Provident Fund (PF) is one of the main platform of savings in India for nearly all people working in Government, Private or Public sector organizations. It is implemented by the Employees Provident Fund Organization (EPFO) of India. Registration has to be done within One month from the date of hiring 20th employees. PF is the best way to provide social security to the employees.

Provident Fund PF is largely an employee benefit scheme prescribed by the Government which provides facilities to the employees of an organization about medical assistance, retirement, education of children, insurance support and housing. It is created with the purpose to provide financial security and stability to employees.

Contribution towards EPF

• Contribution to EPF is to be done by both Employer and Employee.
• Employer deducts his employees’ share of EPF from his salary.
• Employer needs to deposit the amount of his contribution of EPF along with employees deducted share.
• The Employer’s contribution to EPF would be 10% and that of employee’s would be 12%.

Why is it necessary to contribute in EPF?

• The PF contribution by an employer will be tax-free.
• The amount including the amount interest will be exempt from tax on withdrawal after a specific period.
• Organizations can also enroll themselves voluntarily under PF laws.
• Note: Any delay in registration of EPF (Employee Provident Fund) may result in a penalty.

Documents required for PF registration

• Digital Signature of Proprietor/Partner/Director
• Aadhar Card of Proprietor/Partner/Director
• PAN Card of Proprietor/Partner/Director
• Cancelled Cheque/Bank Statement of Entity
• PAN Card of entity
• Electricity Bill of the Registered Office (not older than 2 months)
• Shop and establishment Certificate/GST Certificate/ License issued by the government for factory

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Employees Provident Fund (EPF) is a scheme controlled by the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. It is regulated by Employees’ Provident Fund Organization (EPFO). PF registration is applicable for all establishment which employs 20 or more persons. PF registration can also be obtained voluntarily by establishments having less than 20 employee.

• Provident fund is a social security system that was introduced for encouraging savings among employees, so as to benefit them during the course of their retirement.
• Contributions are made by the employer and the employee monthly. PF contributions can only be withdrawn by the employee at the time of his/her retirement, barring a few exceptions.
• All employers having PF registration are responsible to file returns monthly.

Important Points relating to Provident Fund:

• PF Return: Provident fund return must be filed by all entities having PF registration every month. PF return is due on the 25th of each month. Further, a final PF return is due on the 25th of April for the year ended on 31st March.
• PF Payment: Provident Fund (PF) payments are due on the 15th of each month. The employer must deposit a total of 12% or 10% of the employee wages towards PF on or before this date every month. For most entities, the PF rate of 12% would be applicable.
• UAN: The Employee Provident Fund has launched the Unified Portal to streamline and simplify all aspects of provident fund for both employers and employees. Employees who have the newly allotted UAN can use the Unified Portal for various services.

Details required for PF return

• Account number.
• Name of employee.
• Name of the father or husband.
• Date of leaving service.
• Reason for leaving service.

Consequences of late EPF return filing

Delay in the deposit of P.F. dues attracts penal damages. Damages are levied at the following flat rates:

• Delay of 0 to 2 months– @ 5 % p.a.
• Delay of 2 to 4 months – @10 % p.a.
• Delay of 4 to 6 months– @ 15 % p.a.
• Delay more than 6 months – @ 25 % p.a. (subject to a maximum of 100%)

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Employee State Insurance Corporation or ESIC is a self-financing social security and health insurance scheme which provides medical benefit, sickness benefit, maternity benefit and various other benefits such as funeral expenses, free supply of physical aids etc. to the employees and their family.

Any factory or business establishment having 10 or more than 10 employees, irrespective of salary, have to register with ESIC. ESI contributions must be made for all employees having a salary of less than Rs.21,000 per month. Employees with less than Rs. 21,000 monthly wages get health and sickness benefits through this statutory scheme. The state government also contribute 1/8th share cost of the medical benefit.

Who needs to register for ESI? (What establishments needs ESI registration?)

• Shops
• Hotels or restaurants not having any manufacturing activity, but only engaged in ‘sales’
• Cinemas including preview theaters
• Road Motor Transport Establishments
• News paper establishments
• Private Educational Institutions (those run by individuals, trustees, societies or other organizations and Medical Institutions including Corporate, Joint Sector, trust, charitable, and private ownership hospitals, nursing homes, diagnostic centers, pathological labs)

Who needs to register for ESI? (What establishments needs ESI registration?)

Currently the employee’s contribution rate towards ESIC (w.e.f. 01.07.2019) is 0.75% of the wages and that of the employer’s is 3.25% of the wages paid/payable in respect of the employees in every wage period.
However, this rate keeps on changing from time to time.

Contribution Period and Benefit Period

There are two contribution periods each of six months duration and two corresponding benefit periods also of six months duration.
ESIC registration is a statutory responsibility of the employers of the factory. It is mandatory according to the rules and regulation of the ESI Act 1948.

Benefits of ESIC registration

• Medical Benefit
• Disablement Benefit
• Sickness benefit
• Maternity benefit
• Dependant’s benefit
• Unemployment benefit

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