 0.01% 0.65 ( Round up to Rs 1/-)

Method3

Some are calculating both employer and employee shares on 6500/- in spite of higher
basic salary than 6500.00

Contribution Towards Calculation Amount

EPF Employees share 6500 x 12% 780
EPS Employer share 6500 x 8.33% 541
EPF employer share 6500 x 3.67% 239
EDLI charges 6500 x 0.5% 33
EPF Admin charges 6500 x 1.1% 72
EDLI Admin charges 6500 x 0.01% 0.65 ( Round up to Rs 1/-)
At the time of joining an employee has to fill the following forms

Form - 11
Self declaration form mentioning the name, address and any P.F no. allotted to him by
any previous company where he was working.

Form No.11 ( Eleven) under EPF scheme pertains to information provided by an

employee while joining a new employer, about his previous previous employments with
name and address of employers along with duration of service. In this form a new joinee
also declares that whether he was previously a member of EPF scheme or not. This form
is to be kept by an employer and not to be deposited with Sub/Regional commissioner.
EPF inspector while inspecting records of an establishment may ask for these forms to
check the eligibility criteria.

The Form 11 of EPF is a declaration by the employee for certifying that wherever has has
worked/or not worked, he never had a PF account number. The govt has introduced this
form in order to stop the system of having multiple numbers of one employee. i.e.
suppose you joined A co. you had X PF account no. and later you joined you had Y PF
account no. in that case employee should get the PF account transferred thru his
employer, that's a responsibility on the employee but nobody does that. in order to save
themselves, the employer gets the form 11 filled by the employee and this form is kept
with the employer only and it shud be produced before the inspector upon inspection.

Form 2
Nomination form mentioning the name of nominee/s to get the share of money in case
something accidental happens to you .

Form 2: Employee should fill, at the time of joining, nomination & Declaration form.
Form 2, includes the following

· Name of the employee

· Parent/spouse name
· Date of Birth
· Sex
· Marital Status
· AC No
· Address
· Names, address, relation, Share for each etc
Also for changing nominee names Form 2 is used. His eligibility begins on the date of
joining the firm. Submitted along with form-5.
FOR EMPLOYER

EPF Challan

EPF will be deduct on Basic salary @ 12% Employee share and 13.61 % Employer share.

A/C Nos.:-
1) A/c No. 1:- 3.67 % of Employer and 12 % (Employee PF.)
2) A/C No. 2:- 1.10 % of Employer (PF Inspection Exp.)
3) A/C No. 10:- 8.33 Employer (Eemployee Pention scheme)
4) A/C No. 21:- 0.50% Employer (EDLI)
5) A/C No. 22:- 0.01% (EDLI Admn. Exp.)

After that EPF challan should be deposited before 15th of every month but there is 6
days for grace period.

About PF Challan form:-

1) Name of Address of Branch (SBI) where you Organization deposit EPF.
2) Establishment Code:- Given by EPF Dept.
3) Dues for the M/O:- means for which month you are depositing EPF
4) Date of Payment:- Date of deposit of fund.
5) Total No. of Subcribers: Means total nos. of employees from which wages PF
depositing.
6) Total Wages:- Total Basic wages of all Employees from which you will taken 12 % of
employee share and 13.61 % of employer share. Total Wages salary will be same for all
a/c. i.e. A/C No. 1, A/C No. 10 and A/C No. 21.
After depositing all the contributions of both employer and employee with the bank for
any month, by the 15th of the following month following records have to be filed with
P.F office

1. Triplicate copy of challan (out of 4 copies of the challan)

2. Form 5 - list of all the employees newly joined in that month

Before 25 th P.F. Form 5, includes the following, Monthly before 25 th

• Name of the establishment and address

• Month
• Code no: of the factory
• A c no:
• Name of new employees
• Fathers or Husband name in case of married women
• Date of birth
• Sex
• Date of joining the fund
• Total period of pervious services as on the date of joining the fund

3. Form 10 - list of all the employees left during the same month.

Before 25 th P.F. Form 10, includes the following, Monthly before 25 th

• Name of the establishment and address

• Month
• Code no: of the establishment
• A c no:
• Name of member who is leaving
• Fathers or Husband name in case of married women
• Date of leaving service
 • Reasons for leaving service
• Signature of authorised officer and stamp of the establishment

4. Form - 2 collected from all the new employees covered in Form 5 (joined during the
corresponding month)

5. Form 12A - monthly return form

Before 25 th P.F. Form 12 A, includes the following, Monthly before 25 th

• Name of the establishment and address

• Currency period and month (April yr to march yr)
• Statutory rate of contribution (12%)
• Group code (NA for unexempted establishment. Establishment having more than
1000 (Iam note sure about exact figure) have to keep a PF trust and have to
specify the group code)
• Total wages due for each account (wages on which calculations are done)
• Amount of contribution and amount remitted (consolidated amount with employer
and employee share)
• Date of remittance
• Total number of subscribers for the current month.
• Name and address of the bank in which the amount is remitted.
• Details of subscribers for E.P.F, PF, EDLI
--No of subscribers as per last month
--No of new subscribers (vide F5)
--No of subscribers left service (vide F 10)
--Total no of subscribers (After adding and subtracting the new and retired
employees with, the number should tally with monthly list of employees)

Cross checking the above is done with the salary statement.

WITHDRAWERS/:

FORM 10C (PENSION) & FORM 19 (PF)

Form 19 is used for withdrawing PF amount. Employee and parent/spouse name, name of
the establishment, Ac no, Reasons for leaving service, Contribution for current financial
year etc. Form 10 is used for pension withdrawal.

TRANSFER : FORM 13

Form 13 is used for transferring an employee AC from one company to another. Both
employer and employee have to specify his name, PF AC no, Position etc and submitted
with a covering letter (consolidated list of employees). Photocopy of the above is kept in
PF file for transfer.

4. Employee register 3A, 6

5. For advance : Form 31

IN CASE OF EMPLOYEE EXPIRED / DEAD :

Process details

Form 10 D (For claiming benefits under Pension)

Employee should fill like Expired/late employee name, nomination name, details,
Nomination Bank a/c…for monthly Pension

Form 20 (For Claiming EPF Contributions)

Employee should fill like Expired/late employee name, nomination name, details,
Nomination Bank a/c…for withdrawal of PF Fund (Incase of Death of a member

Form 5 IF (For Claiming EDLI benefits, nominee will get benefit)

EDLI for death case, nominee will get benefit.

ANNUAL RETURNS:

1. Form 3 A (Individual Computation sheet)

2. Form 6 A (Consolidated Annual Contribution Statement)
3. before 30th April every year

Form 6A:

· Currency period and month (April yr to march yr)

· Name of the establishment and address
· Code no: of the establishment
· No: of member voluntary contributing at a higher rate
· AC No of each employee followed by their name, annual salary, annual
contribution, employer contribution, refund of advance, rate of voluntary
contribution.
· This grand total should tally with all form 12 A and challans totals.

Form 3A: Register

This form is filled up for each employee stating his each monthly salary,
contribution, Employer share, Refund of advance, No of days/period of non
contributing service, if any (eg. unauthorised leave). If the employee is resigned
during that financial year then the date of leaving service and reasons for leaving
service should be specified in this form. Using Form 3A, form 6 A is filled up and
crosschecking is done with all challans and 12 A forms.

P.F. Annual Returns Form 6A and 3A

• Currency period and month (April yr to march yr)

• Name of the establishment and address
• Code no: of the establishment
• No: of member voluntary contributing at a higher rate
• AC No of each employee followed by their name, annual salary, annual
contribution, employer contribution, refund of advance, rate of voluntary
contribution.
• This grand total should tally with all form 12 A and challan totals.
P.F. Annual Returns Form 3A

This form is filled up for each employee stating his each monthly salary, contribution, Employer share,
Refund of advance, No of days/period of non contributing service, if any (eg unauthorised leave). If the
employee is resigned during that financial year then the date of leaving service and reasons for leaving
service should be specified in this form. Using this form 6 A is filled up and crosschecking is done with
all challans and 12 A forms.
FAQ ON PROVIDENT FUND

Q1) What is the Contribution for Provident Fund both by the Employer &
Employee ?
Ans : The Employee contributes 12% of his /her Basic Salary & the same amount is
contributed by the Employer.

Q2) Is it Compulsory for the all the employees to contribute to the Provident Fund ?
Ans : Employees drawing basic salary upto Rs 6500/- have to compulsory contribute to
the Provident fund and employees drawing above Rs 6501/- have an option to become
member of the Provident Fund .

Q3) Is it beneficial for employees who draw salary above Rs 6501/- to become
member of Provident Fund ?
Ans Yes because provident fund contribution by the employer & employee is not a
taxable income for Income Tax purpose.

Q4) What if an employee while joining establishment has a basic salary of Rs 4200
and after some period of time his basic salary increases above Rs 6501/-, does he
have an option to terminate his member ship form the Provident fund act?
Ans : Employee who while joining the organisation has a basic salary above Rs 6501/-
have an option to either become or avoid becoming member of Provident fund but
employees whose basic salary while joining the organisation is less then Rs 6501/- but
after some period of time their basic increases above Rs 6501/- have to compulsorily
continue to be member of provident Fund.

Q5) What is the contribution percentage to the Provident fund and Pension
Scheme ?
Ans : Employers contribution of 12% of basic salary is totally deposited in provident
fund account Whereas out of Employees contribution of 12% , 3.67% is contributed to
Provident fund and 8.33% is deposited in Pension scheme.

Q6) Which form has to be filled while becoming member of provident fund ?
Ans : Nomination Form No 2 has to be filled to become a member of the Provident fund,
form is available with HR department .

Q7 ) Which form has to be filled while transferring provident fund deposit ?

Ans : You just have to fill form no 13 to transfer your P.F amount.

Q8 ) What is the provision of the scheme in the matter of nomination by a member ?

Ans : Each member has to make a nomination to receive the amount standing to his credit
in the fund in the event of his death. If he has a family, he has to nominate one or more
person belonging to his family and none other. If he has no family he can nominate any
person or persons of his choice but if he subsequently acquires family, such nomination
becomes invalid and he will have to make a fresh nomination of one or more persons
belonging to his family. You cannot make your brother your nominee as per the Acts.
Q9 ) When is an employee eligible to enjoy pension scheme ?
Ans : For an employee to become eligible for Pension fund, he has to complete
membership of the Fund for 10 Years.

Q10 ) What does it mean by continuous service of ten years ?

Ans : When we say continuous service of 10 years in Employee Pension Fund, we mean
to say that during services, for e.g., an employee who has worked with X company for
say 3 years, then he resigned from that organisation and joined Y company, wherein he
worked for 2 years, then resigned from there to join establishment for 5 years but during
these 10 years of service he has not withdrawn but transferred his Employee pension
fund, then we say continuous service of ten years.

Q11 ) When can an employee avail the benefit of Employee pension fund scheme
which he has contributed during his ten years of continues service /
Ans : An employee can avail the benefit after completion of 58 years of service.

Q12 ) What happens to the provident fund & Employee Pension fund if an employee
who wants to resign from the service before completion of ten years of continues
service?
Ans : Employee can withdraw the PF accumulations by filling Forms 19 & 10 C which is
available with the HR department.

Q13 ) What is this 19 & 10C form ?

Ans : Form No 19 is for Provident fund withdrawal & Form No. 10 C is for Pension
scheme withdrawal.

Q14 ) Do we get any interest on the amount which is deposited in the Provident
Fund account?
Ans : Compound interest as declared by the Govt. is given for every year of service.

Q15 ) What is the accounting year for Provident fund account?

Ans : Accounting year is from March to February.

Q16 ) What are the benefits provided under Employee Provident Fund Scheme?
Ans : Two kinds of benefits are provided under the scheme-
a) Withdrawal benefit
b) Benefit of non -Refundable advances

Q18 ) What is the purpose of the Employee's Pension Scheme ?

Ans : The purpose of the scheme is to provide for
1) Superannuation pension.
2) Retiring Pension.
3) Permanent Total disablement Pension
Superannuation Pension: Member who has rendered eligible service of 20 years and
retires on attaining the age of 58 years.
Retirement Pension: member who has rendered eligible service of 20 years and retires or
otherwise ceases to be in employment before attaining the age of 58 years.
Short service Pension: Member has to render eligible service of 10 years and more but
less than 20 years.
Q19 ) How much time does it take to receive P.F & pension money if an employee
resigns from the Service?
Ans : Normally the procedure for receiving P.F & Pension money is , the employee has to
fill 19 & 10 c Form and submit the same to PF Desk , which is then submitted to the P.F
office after two months, this two months is nothing but a waiting period as the rules are
that an employee should not be in employment for two months after resigning if he has to
withdraw his P.F amount. After completion of two months the form is submitted to the
regional provident fund Commissioner office after which the employee receives his
amount along with interest within a period of 90 days.

Q20 ) Do we receive money through postal order ?

Ans Previously there was a procedure wherein member use to get P.F through Postal
order but now While submitting the P.F form withdrawal form you have to mention your
saving Bank account No. & the complete address of the Bank where you hold the
account.

Q21 ) How would I know the amount of accumulations in my PF account ?

Ans : PF office sends an annual statement through the employer which gives details about
the PF accumulations. The statement contains details like, Opening balance, amount
contributed during the year, withdrawal during the year, interest earned and the closing
balance in the PF account. This statement is sent by the PF department on completion of
the financial year.

Q22 ) Which establishments are covered by the Act ?

Ans : Any establishment which employs 20 or more employees. Except apprentice and
casual laborers, every Employee including contract labour who is in receipt of basic
salary up to Rs. 6500 p.m. is covered by the Act.

Q23 ) In case after registering the establishment at any point in time, the number of
employees working in it becomes less than 20 then will the Act apply ?
Ans : Any establishment which has been covered under the Act once shall continue to be
governed by the Act even if the number of persons employed therein at any time falls
below 20.

Q24 ) Is the Act applicable to a factory which is closed down but is employing a few
employees to look after the assets of the establishment ?
Ans : No, Where the establishment is closed down and only four security men are
employed for keeping a watch over the assets and properties of the establishments, the
Act would not be applicable.

Q25 ) Is a trainee an employee under the Act ?

Ans : Yes, a trainee would be considered as an employee as per the Act but in case the
trainee is an apprentice under the Apprentice's Act then he/ she will not be considered as
an employee under this Act.
Q26) Is it possible to appeal the orders of the Central Government or the Central
Provident Fund Commissioner ?
Ans : Yes, there is a body called as Provident Fund Appellate Tribunal where an
employer can appeal.

Q27 ) Who is the authority to decide regarding the disputes if any ?

Ans : In case there is a dispute regarding the applicability of the Act or the quantum of
money to be deducted etc. the authority to decide are the
i)Central Provident Fund Commissioner,
ii)any Additional Provident Fund Commissioner,
iii)any Additional Central Provident Fund Commissioner
iv)any Deputy Provident Fund Commissioner
v)any Regional Provident Fund Commissioner or
vi)any Assistant Provident Fund Commissioner

Q28 ) What in case there are workers involved as Contract labour ?

Ans : It is the responsibility of the Contractor to deduct the PF and submit a statement to
the Principal Employer in the prescribed format by 7th of every month. The Company
becomes the Principal Employer would be responsible for the PF deduction of the
workers employed on contract basis.

Q29 ) Are the persons employed by or through a contractor covered under the
Scheme ?
Ans : Persons employed by or through a contractor are included in the definition of “
employee ” under the Employee's Provident Finds Act, 1952, and as such, they are
covered under the Scheme.

Q30 ) In case the Contractor fails to deduct and submit the PF amount from the
contract workers then what is to be done ?
Ans : The Company being the Principal employer is responsible for the PF to be deducted
from the Contract workers as well. In case the Contractors fails to deduct and submit the
PF dues then the Company has to pay the amount and can later on recover the amount
from the Contractor.

Q31 ) Could the employer be punished in case the remittance of contribution by him
is delayed in a Bank or post office ?
Ans : Employer cannot be punished or penalized in case there is a delay in the remittance
of the contribution on account of delay in Bank or post office.

Q32 ) What happens in case there is a salary revision and a raise in the basic salary
of the employee and arrears need to be paid, Do we need to deduct PF from the
arrears as well ?
Ans : Arrears are considered to be emoluments earned by the employee and PF is to be
deducted from such arrears.
Q33 ) Is it possible for an employee to contribute at a higher rate of interest than 12
%?
Ans : Yes, if an employee desires to contribute an amount at a higher rate of interest than
12 % of basic salary then they can do so but it does not become obligatory for the
employer to pay anything above than 12 %.This is called voluntary contribution and a
Joint Declaration Form needs to be filled up where the employer and the employee both
have to give a declaration as to the rate at which PF would be deducted.

Q34 ) What is the interest on the PF accumulations ?

Ans : Compound interest as declared by Central Govt. is paid on the amount standing to
the credit of an employee as on 1st April every year.