PRESENTATION PRESENTATION ON ON

PROVIDENT FUND &PROVIDENT FUND &MISCELLANEOUS MISCELLANEOUS

PROVISIONS ACT, 1952PROVISIONS ACT, 1952

INTRODUCTIONINTRODUCTION

Definition of PFDefinition of PF:-:-

PF is that fund that fund which is deducted from PF is that fund that fund which is deducted from

the salary of an employee at a definite rate.the salary of an employee at a definite rate.

HISTORY OF THE ACTHISTORY OF THE ACT

The Employees’ Provident Funds Ordinance, 1951 The Employees’ Provident Funds Ordinance, 1951 was promulgated by the President of India under was promulgated by the President of India under the constitution in November, 1951. A scheme the constitution in November, 1951. A scheme under the Act was framed by the Central under the Act was framed by the Central Government in September1951In exercise of the Government in September1951In exercise of the powers conferred by Section 6-A of the powers conferred by Section 6-A of the Employees Provident Fund Act,1952 ,the Central Employees Provident Fund Act,1952 ,the Central Government has maid Employees Family Pension Government has maid Employees Family Pension Scheme in 1972. It may be further observed that Scheme in 1972. It may be further observed that in exercise of powers conferred by Section 6-C of in exercise of powers conferred by Section 6-C of the Employees Provident Fund Act, 1952, the the Employees Provident Fund Act, 1952, the Central Government has made Employees Central Government has made Employees Deposit –linked Insurance Scheme in 1976. Deposit –linked Insurance Scheme in 1976.

PF

GPF CPF EPF

TYPES OF PFTYPES OF PF

PROVIDENT FUND ACT 1952PROVIDENT FUND ACT 1952 PF Act is an important labor legislation which came into PF Act is an important labor legislation which came into

existence in 1952 to ensure compulsory PF, family pension existence in 1952 to ensure compulsory PF, family pension fund and deposit linked insurance in factories and other fund and deposit linked insurance in factories and other establishment for the benefits of employees.establishment for the benefits of employees.

The legislation of PF in industrial and under taken was The legislation of PF in industrial and under taken was discussed in which representative of central and state Govt., discussed in which representative of central and state Govt., employer and worker participated.employer and worker participated.

The Employees Provident Fund Act, 1952 was brought on the The Employees Provident Fund Act, 1952 was brought on the statute book for providing for the institution of provident fund for statute book for providing for the institution of provident fund for the workmen in factories and other industrial establishments. The the workmen in factories and other industrial establishments. The basic purpose of the Act was to provide provident funds and to basic purpose of the Act was to provide provident funds and to make provision for future of the workmen after his retirement or make provision for future of the workmen after his retirement or his dependents in case of his early death. In order to achieve this his dependents in case of his early death. In order to achieve this ultimate object the Act is designed to cultivate among the workers ultimate object the Act is designed to cultivate among the workers a spirit of saving something regularly and also to encourage a spirit of saving something regularly and also to encourage stabilization of a steady labour force in the industrial centres. stabilization of a steady labour force in the industrial centres.

OBJECTIVES & AIMS OF THE ACT

SCOPESCOPE

The provision of the act extend to whole of India The provision of the act extend to whole of India except the State of Jammu and Kashmir. Section except the State of Jammu and Kashmir. Section 1 (3) of the Act provides that subject to provisions 1 (3) of the Act provides that subject to provisions contained in section 16 the provisions of the Act contained in section 16 the provisions of the Act apply to- apply to-

(a) to every establishment which is a factory (a) to every establishment which is a factory engaged in any industry specified in schedule I engaged in any industry specified in schedule I and in which twenty or more persons are and in which twenty or more persons are employed. employed.

(b) to any other establishment employing twenty (b) to any other establishment employing twenty or more persons or, class of such establishments or more persons or, class of such establishments which the central Government may by notification which the central Government may by notification in the official Gazette.in the official Gazette.

POWER TO EXEMPTPOWER TO EXEMPT

The Factory/ Establishment in which the The Factory/ Establishment in which the employees are employees are

in the enjoyment of the benefits in the nature of in the enjoyment of the benefits in the nature of the the

Provident fund, Pension which in the opinion Provident fund, Pension which in the opinion

of the Govt. are not less favourable than the of the Govt. are not less favourable than the benefits benefits

provided under the Act.provided under the Act.

Such an exemption can be made only after Such an exemption can be made only after consultation consultation

with Central board of Trustee.with Central board of Trustee.

INSPECTORSINSPECTORS

Central and State govt. for appointing the inspector.Central and State govt. for appointing the inspector.

Duties :Duties :

Inquiring into correctness of information.Inquiring into correctness of information.

Observance of the conditions of exemptions.Observance of the conditions of exemptions.

Checking the books, registers and other documents.Checking the books, registers and other documents.

Take extract from any book, register or document.Take extract from any book, register or document.

Power to search and seize the document under the Power to search and seize the document under the code of Criminal procedure. [sec.13] code of Criminal procedure. [sec.13]

DIFFERENT DEFINITIONS DIFFERENT DEFINITIONS UNDER THIS ACTUNDER THIS ACT

Appropriate Govt.Appropriate Govt. :: In relation to an establishment belonging to, or under the control of, the central In relation to an establishment belonging to, or under the control of, the central

Govt. or in relations to an establishment connected with a railway company, a mine Govt. or in relations to an establishment connected with a railway company, a mine or an oil field or in relation to an establishment having departments or branches in or an oil field or in relation to an establishment having departments or branches in more than one industry.more than one industry.

Basic Wages :Basic Wages : It means all emoluments which are earned by an employee while on duty or on It means all emoluments which are earned by an employee while on duty or on

leave with wages in accordance with the terms of the contract of employment and leave with wages in accordance with the terms of the contract of employment and which are paid or payable in cash to him but does not include :which are paid or payable in cash to him but does not include :

i.i. Any DA Any DA ii.ii. HRAHRAiii.iii. OAOAiv.iv. BonusBonusv.v. Any otherAny other

DIFFERENT DEFINITIONS DIFFERENT DEFINITIONS UNDER THIS ACTUNDER THIS ACT

Contribution :Contribution :

A contribution payable in respect of a member under a scheme or the contribution A contribution payable in respect of a member under a scheme or the contribution payable in respect of an employee to whom the insurance scheme applies.payable in respect of an employee to whom the insurance scheme applies.

Employee :Employee :

Exempted employeeExempted employee

Factory :Factory :

Any premises in any part of which a manufacturing process is being carried on Any premises in any part of which a manufacturing process is being carried on weather with the aid of power or with out the aid of power weather with the aid of power or with out the aid of power

Establishment to include all departments and branches :Establishment to include all departments and branches :

All the departments and branches are treated as a part of that establishment, All the departments and branches are treated as a part of that establishment, whether they are situated in the same place or any other place.whether they are situated in the same place or any other place.

FRAMING OF THE SCHEMES FRAMING OF THE SCHEMES AND ESTABLISHMENT OF THE AND ESTABLISHMENT OF THE

FUNDSFUNDS

Employees provident funds scheme Employees provident funds scheme (sec5)(sec5)

Employees deposit- linked insurance Employees deposit- linked insurance scheme (sec6C)scheme (sec6C)

Employees pension scheme(sec6A)Employees pension scheme(sec6A)

EMPLOYEES PROVIDENT EMPLOYEES PROVIDENT FUNDS SCHEMEFUNDS SCHEME

Schedule II of the act specifies in matters Schedule II of the act specifies in matters which are to be included under this which are to be included under this scheme. These include-scheme. These include-

1.1. Time and manner of paying contributionTime and manner of paying contribution

2.2. Payment of cost of administration by Payment of cost of administration by employeremployer

3.3. Conditions for withdrawals from the fundsConditions for withdrawals from the funds

4.4. Rate of interest payableRate of interest payable

5.5. Maintenance of records and registers etc.Maintenance of records and registers etc.

CENTRAL BOARD OF CENTRAL BOARD OF TRUSTEESTRUSTEES

The board consists of:-The board consists of:- A chairman and a vice-chairman appointed A chairman and a vice-chairman appointed

by the central govt.by the central govt. Not more than 5 central govt. officialsNot more than 5 central govt. officials Not more than 15 representatives of the Not more than 15 representatives of the

state govt.state govt. 10 representatives of employers in 10 representatives of employers in

consultation with organisations of consultation with organisations of employeremployer

10 employees representatives in 10 employees representatives in consultation with organisation of consultation with organisation of employees, all appointed by central govt.employees, all appointed by central govt.

EXECUTIVE COMMITTEEEXECUTIVE COMMITTEE

A chairman from amongst the A chairman from amongst the members of the central boardmembers of the central board

2 officials members of the board2 officials members of the board 3 representatives of the state govt.3 representatives of the state govt. 3 representatives of the employers3 representatives of the employers 3 representatives of employees 3 representatives of employees

(members of central board)(members of central board) Central provident fund Central provident fund

commissioners ex-officio.commissioners ex-officio.

STATE BOARDSTATE BOARD

The central govt. is also empowered The central govt. is also empowered to constitute state board of trustees to constitute state board of trustees as laid down in EPFS.as laid down in EPFS.

Powers & functions of state board are Powers & functions of state board are assigned by central govt. assigned by central govt.

OFFICERSOFFICERS

Officers include central provident Officers include central provident commissioner who will be CEO of the commissioner who will be CEO of the central board of trusties, one central board of trusties, one financial adviser and chief a/c officer financial adviser and chief a/c officer appointed by central govt. appointed by central govt.

CONTRIBUTIONCONTRIBUTION

It is payable by employer to the It is payable by employer to the provident fund will be 10 % of the provident fund will be 10 % of the basic wages.basic wages.

Govt. may raise contribution from Govt. may raise contribution from 10% to 12%.10% to 12%.

TERMS UNDER EPFS, 1952TERMS UNDER EPFS, 1952

Coverage:-Coverage:-

i.i. Applicable to factories in about 180 Applicable to factories in about 180 industries of establishments industries of establishments employing 20 or more workers.employing 20 or more workers.

ii.ii. From 1 June 2001 wage ceiling has From 1 June 2001 wage ceiling has been raised to Rs. 6,500.been raised to Rs. 6,500.

CONTRIBUTONCONTRIBUTON

Central govt. is empowered to raise Central govt. is empowered to raise the contribution from 10% to 12%the contribution from 10% to 12%

RATE OF INTERESTRATE OF INTEREST

Rate of interest on PF has been Rate of interest on PF has been reduced to 9.50% from 12% and is reduced to 9.50% from 12% and is likely to be reduced further.likely to be reduced further.

INVESTMENTINVESTMENT

PF contribution are invested as per PF contribution are invested as per the pattern prescribed by the central the pattern prescribed by the central govt.govt.

WITHDRAWALWITHDRAWALCOMPLETE WITHDRAWL

• Migrate from India to abroad for permanent settlement

•Retrenched

•Completes 15 years of members

•Suffering from any severe disease

PARTIAL WITHDRAWAL

•Construction of house

•Illness

•Marriage

•Higher education of children

•Payment of life insurance premium

•Purchase of share

EMPLOYEES’ DEPOSITE-LINKED EMPLOYEES’ DEPOSITE-LINKED INSURANCE SCHME,1976INSURANCE SCHME,1976

EMPLOYEES’ PENSION SCHEME EMPLOYEES’ PENSION SCHEME ,1995,1995

WHAT IS IT?WHAT IS IT?

The central government is empowered to The central government is empowered to frame the employees’ deposit-linked insurance frame the employees’ deposit-linked insurance scheme for the purpose of providing insurance scheme for the purpose of providing insurance benefits to the covered under the act .benefits to the covered under the act .

CONTRIBUTIONCONTRIBUTION

.05% of the employees wages..05% of the employees wages. Government contributes .25% of the employees Government contributes .25% of the employees

wages bill.wages bill.

BENEFITSBENEFITS

The person is entitled to receive his provident fund The person is entitled to receive his provident fund accumulations is to be paid an additional; amount accumulations is to be paid an additional; amount equal to the average balance in the provident fund equal to the average balance in the provident fund account of the deceased during the preceding 12 account of the deceased during the preceding 12 months, wherever the average provident fund balance months, wherever the average provident fund balance is less than Rs 35,000 is less than Rs 35,000

More than the 35,000 he will get 25% more.More than the 35,000 he will get 25% more.

INVESTMENTINVESTMENT The total of the contribution received to the insurance The total of the contribution received to the insurance

fund was Rs 1301 Caror in 2000fund was Rs 1301 Caror in 2000 1441 caror in 20011441 caror in 2001

The progressive total of investment of fund was Rs The progressive total of investment of fund was Rs 2466 caror in 20002466 caror in 2000

Rs 2783 caror in 2001Rs 2783 caror in 2001

EMPLOYEES’ PENSION EMPLOYEES’ PENSION SCHEME ,1995SCHEME ,1995

Employees’ pension scheme aimed at “providing for Employees’ pension scheme aimed at “providing for economic sustence during old age and survivorship economic sustence during old age and survivorship coverage to the member and his family.coverage to the member and his family.

COVERAGECOVERAGE

Employees’ pension scheme ,1995 is compulsory for Employees’ pension scheme ,1995 is compulsory for all person who were member of the family pension all person who were member of the family pension schme,1971schme,1971

For also those Employees’ provident fund fro 16 For also those Employees’ provident fund fro 16 November 1995 that is the date of introduction of the November 1995 that is the date of introduction of the scheme.scheme.

FINANCEFINANCE

Neither employee nor employer is required to make Neither employee nor employer is required to make any additional contribution.any additional contribution.

BENEFITSBENEFITS

Monthly member’s pension on Monthly member’s pension on superannuation/retirement and short-services pension.superannuation/retirement and short-services pension.

Member’s pension=Member’s pension=pensionable salary*(pensionable salary+2)pensionable salary*(pensionable salary+2)

7070

MONTHLY REDUCED PENSIONMONTHLY REDUCED PENSION

Date after 50 years of age but earlier than 58 years, in Date after 50 years of age but earlier than 58 years, in this case amount of pension is reduced @ rate of 3% this case amount of pension is reduced @ rate of 3%

every year the age falls short of 58 yearsevery year the age falls short of 58 years

Permanent and total disablement planPermanent and total disablement plan Monthly widow pensionMonthly widow pension Monthly children pension Monthly children pension Monthly orphan pension Monthly orphan pension Monthly pension to permanently and totally Monthly pension to permanently and totally

son or daughterson or daughter

MISCELLANEOUS PROVISIONSMISCELLANEOUS PROVISIONS Laying of the scheme ParliamentLaying of the scheme Parliament :- :- All the schemes framed under the act are to be laid before the All the schemes framed under the act are to be laid before the

parliament which can modify and annual them. [Sec. 6D]parliament which can modify and annual them. [Sec. 6D]

Modification of the scheme [Sec. 7]Modification of the scheme [Sec. 7]

Determination of moneys due from employers: Determination of moneys due from employers: [Sec7A,7B,7C]-[Sec7A,7B,7C]-

All the Commissioners are empowered to determine the All the Commissioners are empowered to determine the amount of due from any employer under the act.amount of due from any employer under the act.

If the determination of the amount is not perfect, the inspector If the determination of the amount is not perfect, the inspector can re-open the case for further inquiry. can re-open the case for further inquiry.

Employees’ PF appellate tribunal [Sec.7N]Employees’ PF appellate tribunal [Sec.7N]

MISCELLANEOUS PROVISIONSMISCELLANEOUS PROVISIONS

Interest payable by employer : Interest payable by employer : [Sec.7Q][Sec.7Q]

The employer is liable to pay simple interest @ The employer is liable to pay simple interest @ 12% per annum. 12% per annum.

Employer not to reduce wages and others Employer not to reduce wages and others [Sec.12][Sec.12]

Special provisions relating to existing PF Special provisions relating to existing PF [Sec.15][Sec.15]

Transfer of accounts [Sec.17A]Transfer of accounts [Sec.17A]

Provident Fund CodeProvident Fund Code Returns- Returns- The monthly return of joining & leaving The monthly return of joining & leaving

of employee’s is send inof employee’s is send in Form-5 & Form-10. The Form-5 & Form-10. The status of maintenance of submission of Form-5 & status of maintenance of submission of Form-5 & 10 by the Company/Establishment or by the 10 by the Company/Establishment or by the contractor is as per the State Law Directives.contractor is as per the State Law Directives.

P.F. Number AllocationP.F. Number Allocation- The P.F. No. is being - The P.F. No. is being allocated to their employees by the company for allocated to their employees by the company for depositing the P.F. contribution on monthly basis.depositing the P.F. contribution on monthly basis.

VARIOUS FORMSVARIOUS FORMS Form 2-Form 2- For Nomination. For Nomination.

Form 5 &10- Form 5 &10- For new joining and leaving of the employees.For new joining and leaving of the employees.

Form 13-Form 13- For transferring the Provident Fund account of a For transferring the Provident Fund account of a member from one establishment to another establishment member from one establishment to another establishment covered under the act / scheme.covered under the act / scheme.

Form 19-Form 19- To be submitted by a member to withdraw his To be submitted by a member to withdraw his Provident Fund dues on leaving service/retirement/termination.Provident Fund dues on leaving service/retirement/termination.

Form 20-Form 20- In the event of death of member, this form is to be In the event of death of member, this form is to be used by a nominee / family member to claim the member's used by a nominee / family member to claim the member's Provident Fund accumulation.Provident Fund accumulation.

Form 10 C-Form 10 C- For claiming : Refund of Employer share / For claiming : Refund of Employer share / Withdrawal benefit /Scheme certificate for retention of Withdrawal benefit /Scheme certificate for retention of membership.membership.

Form 31-Form 31- For the use of Provident Fund members to avail For the use of Provident Fund members to avail advances / withdrawals as provided in the scheme.advances / withdrawals as provided in the scheme.

PENALTIES & COGNIZANCE OF PENALTIES & COGNIZANCE OF OFFENCES {sec 14}OFFENCES {sec 14}

If any person, for the purpose of avoiding any payment to If any person, for the purpose of avoiding any payment to be made under the Act or the Schemes, knowingly makes be made under the Act or the Schemes, knowingly makes any false statement or false representation, he would be any false statement or false representation, he would be punished with imprisonment up to one year, or with fine up punished with imprisonment up to one year, or with fine up to Rs. 5000.00 or with both.to Rs. 5000.00 or with both.

Making default in paying prescribed employees’ Making default in paying prescribed employees’ contribution deducted from wages is punishable with contribution deducted from wages is punishable with imprisonment for 1-3 years & fine of Rs.10,000.imprisonment for 1-3 years & fine of Rs.10,000.

If any employer makes default in payment of the If any employer makes default in payment of the administrative charges payable under the Deposit Linked administrative charges payable under the Deposit Linked Insurance Scheme under section 6-C or inspection charges, Insurance Scheme under section 6-C or inspection charges, he would be punished with imprisonment up to 6 month to he would be punished with imprisonment up to 6 month to 3 years plus fine up to Rs. 5000.3 years plus fine up to Rs. 5000.

PENALTIES & COGNIZANCE OF PENALTIES & COGNIZANCE OF OFFENCES {sec 14}OFFENCES {sec 14}

Non payment of inspection charges under the Deposit Linked Non payment of inspection charges under the Deposit Linked Insurance Scheme is punishable with imprisonment from 6 months Insurance Scheme is punishable with imprisonment from 6 months to one years plus fine up to Rs. 5000.to one years plus fine up to Rs. 5000.

If any person makes default in complying with any other provision If any person makes default in complying with any other provision of the Act, he would be punished with imprisonment upto 1 year of the Act, he would be punished with imprisonment upto 1 year but which shall not be less than 1 month and with fine upto Rs. but which shall not be less than 1 month and with fine upto Rs. 4000.00 or with both.4000.00 or with both.

If any person convicted of an offence under the Act or the If any person convicted of an offence under the Act or the Schemes commits it again, he would be punished with Schemes commits it again, he would be punished with imprisonment upto five years but which shall not be less than two imprisonment upto five years but which shall not be less than two years, plus fine upto Rs. 25000.years, plus fine upto Rs. 25000.

The offence relating to default in payment of any contribution The offence relating to default in payment of any contribution especially the employee's share deduct from the wages of the especially the employee's share deduct from the wages of the employees by the employer is cognizable. That means a person employees by the employer is cognizable. That means a person committing such offence can be committing such offence can be arrested by the police without arrested by the police without warrant.warrant. {Section 14(AB)} {Section 14(AB)}

PENALTIES & COGNIZANCE OF PENALTIES & COGNIZANCE OF OFFENCES {sec 14}OFFENCES {sec 14}

No court is to take cognizance of any offence No court is to take cognizance of any offence under the act or the scheme except on a written under the act or the scheme except on a written report by an inspector which is sanctioned by the report by an inspector which is sanctioned by the chief PF Commissioner or an officer authorized by chief PF Commissioner or an officer authorized by the central government.the central government.

When an employer is convicted of an offence When an employer is convicted of an offence relating to default in the payment of contribution relating to default in the payment of contribution or transfer of accumulation, the court in addition or transfer of accumulation, the court in addition of awarding any punishment, by order require of awarding any punishment, by order require him to pay the amount within a specified period. him to pay the amount within a specified period. If the employer does not comply with the order he If the employer does not comply with the order he is liable to pay fine which may extend to Rs.100 is liable to pay fine which may extend to Rs.100 for everyday of default.for everyday of default.

RECOVERY OF DAMAGES RECOVERY OF DAMAGES In 1991, the Central Government, by inserting In 1991, the Central Government, by inserting

Para 32-A in the Employees' Provident Funds Para 32-A in the Employees' Provident Funds Scheme, has laid down different rates of damages Scheme, has laid down different rates of damages depending upon the period of default.depending upon the period of default.

DamagesDamages:: Less than 2 monthsLess than 2 months ….@ 17% per annum….@ 17% per annum Two months and above but less than up to four Two months and above but less than up to four

monthsmonths ….@22% per ….@22% per annumannum

Four months and above but less than up to six Four months and above but less than up to six monthsmonths ….@ 27% per ….@ 27% per annum.annum.

RECOVERY OF DAMAGESRECOVERY OF DAMAGES

In case an employer makes default in the In case an employer makes default in the payment of contributions to the funds, or payment of contributions to the funds, or in the transfer of accumulations or in the in the transfer of accumulations or in the payment of any charges, the central PF payment of any charges, the central PF Commissioner or an officer authorized by Commissioner or an officer authorized by the central govt. may recover from him.the central govt. may recover from him.

Damages not exceeding the amount of Damages not exceeding the amount of arrears, as may be specified in the arrears, as may be specified in the scheme. scheme.

The central board of trustees may reduce The central board of trustees may reduce or waive the damage.or waive the damage.

CONCLUSIONCONCLUSION

THANKSTHANKS