The Employees Provident Fund or the EPF is regulated by the Employees Provident Fund Organization or EPFO, which is the most prominent security organization in the world with respect to the volume of transactions and clients. The EPF is a scheme which was introduced to benefit the employee during retirement and was brought about under the Employees’ Provident Fund and Miscellaneous Provisions Act of 1952. It is imperative for a private limited company having salaried employees to carry out its EPF registration since TDS is deducted from the salaries of the employees. Employees must make remittances only after the challans are generated from the employee portal of the EFPO. Thus, it is imperative for the employer to obtain an EPF registration online.
The EPF scheme was put in place to financially secure the retirement period of employees. Employees are entitled to draw the money from their EPF account at the time of the retirement. Both the employees and employers are required to contribute to the EPF. The EPF accounts shall include contributions from their own salary, the contribution from the employer and the interest accumulated over the years on both the accounts. The EPF is highly beneficial to the people employed in the private and public sectors.
Applicability of EPF Registration
For the Employer
The EPF is mandatory for every establishment that:
- Is a factory which is engaged in any industry and has 20 or more persons as employees
- Or any other establishment with 20 or more persons as employees or class of such establishments which have been notified by the central government.
Every employer must obtain the requisite EPF registration within one month of achieving the above-mentioned strength. Non-compliance with this mandate will lead to heavy penalties. Once an establishment has been granted EPF registration and even if the employee strength falls far beyond the required minimum, they are required to follow the mandate under the EPF Act.
Central Government may, by notification, make the provisions of the EPF Act applicable to establishments having less than 20 employees after giving such establishment and notice not less than two months for compulsory registration. Where the majority of the employees and the employer have mutually agreed other provisions of the EPF Act should apply to the establishment, they themselves can apply to the Central Commissioner for Provident Fund. Central PF commissioner can of her own volition apply the provisions of the EPF Act establishment after the passing off notification in the Official Gazette from the date of the agreement or the date which is specified in such agreement.
For the Employee
It is mandatory for every employee drawing a salary of less than ₹15,000 per month, along with basic pay and dearance allowance, to have an EPF account by their employer. However, employees drawing a salary of more than ₹15,000 per month makes them non eligible employees and its not mandatory for such employees to become a member of the EPF.
All such employees shall be eligible for PF from the day the employment commences, and the responsibility of such deduction lies with the employer along with payment of the PF. 12% of PF contribution must be divided equally between the employee and the employer. The contribution to the EPF is 12% of the basic salary.
Contribution Percentage to the EPF
As mentioned above, both the employers and employees are required to contribute to the EPF. The 12% contribution to be made by the employer is calculated by taking the following into consideration as well- basic wages, retaining allowance, and dearance allowance. The employee is also required to make an equal contribution. If there are less than 20 employees in an organization, then the contribution rate by both the employer and employee shall be 10% of the salary.
From the 12% or 10% contribution of the employers, the Employees’ Pension Scheme shall receive 8.33% of the contribution. However, it should be calculated at ₹15,000 for every employee receiving a salary of ₹15,000 or more. Thus, for every such employee, ₹1250 is transferred to the Employees’ Pension Scheme. In contrast, if the basic salary is less than ₹15,000, then 8.33% of the whole amount shall be transferred to the Employees’ Pension Scheme. Any balance other than this 8.33% is transferred to the EPF scheme. When the employee retires, she shall receive her entire share of contribution along with the percentage retained by the employer in the EPF account balance.
Detailed breakup of the EPF Contribution
The 12 % Contribution made to the PF is divided as provided below:
- 3.67% of the contribution goes towards the Employees’ Provident Fund.
- 0.5% of the contribution goes towards the Employee Deposit Linked Insurance Scheme.
- 1.1% of the contribution goes towards the administration charges of EPF.
- 0.01% of the contribution goes towards the administration charges of EDLI.
- 8.33% of the contribution goes towards the Employees’ Pension Scheme.
Reasons to obtain EPF Registration.
As TDS is deducted from the salaries of the employees, EPF registration is highly essential for the employers. Some of the important reasons to obtain an EFPO registration are as follows:
- Coverage of Risk: The most essential benefit that the Provident fund provides to the employees is to cover the risk that employees or their dependents might face due to death or illness, or retirement.
- Uniform Account: One of the most vital aspects of the provident fund is that the account is constant and transferable. This means that it can be transferred to any other place of employment.
- Employee Deposit Linked Insurance Scheme or EDLIS: TheEmployee Deposit Linked Insurance Scheme is available for every holder of a PF account. According to the scheme, 0.5% of the salary shall be deducted as the life insurance premium.
- Emergency Needs: One must always be prepared for an unexpected event like an accident or illness or any other events like family gatherings where there might be a requirement for immediate financial assistance. The PF fund can be extremely beneficial during these times.
- Long-Term Loans: The money accumulated in the PF fund can be used to meet the paucity of funds for certain milestones or long term events like a wedding or for higher education.
- Pension Coverage: The PF fund can always be used to add to one’s pension fund. Other than the 12% of the employee’s salary to the EPF, the employer shall also be required to contribute an equal amount, which shall also include 8.33% to the Employee Pension Scheme or EPS.
- Tax-Free Interest and Withdrawals: Interest on the EPF shall be tax free along with EPF withdrawals.
- EPF Contribution by the government in certain situations: The government has offered to pay the EPF contribution on the employer’s behalf for a period of three years for new employees and women employees hired before March 2019.
- Reduction in EPF Contribution for Women Employees: To increase the take home salary for women employees, the government has reduced the EPF contribution to % for women employees.
Exclusion from wages under EPF
The below mentioned shall be excluded while calculating PF deduction from the wages of the employees:
- Food allowance
- Overtime Allowance or OTA
- Dearance Allowance or DA
- House Rent Allowance or HRA
Pre-requisites for obtaining an EPF Registration
Every employer is required to register their establishment online in relation to EPF registration. The employer is required to provide below mentioned details to register the establishment for EPF registration online:
- Details of the Establishment
There are some details regarding the establishment which are required to be provided registration process. The details include the following:
- The name of the establishment
- the address of the establishment.
- The incorporation date of the company
- TAN and PAN of the establishment
- The type of establishment
- If the establishment happens to be an MSME, and the proof of MSME registration.
- If the establishment is a factory, then details pertaining to the factory license, like the license number, the date on which the license was obtained and the place from where such license was granted.
- Contact Details
The employer is required to provide the contact details like the email ID and mobile phone number of the authorized person or the contact person. The employer is also required to provide details regarding the name, date of birth, PAN details, designation of the contact person, date of commencement of employment, along with the address details of the contact person.
- Employment details
The employer is required to provide employment details of the establishment, like the number of employees, gender of the employees, type of activities involved, and the wages paid, among other information.
- Branch or division details
The employer shall also provide details regarding the branch of the establishment, like the name, premise number and address of the establishment, along with the labour identification number or LIN.
- Activities of the Establishment
The employer is required to provide details regarding the nature and business of activities in which the establishment is involved in. The employer shall be required to enter the National Industrial Classification or the NIC code and then select the business and the nature of the activities of the establishment.
Documents to obtain an EPF Registration
There are certain documents which every employer is required to submit to obtain an EPF registration. Below mentioned are the essential documents which are necessary for EPF registration:
- The Aadhaar card of the director or partner, or proprietor of the establishment
- The PAN card of the director or partner, or proprietor of the establishment
- Digital signature of the director or partner, or proprietor of the establishment
- Proof of address of the registered office of the establishment utility bills not older than two months like telephone bill or water bill, or electricity bill.
- Bank statements of the establishment or a cancelled cheque
- Proof of ownership of the establishment premises, like a sale deed. If the establishment premises is on a rented property, then the lease deed is.
- Proof of registration of the establishment, like the certificate of incorporation in case of a company.
- Any certificate or licenses issued by the Government of India for the establishment
- Proof of licence, which has been issued by the licensing authority
Steps to obtain an EPF Registration
Employers looking to obtain an EPF registration for their establishment can register online on the official Shram Suvidha Portal. However, new private limited companies can no longer get EPFO registration on the Shram Suvidha Portal. From 2020, newly established private companies can obtain EPFO registration by filing the SPICE+ and AGILE Pro forms on the official website of the Ministry of Corporate Affairs.
Other private limited companies can obtain EPFO registration through the Shram Suvidha Portal. The following steps are to be followed to obtain such registration:
- Step One: Sign up on the Unified Shram Suvidha Portal
The very first step is to register one’s establishment on the Unified Shram Suvidha Portal or USSP. The employer is required to provide specific details like the Name, mobile number, email ID of the applicant and, enter the verification code and click on “Sign Up” to create a new account. This account shall be used for EPFO registration.
- Step Two: Log in to your USSP account.
Once the account has been created on the USSP, The employer is required to log in to the account and select the “EPFO-ESIC Registration” tab Situated on the left side of the screen. The applicant shall then click on the “Apply for New Registration” tab displayed on the screen.
The applicant shall be presented with two options, namely, the Employees’ state Insurance Act, 1946 and the Employees’ Provident fund and miscellaneous provision act, 1952. the applicant is required to select the “Employees’ Provident fund and miscellaneous provision act, 1952” option and then click on the button labelled “ Submit.”
- Step Three: Fill out the registration form
Once the applicant clicks on the “Submit” button as mentioned above, she shall be taken to the next page, which shall have the registration form for EPFO. The applicant is required to fill in all the required fields and sections of the form. The applicant shall be required to fill in details pertaining to the establishment as mentioned above, eContact section which shall have further information related to the primary Email ID and mobile number, Contact Person section which shall have details of the contact person or the primary manager of the establishment for the EPFO registration like the Email ID and contact details.
The following section pertains to the “Identifiers”, where the applicant shall be required to enter the requisite details. The applicant shall be acquired to enter employee details like the gender, the number of employees in the establishment, the date on which required strength was achieved, wages, and details regarding the establishment premises. The following section is the “Branch/Division”, where the applicant challenger details. The last section pertains to the activities of the establishment where the NIC Code, nature of work and primary business activity details shall be entered.
There will also be an “Attachment” section wherein important documents like scanned copies of the PAN card, the document providing proof of address, the document showing evidence of setup date, proof of licence, specimen signature, scanned copy of the cheque, hired or leased attachment.
Once all the necessary details have been filled in and essential documents have been attached as required, a summary of the application form shall be displayed. The applicant must review the information entered and the documents attached before clicking on the button labelled “Submit “.
- Step Three: Attach the Digital Signature Certificates
Once the applicant has filled out the application form and attached all the essential documents, the applicant is also required to upload and affix the digital signature certificates or the DSCs of the applicant.
Once the DSC has been successfully uploaded and affixed, the applicant shall receive a confirmation Email from the Unified Shram Suvidha Platform that the registration form has been successfully submitted.
Due Date for EPF
Before an employer pays salaries to its employee, the employer is required to deduct the contribution of the employee to PF from her wages. Both the employer’s and employee’s share shall be payable to the EPF within 15 days of the end of every month.
The Employees Provident Fund or the EPF is regulated by the Employees Provident Fund Organization or EPFO, which is the most prominent security organization in the world with respect to the volume of transactions and clients. The EPF is a scheme which was brought about under the Employees’ Provident Fund and Miscellaneous Provisions Act of 1952 to financially secure the retirement period of employees. Employees are entitled to draw the money from their EPF account at the time of the retirement. Both the employees and employers are required to contribute to the EPF. The most important benefit that the provident fund provides to the employees is to cover the risk that employees or their dependents might face due to death or illness, or retirement. The EPF can also be highly beneficial in mitigating times of emergency or financial paucity. It is mandatory for establishments with 20 or more employees to obtain EPFO registration. It is compulsory for every employee drawing a salary of less than ₹15,000 per month, along with basic and dearance allowance, to have an EPF account by their employer. Employers looking to obtain an EPF registration for their establishment are required to register online on the official Shram Suvidha Portal. Newly established private limited companies can no longer obtain EPFO registration on the Shram Suvidha Portal. From 2020, such companies can get EPFO registration only on the official website of the Ministry of Corporate Affairs.
Read Our Article: How To Apply For EPF Registration Online?