What is Employee Provident Fund Schem... January 5, 2023
If you are a newbie to kickstart your job then you might definitely get this question. It is a simple saving scheme given by the government for private employees which can help them after retirement or superannuation. The government has passed a legislation act of Employee Provident Fund Scheme, 1952 which was the 19th act of 1952. This act is helpful for both employee and employer. Let’s see how it’s helping both in the upcoming blog!
An employer who has more than 20 employees in their organization can opt for this scheme. 20 is not a constraint for employees, organizations can adapt the act even when there are fewer employees lesser than 20.
Any employees who are drawing basic pay lesser than 15,000 can opt for this scheme. The EPF scheme comes in the combination of EPS & EDLI. Employees are given choices either to opt-in or out of this EPF scheme while joining the organization.
Employee and employer contribute the same percentage of 12% for this scheme. The 12% of the contribution is split as
- 8.33% – Employees Pension Fund
- 3.67% – Employees Provident Fund
The employer contributes exactly 13.61% to the Scheme.
- 67% – EPF
- 33% – EPS
- 5% – EDLI
- 1% – EPF admin charges
- 0.1% – EDLI admin charges
This is 0.50% of the basic pay. Rather than this contribution, the employer can contribute 0.50% of the basic towards the PF Administrative charges subject to a minimum of INR 75/- per month for a non-functional organization without any contributory member and INR 500/- for other establishments.
Penalty for employers
Employers need to pay the penalty if they haven’t remitted their part of contribution to this scheme. 15th of every month is the deadline for an employer to remit their contribution. If employers are found late filing then they will be penalized under section 14B of the Act. Here are the interest rates:
|Interest||Delay of months|
|5% p.a||2 months|
|10% p.a||4 months|
|15% p.a||6 months|
|25% p.a||More than 6 months|
Basically, this scheme is given to private employees who can make use of the savings for later purposes. Schemes like these added in the payroll services add value to employees. If you are a start-up company or a mid-level company, Park Global HR can help you to organize the payroll and statutory compliances for you!
Visit https://parkglobalhr.com/payroll-statutory-compliance/ to know more.