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Employees Provident Fund and Miscellaneous Provisions Act

Section:1 (3), 6, 16 :Coverage Under The P.F. Act

Obligation : To check whether the establishment is covered under the PF Act.

Type:Preventive Compliance Frequency: Annual

Action to be taken:
Obtain Legal Opinions on Coverage Under The P.F. Act for the establishment. If the establishment is covered under the act, Obtain a legal opinion on :
a) whether PF and Pension contributions and EDLIS payments are equal to the percentage specified for the establishment in the act and
b) that the calculation of wages for the purpose of these schemes is accurate.

Audit Requirement:
Is the establishment covered under the P.F. Act ? Are the employers and employees contributions towards PF, Pension Fund and EDLIS in line with the provisions of the Act ?

Supporting Documents:
Legal Opinions on a) Coverage Under the PF Act for each location b) Percentage of PF and Pension contributions and EDLIS payments c) calculation of wages for the purpose of these schemes

Related Documents:
 Schedule I - Sections 2(i),4: List of Industries defined as an 'Industry' under the Act   View htm  8.9 Kb

Related Triggers:
Startup of a New Establishment or Factory

Related Keywords:
Provident Fund
Provident Funds (Exemptions)

Related Sections:
Employees Provident Fund and Miscellaneous Provisions Act, 1952
1:Short title, extent and application:
(1) This Act may be called the Employees' Provident Funds and Miscellaneous Provisions Act, 1952.
(2) It extends to the whole of India except the State of Jammu and Kashmir.
(3) Subject to the provisions contained in section 16, it applies-
(a) to every establishment which is a factory engaged in any industry specified in Schedule I and in which twenty or more persons are employed, and
(b) to any other establishment employing twenty or more persons or class of such establishments which the Central Government may, by notification in the Official Gazette, specify in this behalf :
Provided that the Central Government may, after giving not less than two months' notice of its intention so to do, by notification in the Official Gazette, apply the provisions of this Act to any establishment employing such number of persons less than twenty as may be specified in the notification.
(4) Notwithstanding anything contained in sub-section (3) of this section or sub-section (1) of section 16, where it appears to the Central Provident Fund Commissioner, whether on an application made to him in this behalf or otherwise, that the employer and the majority of employees in relation to any establishment have agreed that the provisions of this Act should be made applicable to the establishment, he may, by notification in the Official Gazette, apply the provisions of this Act to that establishment on and from the date of such agreement or from any subsequent date specified in such agreement.
(5) An establishment to which this Act applies shall continue to be governed by this Act notwithstanding that the number of persons employed therein at any time falls below twenty. Employees Provident Fund and Miscellaneous Provisions Act, 1952
6:Contributions and matters which may be provided for in Schemes:
The contribution which shall be paid by the employer to the Fund shall be twelve per cent of the basic wages, dearness allowance and retaining allowance (if any), for the time being payable to each of the employees, (whether employed by him directly or by or through a contractor), and the employees contribution shall be equal to the contribution payable by the employer in respect of him and may, if any employee so desires, be an amount exceeding twelve per cent of his basic wages, dearness allowance and retaining allowance (if any), subject to the condition that the employer shall not be under an obligation to pay any contribution over and above his contribution payable under this section:
Provided that in its application to any establishment or class of establishments which the Central Government, after making such inquiry as it deems fit, may, by notification in the Official Gazette specify, this section shall be subject to the modification that for the words twelve per cent, at both the places where they occur, the words twelve per cent shall be substituted:
Provided further that where the amount of any contribution payable under this Act involves a fraction of a rupee, the Scheme may provide for the rounding off of such fraction to the nearest rupee, half of a rupee or quarter of a rupee.
Explanation 1.- 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.
Explanation 2.- For the purposes of this section "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. Employees Provident Fund and Miscellaneous Provisions Act, 1952
16:Act not to apply to certain establishments:
(1) This Act shall not apply-
(a) to any establishment registered under the Co-operative Societies Act, 1912 (2 of 1912), or under any other law for the time being in force in any State relating to co-operative societies, employing less than fifty persons and working without the aid of power; or
(b) to any other establishment belonging to or under the control of the Central Government or a State Government and whose employees are entitled to the benefit of contributory provident fund or old age pension in accordance with any scheme or rule framed by the Central Government or the State Government governing such benefits ; or
(c) to any other establishment set up under any Central, Provincial or State Act and whose employees are entitled to the benefits of contributory provident fund or old age pension in accordance with any scheme or rule framed under that Act governing such benefits ; or
(2) If the Central Government is of opinion that having regard to the financial position of any class of establishments or other circumstances of the case, it is necessary or expedient so to do, it may, by notification in the Official Gazette, and subject to such conditions as may be specified in the notification, exempt whether prospectively or retrospectively that class of establishments from the operation of this Act for such period as may be specified in the notification. Employees Deposit Linked Insurance Scheme, 1976
7:Contribution:
(1) The Contribution payable by the employer and the Central Government under sub-section (2) and sub-section (3) of Section 6-C of the Act, shall be calculated on the basis of the basic wages, dearness allowance (including the cash value of any food concession) and retaining allowance, if any, actually drawn during the whole month whether paid on daily, weekly, fortnight or monthly basis:

Provided that where the monthly pay of an employee exceeds six thousand five hundred rupees, the contribution payable in respect of him by the employer and the Central Government shall be limited to the amounts payable on a monthly pay of six thousand five hundred rupees including dearness allowance retaining allowance (if any ) and cash value of food concession.

(2) Each contribution shall be calculated to the nearest rupees, 50 paise or more to be counted as the next higher rupee and fraction of a rupee less than 50 paise to be ignored. Employees Pension Scheme, 1995
3:Employees Pension Fund:
(1) From and out of the contribution payable by the employer in each month under Section 6 of the Act or under the rules of the Provident Fund of the establishment which is exempted either under clauses (a) and (b) of sub-Section (1) of Section 17 of the Act or whose employees are exempted under either paragraph 27 or Paragraph 27-A of the employees' Provident Funds Scheme, 1952, a part of contribution representing 8.33 per cent of the employees' pay shall be remitted by the employer to the Employees' Pension Fund within 15 days of the close of every month by a separate bank draft or cheque on account of the Employees' Pension Fund contribution in such manner as may be specified in this behalf by the Commissioner. The cost of the remittance, if any, shall be borne by the employer.
(2) The Central Government shall also contribute at the rate of 1.16 per cent of the pay of the members of the employees' Pension Scheme and credit the contribution to the employees' Pension Fund:
Provided that where the pay of the member exceeds rupees five thousand per month the contribution payable by the employer and the Central Government be limited to the amount payable on his pay of rupees five thousand only.
(3) Each contribution payable under sub-paragraph (1) and (2) shall be calculated to the nearest rupee, fifty paise or more to be counted as the next higher rupee and fraction of a rupee less than fifty paise to be ignored.
(4) The net assets of the Family Pension Scheme, 1971 shall vest in and stand transferred to the Employees' Pension Fund. Employees Pension Scheme, 1995
4:Payment of contribution:
(1) The employer shall pay the contribution payable to the Employees Pension Fund in respect of each member of the Employees Pension Fund employed by him directly or by or through a contractor.
(2) It shall be the responsibility of the principal employer to pay the contributions payable to the Employees Pension Fund by himself in respect of the employees directly employed by him and also in respect of the employees employed by or through a contractor.
Provided that the Central Government shall pay the contribution payable to the Employees Pension Fund in respect of an employee who is a person with disability under the Persons with Disabilities(Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 (1 of 1996) and under the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1994 (44 of 1999) respectively, up to a maximum period of three years from the date of commencement of membership of the Fund.