Employees’ Provident Fund And Miscellaneous Provisions Act, 1952
APPENDIX A
Revised Conditions for the Grant of Exemption Under Section 17 of the Employees’ Provident Funds
and Miscellaneous Provisions Act, 1952
The following are the revised conditions for grant of exemption
under section 17 of the Act, 1952: -
1. The employer shall establish a Board of Trustees under his
Chairmanship for the management of the Provident Fund according to such
directions as may be given by the Central Government or the Central Provident
Fund Commissioner, as the case may be, from time to time. The Provident
Fund shall vest in the Board of Trustees who will be responsible for and
accountable to the Employees’ Provident Fund Organisation, inter alia, for
proper accounts of the receipts into and payment from the Provident Fund and
the balance in their custody. For this purpose, the “employer” shall mean
–
(i) in relation to an establishment, which is a factory, the owner or
occupier of the factory; and
(ii) in relation to any other establishment, the person who, or the
authority, that has the ultimate control over the affairs of the establishment.
2. The Board of Trustees shall meet at least once in every three months and shall
function in accordance with the guidelines that may be issued from time to time
by the Central Government / Central Provident Fund Commissioner (CPFC) or an
officer authorized by him.
3. All employees’ as defined in section 2(f) of the Act, who have been
eligible to become members of the Provident Fund, had the establishment not
been granted exemption, shall be enrolled as members.
4. Where an employee who is already a member of Employees’ Provident Fund
or a provident fund of any other exempted establishment is employed in his
establishment, the employer shall immediately enroll him as a member of the
fund. The employer should also arrange to have the accumulations in the
provident fund account of such employee with his previous employer transferred
and credited into his account.
5. The employer shall transfer to the Board of Trustees the contributions
payable to the Provident Fund by himself and employees at the rate prescribed
under the Act from time to time by the 15th of each month following the month
for which the contributions are payable. The employer shall be liable to
pay simple interest in terms of the provisions of section 7-Q of the Act for
any delay in payment of any dues towards the Board of Trustees.
6. The employer shall bear all the expenses of the administration of
the Provident Fund and also make good any other loss that may be caused to the
Provident Fund due to theft, burglary, defalcation, misappropriation or any
other reason.
7. Any deficiency in the interest declared by the Board of
Trustees is to be made good by the employer to bring it up to the statutory
limit.
8. The employer shall display on the notice board of the establishment, a
copy of the rules of the funds as approved by the appropriate authority and as
when amended thereto along with a translation in the language of the majority
of the employees.
9. The rate of contributions payable, the conditions and quantum of
advances and other matters laid down under the provident fund rules of the
establishment and the interest credited to the account of each member,
calculated on the monthly running balance of the member and declared by the
Board of Trustees shall not be lower than those declared by the Central
Government under the various provisions prescribed in the Act and the Scheme
framed there under.
10. Any amendment to the Scheme, which is more beneficial to the
employees than the existing rules of the establishment, shall be made
applicable to them automatically pending formal amendment of the Rules of the
Trust.
11. No amendment in the rules shall be made by the employer without
the prior approval of the Regional Provident Fund Commissioner (referred to as
RPFC hereafter). The RPFC shall before giving his approval give a
reasonable opportunity to the employees to explain their point of view.
12. All claims for withdrawals, advances and transfers should be
settled expeditiously, within the maximum time frame prescribed by the
Employees’ Provident Fund Organisation.
13. The Board of Trustees shall maintain detailed accounts to show
the contributions credited, withdrawal and interest in respect of each
employee. The maintenance of such records should preferably be done
electronically. The establishments should periodically transmit the
details of members’ accounts electronically as and when directed by the CPFC /
RPFC.
14. The Board of Trustees shall issue an annual statement of
accounts or pass books to every employee within six months of the close of
financial / accounting year free of cost once in the year. Additional
printouts can be made available as and when the members want, subject to
nominal charges. In case of pass book, the same shall remain in custody
of employee to be updated periodically by the Trustees when presented to them.
15. The employer shall make necessary provisions to enable all the
members to be able to see their account balance from the computer terminals as
and when required by them.
16. The Board of Trustees and the employer shall file such returns
monthly / annually as may be prescribed by the Employees’ Provident Fund
Organisation within the specified time-limit failing which it will be deemed as
a default and the Board of Trustees and employer will jointly and separately be
liable for suitable penal action by the Employees’ Provident Fund Organisation.
17. The Board of Trustees shall invest the monies of the provident fund as per
the directions of the Government from time to time. Failure to make
investments as per directions of the Government shall make the Board of
Trustees separately and liable to surcharge as may be imposed by the Central
Provident Fund Commissioner or his representative.
18. (a) The securities shall be obtained in the name of Trust. The
securities so obtained should be in dematerialized (DEMAT) form and in case the
required facility is not available in the areas where the trust operates, the
Board of Trustees shall inform the Regional Provident Fund Commissioner
concerned about the same.
(b) The Board of Trustees shall maintain a script wise register and ensure
timely realization of interest.
(c) The DEMAT Account should be opened through depository
participants approved by Reserve Bank of India and Central Government in
accordance with the instructions issued by the Central Government in this
regard.
(d) The cost of maintaining DEMAT account should be treated as incidental
cost of investment by the Trust. Also all types of cost of investments
like brokerage of purchase of securities etc. shall be treated as incidental
cost of investment by the Trust.
19. All such investments made, like purchase of securities and bonds,
should be lodged in the safe custody of depository participants, approved by
Reserve Bank of India and Central Government, who shall be the custodian of the
same. On closure of establishments or liquidation or cancellation of
exemption from EPF Scheme, 1952, such custodian shall transfer the investment
obtained in the name of the Trust and standing in its credit to the RPFC
concerned directly on receipt of request from the RPFC concerned to that
effect.
20. The exempted establishments shall intimate to the RPFC concerned, the
details of depository participants (approved by Reserve Bank of India and
Central Government), with whom and in whose safe custody, the investments made
in the name of trust, viz. Investments made in securities, bonds, etc. have
been lodged. However, the Board of Trustees may raise such sum or sums of
money as may be required for meeting obligatory expenses such as settlement of
claims, grant of advances as per rules and transfer of member’s P.F
accumulations in the event of his/her leaving service of the employer and any
other receipts by sale of the securities or other investments standing in the
name of the Fund subject to the prior approval of the Regional Provident Fund
Commissioner.
21. Any commission, incentive, bonus or other pecuniary rewards given by
any financial or other institutions for the investment made by the Trust should
be credited to its account.
22. The employer and the members of the Board of Trustees, at the time of grant
of exemptions, shall furnish a written undertaking to the RPFC in such format
as may be prescribed from time to time, inter
alia, agreeing to abide by the conditions which are specified and
this shall be legally binding on the employer and the Board of Trustees,
including their successors and assignees or such conditions as may be specified
later for continuation of exemption.
23. The employer and the Board of Trustees shall also give an undertaking
to transfer the funds promptly within the time limit prescribed by the
concerned RPFC in the event of cancellation of exemption. This shall be
legally binding on them and will make them liable for prosecution in the event
of any delay in the transfer of funds.
24. (a) The account of the Provident Fund maintained by the Board of
Trustees shall be subject to audit by a qualified independent chartered
accountant annually. Where considered necessary, the CPFC or the RPFC
in-charge of the Region shall have the right to have the accounts reaudited by
any other qualified auditor and the expenses so incurred shall be borne by the
employer.
(b) A copy of the Auditor’s report along with the audited balance sheet
should be submitted to the RPFC concerned by the Auditors directly within six
months after the closing of the financial year from 1st April to 31st
March. The format of the balance sheet and the information to be
furnished in the report shall be as prescribed by the Employees’ Provident Fund
Organisation and made available with the RPFC Office in electronic format as
well as a signed hard copy.
(c) The same auditors should not be appointed for two consecutive years
and not more than two years in a block of six years.
25. A company reporting loss for three consecutive financial years or
erosion in their capital base shall have their exemption withdrawn from the
first day of the next / succeeding financial year.
26. The employer in relation to the exempted establishment shall provide
for such facilities for inspection and pay such inspection charges as the
Central Government may from time to time direct under clause (a) of sub-section
(3) of section 17 of the Act within 15 days from the close of every month.
27.In the event of any violation of the conditions for grant of exemption, by
the employer or the Board of Trustees, the exemption granted may be cancelled
after issuing a show cause notice in this regard to the concerned persons.
28. In the event of any loss to the trust as a result of any fraud,
defalcation, wrong investment decisions etc., the employer shall be liable to
make good the loss.
29. In case of any change of legal status of the establishment which has
been granted exemption, as a result of merger, demerger, acquisition, sale,
amalgamation, formation of a subsidiary, whether wholly owned or not, etc., the
exemption granted shall stand revoked and the establishment should promptly
report the matter to the RPFC concerned for grant of fresh exemption.
30. In case, there are more than one unit/establishment, participating in
the common Provident Fund Trust which has been granted exemption, all the
trustees shall be jointly and separately liable / responsible for any default
committed by any of the trustees / employer of any of the participating units
and the RPFC shall take suitable legal action against all the trustees of the
common Provident Fund Trust.
31. The Central Government may lay down any further conditions for
continuation of exemption of the establishments.