How to set up provident fund for your employees?

Here are some tips to set up the PF...

Provident fund has been designed to act as a beneficial factor for employee of any company offering benefits at the of their employment. Since India is a country with a large population and everyone cannot be accommodated in government jobs offering pensions in case of retirement and other benefits, provident fund has been designed to offer financial security for all employees. Employee Provident Fund (EPF) is implemented by the Employees Provident Fund Organization (EPFO) of India under the Employees’ Provident Fund Scheme (EPS) 1952.

Any employee who has completed one year of continuous service or having worked for a period of 240 days in a  year expect those working in the state of Jammu and Kashmir are eligible for provident fund membership. Business establishments and entities having more than 20 individual employees need to create an employee provident account as per the rules of the Employees Provident Fund Organization (EPFO) of India. Let us take a look at various steps involved to set up a provident fund account for employees.

Understanding Employee Provident Fund (EPF):

Employees Provident Fund Organization (EPFO) of India has laid down various rules and regulations under the Employees’ Provident Fund Scheme (EPS) 1952 for opening of provident fund accounts by business establishments. Any company associated with any of the180 industries as listed on the EPFO website having more than the stipulated number of 20 employees has to open a provident fund account with the Employees Provident Fund Organization of India.

Applicability for Employee Provident Fund:

As per the existing laws defined by the Employees Provident Fund Organization of India, the employer has to contribute a minimum of 12% of the basic, DA along with cash value for food allowance for each individual EPF account for the employee. In case the company is exempted under the EPFO rules and guidelines for provident fund account, the employer is liable to pay only the inspection charges amounting to 0.18% of the emoluments involved.

Employees Provident Fund Organization Directives:

All companies and business establishments having more than 20 employees registered with the employees provident fund organization has to follow certain basic directives as stipulated by the Employees’ Provident Fund Scheme (EPS) 1952. The company must enroll employees of all categories including contractors or other hourly rated employees. The company must remit the contributions in the provident fund account before the 15th date of each month while making all available and relevant records open to investigation by Employees’ Provident Fund office at all times.

Delay Charges:

In case an employer of company fails to remit their contribution for employee provident fund account by the due date of 15th for the month, the company or business owner will be liable to pay both interest and damages for the period of delay. Interest is payable at the rate of 12% per annum calculated on the amount of remittance due while a penalty ranging from 17 to 37% per annum is charged for the delay in payments.

Online Application Process at EPFO Website:

Companies with more than 20 employees eligible for provident fund account for their employees can use the online account opening facility of the employee provident fund organization. Users can visit the official website and register their company under the state in which the business is established. One would need to enter the establishment code along with details of the business establishment including PAN card and authorized signatories of the company. Once the details are submitted the website sends verification PIN on the mobile number of the applicant along with a temporary login and password id. Users can login on to the website using the username and password provided. The user can then use the website to create employee provident fund accounts for their employees.

Hope you would have some ease in arranging the Provident Fund for your employees.

Do let us know.