Type:Preventive Compliance Frequency: Annual

Action to be taken:
Obtain legal opinion on exemption of the establishment or a class of employees from certain provisions of the PF Act and its schemes under Section 17 and apply to obtain such exemptions as are available.

Audit Requirement:
Is the establishment exempted under Section 17 of the PF Act ?

Supporting Documents:
Legal Opinion regarding Exemption Under Section 17

Related Documents:
Form 1 - Para 27 : Exemption from Operation of the Scheme   View doc  22 Kb
Appendix I - Section 1(3)(b): List Of Non-Factory Industries To Which The PF Act, 1952 Has Been Made Applicable   View htm  77 Kb
Appendix II - Section 6: List of Industries/Classes of Establishments where the PF Rate has been increased to 10%   View htm  25 Kb

Related Triggers:
Startup of a New Establishment or Factory

Related Keywords:
Exemptions
Provident Fund
Provident Funds (Exemptions)

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Related Sections:
Employees Provident Fund and Miscellaneous Provisions Act, 1952
16-A:Authorising certain employers to maintain provident fund accounts:
(1) The Central Government may, on an application made to it in this behalf by the employer and the majority of employees in relation to an establishment employing one hundred or more persons, authorise the employer, by an order in writing, to maintain a provident fund account in relation to the establishment, subject to such terms and conditions as may be specified in the Scheme:
Provided that no authorisation shall be made under this sub-section if the employer of such establishment had committed any default in the payment of provident fund contribution or had committed any other offence under this Act during the three years immediately preceding the date of such authorisation.
(2) Where an establishment is authorised to maintain a provident fund account under sub-section (1), the employer in relation to such establishment shall maintain such account, submit such return, deposit the contribution in such manner, provide for such facilities for inspection, pay such administrative charges, and abide by such other terms and conditions, as may be specified in the Scheme.
(3) Any authorisation made under this section may be cancelled by the Central Government by order in writing if the employer fails to comply with any of the terms and conditions of the authorisation or where he commits any offence under any provision of this Act: Provided that before cancelling the authorisation, the Central Government shall give the employer a reasonable opportunity of being heard. Employees Provident Fund and Miscellaneous Provisions Act, 1952
17:Power to exempt:
(1) The appropriate Government may, by notification in the Official Gazette, and subject to such conditions as may be specified in the notification, exempt, whether prospectively or retrospectively, from the operation of all or any of the provisions of any Scheme-
(a) any establishment to which this Act applies if, in the opinion of the appropriate Government, the rules of its provident fund with respect to the rates of contribution are not less favourable than those specified in Section 6 and the employees are also in enjoyment of other provident fund benefits which on the whole are not less favourable to the employees than the benefits provided under this Act or any Scheme in relation to the employees in any other establishment of a similar character; or
(b) any establishment if the employees of such establishment are in enjoyment of benefits in the nature of provident fund, pension or gratuity and the appropriate Government is of opinion that such benefits, separately or jointly, are on the whole not less favourable to such employees than the benefits provided under this Act or any Scheme in relation to employees in any other establishment of a similar character.
Provided that no such exemption shall be made except after consultation with the Central Board which on such consultation shall forward its views on exemptions to the appropriate Government within such time limit as may be specified in the Scheme.
(1-A) Where an exemption has been granted to an establishment under clause (a) of sub-section (1),-
(a) the provisions of Sections 6, 7-A, 8 and 14-B shall, so far as may be, apply to the employer of the exempted establishment in addition to such other conditions as may be specified in the notification granting such exemption, and where such employer contravenes, or makes default in complying with any of the said provisions or conditions or any other provision of this Act, he shall be punishable under Section 14 as if the said establishment had not been exempted under the said clause (a);
(b) the employer shall establish a Board of Trustees for the administration of the provident fund consisting of such number of members as may be specified in the Scheme;
(c) the terms and conditions of service of members of the Board of Trustees shall be such as may be specified in the Scheme;
(d) the Board of Trustees constituted under clause (b) shall-
(i) maintain detailed accounts to show the contributions credited, withdrawals made and interest accrued in respect of each employee;
(ii) submit such returns to the Regional Provident Fund Commissioner or any other officer as the Central Government may direct from time to time;
(iii) invest the provident fund monies in accordance with the directions issued by the Central Government from time to time;
(iv) transfer, where necessary, the provident fund account of any employee; and
(v) perform such other duties as may be specified in the Scheme.
(1-B) Where the Board of Trustees established under clause (b) of sub-section (1-A) contravenes, or makes default in complying with, any provisions of clause (d) of that sub-section, the Trustees of the said Board shall be deemed to have committed an offence under sub-section (2-A) of Section 14 and shall be punishable with the penalties provided in that sub-section.
(1-C) The appropriate Government may, by notification in the Official Gazette, and subject to the condition on the pattern of investment of pension fund and such other conditions as may be specified therein, exempt any establishment or class of establishments from the operation of the Pension Scheme if the employees of such establishment or class of establishments are either members of any other pension scheme or proposed to be members of such pension scheme, where the pensionary benefits are at par or more favourable than the Pension Scheme under this Act.
(2) Any Scheme may make provision for exemption of any person or class of persons employed in any establishment to which the Scheme applies from the operation of all or any of the provisions of the Scheme, if such person or class of persons is entitled to benefits in the nature of provident fund, gratuity or old age pension and such benefits, separately or jointly, are on the whole not less favourable than the benefits provided under this Act or the Scheme :
Provided that no such exemption shall be granted in respect of a class of persons unless the appropriate Government is of opinion that the majority of persons constituting such class desire to continue to be entitled to such benefits.
(2-A) The Central Provident Fund Commissioner may, if requested so to do by the employer, by notification in the Official Gazette, and subject to such conditions as may be specified in the notification, exempt, whether prospectively or retrospectively, any establishment from the operation of all or any of the provisions of the Insurance Scheme, if he is satisfied that the employees of such establishment are, without making any separate contribution or payment of premium, in enjoyment of benefits in the nature of life insurance, whether linked to their deposits in provident fund or not, and such benefits are more favourable to such employees than the benefits admissible under the Insurance Scheme.
(2-B) Without prejudice to the provisions of sub-section (2-A), the Insurance Scheme may provide for the exemption of any person or class of persons employed in any establishment and covered by that scheme from the operation of all or any of the provisions thereof, if the benefits in the nature of life insurance admissible to such person or class of persons are more favourable than the benefits provided under the Insurance Scheme.
(3) Where in respect of any person or class of persons employed in an establishment an exemption is granted under this section from the operation of all or any of the provisions of any Scheme (whether such exemption has been granted to the establishment wherein such person or class of persons is employed or to the person or class of persons as such), the employer in relation to such establishment-
(a) shall, in relation to the provident fund, pension and gratuity to which any such person or class of persons is entitled, maintained such accounts, submit such returns, make such investment, provide for such facilities for inspection and pay such inspection charges as the Central Government may direct;
(b) shall not at any time after the exemption, without the leave of the Central Government, reduce the total quantum of benefits in the nature of pension, gratuity or provident fund to which any such person or class of persons was entitled at the time of the exemption; and
(c) shall, where any such person leaves his employment and obtains re-employment in another establishment to which this Act applies, transfer within such time as may be specified in this behalf by the Central Government, the amount of accumulations, to the credit of that person in the provident fund of the establishment left by him to the credit of that person's account in the provident fund of the establishment in which he is re-employed or, as the case may, in the Fund established under the Scheme applicable to the establishment.
(3-A) Where, in respect of any person or class of persons employed in any establishment, an exemption is granted under sub-section (2-A) or sub-section (2-B) from the operation of all or any of the provisions of the Insurance Scheme (whether such exemption is granted to the establishment wherein such person or class of persons is employed or to the person or class of persons as such), the employer in relation to such establishment-
(a) shall, in relation to the benefits in the nature of life insurance, to which any such person or class of persons is entitled, or any insurance fund, maintain such accounts, submit such returns, make such investment, provide for such facilities for inspection and pay such inspection charges, as the Ce Employees Provident Fund Scheme, 1952
Chapter:Membership of the Fund| 27:Exemption of an employee:
(1) A commissioner may by order and subject to such conditions as may be specified in the order exempt from the operation of all or any of the provisions of the Scheme an employee to whom the Scheme applies on receipt of application in Form I from such an employee :

Provided that such an employee is entitled to benefit in the nature of Provident Fund, gratuity or old-age pension according to the rules of the factory or other establishment and such benefits separately or jointly are on the whole not less favourable than the benefits provided under the Act and the Scheme.

(2) Where an employee is exempted as aforesaid, the employer shall in respect of such employee maintain such account, submit such returns, provide such facilities for inspection, pay such inspection charges and invest provident fund collections in such manner as the Central Government may direct.
Provided that above mention returns shall be submitted by the employer in electronic format also, in such form and manner as may be specified by the Commissioner.

(3) An employee exempted under sub-paragraph (1) may by an application to the Commissioner make a declaration that he shall become a Member of the Fund.

(4) No employee shall be granted exemption or permitted to apply out of exemption more than once on each account. Employees Provident Fund Scheme, 1952
Chapter:Membership of the Fund| 27-A:Exemption of a class of employees:
(1) The appropriate Government may by order and subject to such conditions as may be specified in the order exempt from the operation of all or any of the provisions of this Scheme any class of employees to whom the Scheme applies:

Provided that such class of employees is entitled to benefits in the nature of Provident Fund, gratuity or old age pension according to the rules of the factory or other establishment and such benefits separately or jointly are on the whole not less favorable than the benefits provided under the Act and this Scheme.

(2) Where any class of employee is exempted as aforesaid, the employer shall in respect of such class of employees maintain such account, submit such returns, provide such facilities for inspection, pay such inspection charges and invest provident fund collections in such manner as the Central Government may direct.
Provided that above mentioned returns shall be submitted by the employer in electronic format also, in
such form and manner as may be specified by the Commissioner.

(3) A class of employees exempted under sub-paragraph (1) or the majority of employees constituting such class may by an application to the Commissioner make a declaration that the class of employees shall become Member of the Fund.

(4) No class of employees shall be granted exemption or permitted to apply out of exemption more than once on each account.

(5) The Provisions of this paragraph shall be deemed to have come into force with effect from 14th October, 1953.