EPF applicability

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Querist : Anonymous

Querist : Anonymous (Querist)

06 May 2010 hi everybody

i hav small doubt regarding the applicability of PF. what is the criteria.

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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06 May 2010 The Employees’ Provident Funds and Miscellaneous Provisions Act, provides for compulsory contributory fund for the future of an employee after his/her retirement or for his/her dependents in case of his/her early death. Its applicability: It extends to the whole of India except the State of Jammu and Kashmir and is applicable to:

a) every factory engaged in any industry specified in Schedule 1 in which 20 or more persons are employed;

b) every other establishment employing 20 or more persons or class of such establishments which the Central Govt. may notify;

c) any other establishment so notified by the Central Government even if employing less than 20 persons.

Every employee, including the one employed through a contractor (but excluding an apprentice engaged under the Apprentices Act or under the standing orders of the establishment and casual laborers), who is in receipt of wages up to Rs.6,500 p.m., shall be eligible for becoming a member of the funds. The condition of three months’ continuous service or 60 days of actual work, for membership of the scheme, has been done away.

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Rahul Gupta

Rahul Gupta (Expert)
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06 May 2010 Well explained by Mr Sanjay.

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Gajendra R. Tiwari

Gajendra R. Tiwari (Expert)
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06 May 2010 Applicability:
• Every establishment which is factory engaged in any industry specified in Schedule 1 and in which 20 or more persons are employed.
• Any other establishment employing 20 or more persons which Central Government may, by notification, specify in this behalf.
• Any establishment employing even less than 20 persons can be covered voluntarily u/s 1(4) of the Act.
Clarification about

The employer is required to contribute the following amounts towards Employees’ Provident Fund and Pension Fund:

a. In case of establishments’ employing less than 20 persons or a sick industrial (BIFR) company or ‘sick establishments’ or any establishment in the jute, beedi, brick, coir or gaur gum industry. –the employer contribution is 10% of the basic wages, dearness allowance and retaining allowance, if any.

b. In case of all other establishments’ employing 20 or more person- the employer contribution is 12% of basic wages, dearness allowance and retaining allowance, if any.
A part of the contribution is remitted to the Pension Fund and the remaining balance continues to remain in Provident Fund account.
Where, the pay of an employee exceeds Rs.6, 500 p.m., the contribution payable to Pension Fund shall be limited to the amount payable on his pay of Rs.6, 500/- only.
“Basic wages" means all emoluments which are earned by an employee while on duty or on leave or on holidays with wages in either case in accordance with the terms of the contract of employment and which are paid or payable in cash to him but does not include:

(i) The cash value of any food concession;
(ii) Any dearness allowance, house-rent allowance, overtime allowance, bonus, commission or any other similar allowance.
(iii) Any presents made by the employer;
For the purposes of this section dearness allowance shall be deemed to include also the cash value of any food concession allowed to the employee.
Retaining allowance means an allowance payable for the time being to an employee of any factory or other establishment during any period in which the establishment is not working for retaining his services.

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