Hello, in this post, we will discuss the guide to EPF rules for employer.
- As per the new wage code, the employee’s basic salary will be at least 50% of his/her net monthly CTC. Thus, employees will not be able to get more than 50% of his/her net monthly salary as allowance. The PF and gratuity contribution of the employee will increase and take-home salary will decrease.
- Interest on employee contributions to the provident fund (PF) above Rs 2.5 lakh per annum will be taxed from April 1, 2021.
- Senior citizens above 75 years having pension income and interest from fixed deposit in the same bank do not need to file income tax returns for the FY beginning April 1.
We will cover the following:
- Employees provident fund act 1952 – An Introduction
- Recent changes to EPF
- Deduction of EPF
- EPF rules for employer
- Regular EPF-related tasks for employers
Employees Provident Fund Act, 1952
Employees Provident Fund was established in the year 1952. Hence, the Act is named as Employees Provident Fund and Miscellaneous Provisions Act, 1952. This act extends to the whole of India except Jammu and Kashmir.
Basically, the Provident Fund is a welfare scheme for the benefits of the employees. Both employer and employee contribute their share of amount but the whole of the amount is deposited by the employer. The employer deducts the employee share from the salary of the employee. So, the accumulated amount can be withdrawn if certain conditions are met.
Recent changes to EPF
- The claim settlement period for PF withdrawal is now just 10 days
- Aadhar Card is compulsory for pensioners and subscribers.
- EPF contribution rate for the newly recruited female employees has been reduced from 12% to 8%. This will be available to the new female employees for the first 3 years of employment.
- Employers must consider special allowances paid to the employees as a part of the “Basic Wage” for deduction towards provident fund.
- EPFO subscribers can now withdraw 75% of their PF after 1 month of unemployment. Also, the remaining 25% of the amount can be withdrawn after 2 months of unemployment.
- Women employees resigning to get married can withdraw their 100% without waiting for two months.
- TDS will attract at the time of payment if the PF accumulated balance is more than Rs. 30,000.
- The facility of offline withdrawal has been completely withdrawn.
- Contribution by an employer -The contribution made by the employer is 12% of the basic salary of the employee. However, this 12% is further subdivided into:
- Employee Pension Scheme (EPS) – 8.33%
- Employee’s Provident Fund (EPF) – 3.67%
- Contribution by an employee – Contribution towards EPF is deducted from employee’s salary. This is 12% of the basic salary of the employee.
We all know that, if Basic+DA is less than Rs.15000, then both the employer and employee contribution will be the same. If the amount exceeds Rs.15,000 then you have an option to either contribute based on the original amount or restrict the calculations to Rs. 15,000.
EPF rules for employer
We know that the contributions from employees as well as employers get added to the EPF. The latest changes made in the EPF rules are the following –
Revise of minimum salary limit – The employee with a monthly salary less than or equal to 15000 will have to contribute mandatory towards EPF.
Change in the pension amount – The minimum monthly pension amount was set at Rs. 1000 for the widow of a member of the Employees’ Provident Fund. For children and orphans, it is set at Rs. 250 and 750 per month respectively. The pension amount will be calculated as per the average salary of the last 60 months.
Insurance Coverage – The coverage amount has now been increased to Rs. 3,00,000 per member.
Employer Contribution towards EPS – The employer’s contribution towards EPS is increased to Rs. 1,250 per month irrespective of the salary even if it is below or above Rs. 15,000 per month.
Change in employee limit – Even though an organization has only 10 employees they are eligible for EPF contribution.
Withdrawal of EPF – Withdrawals are made from EPF account for financing an insurance policy, buying or building a house and other situations mentioned in the EPFO website.
EPF-related tasks for employers
- PF Registration
- Correction of Personal Details
- Generate UAN
- Upload KYC
- PF Payment
- PF Returns
- Inform UAN number and EPF ID
The employer who is a part of the EPF scheme has to do some regular tasks. They have to pay to EPFO for the administrative expenses. By the arrival of UAN and online portals, these tasks have become a lot easier.
An employer can also create a trust to manage the EPF contribution. For this reason, an employer is not required to remit EPF contribution as it goes to the private trust. Instead, the trust should provide an equal or higher return than the EPFO.
The employer with the help of Form 11 will register a new employee into the EPF scheme. However, it is not submitted to the EPF office but the employer keeps it with himself and uses it to fill up the online form.
Correction of Personal Details
The employer should verify the authenticity of the employee. Therefore before linking UAN with the Aadhaar, the errors in the personal details of members like wrong spelling should be fixed by the employer.
The employer generates the UAN for the new employee who does not have an existing UAN. To make a new UAN, the employer has to login UAN employer portal.
KYC is mandatory for the withdrawal of EPF. The EPFO needs the PAN, Bank account number and Aadhaar or other KYC details of each EPF member. Hence, It is the responsibility of the employer to furnish the KYC details of its employees. But older employees may not have these KYC details.
The employer needs to verify the details before giving approval for an EPF member of the company to upload his/her KYC details online.
An employer has to pay the EPF contribution to the EPFO every month. The employer has to pay EPF contribution within 15 days of the next month. If the deadline is missed the company will be in the defaulter list and they have to pay a penalty for the default period.
An employee has to file a return of monthly payment by logging in to UAN employer portal and filling the ECR. The employer gives details of the employees, their salary as well as contribution. Then EPFO updates the passbook of every employee. It is tallied with the aggregate of the EPF amount paid and employer files an annual return.
Inform UAN number and EPF ID
The employer should inform about the UAN and EPF member ID to its employee. It is usually printed in the salary slip. The employer persuades its employees to activate their UAN in order to do EPF related tasks online.
- Documents required for PF and ESI registration
- Payment and filing due dates for PF, ESI, and TDS
- Steps for PF online payment on the EPFO portal
- PF admin charges – A quick guide
Here ends the post about the EPF rules for employer. Also, we like to hear from you in the comments section below.