EPF
Date : 05 - Jul- 2020
Actual
rate is 12%.
But, 10%
rate is applicable for the below :-
i. Any
establishment in which less than 20 employees are employed.
ii. Any
sick industrial company and which has been declared as such by the Board for
Industrial and
Financial Reconstruction
iii. Any
establishment which has at the end of any financial year, accumulated losses
equal to or
exceeding its entire net worth and
iv. Any
establishment in following industries:-
(a) Jute
(b) Beedi
(c) Brick
(d) Coir
and
(e) Guar
gum Factories.
The EPF rates are as below :-
|
Contribution |
Account # |
Employee |
Employer |
Calculated on |
|
EPF (Employee) |
1 |
12% |
- |
on EPF wages
(Basic + DA) |
|
EPS |
10 |
|
8.33% |
on EPS wages |
|
EPF (Employer) |
1 |
|
3.67% |
12% of EPF wages
- 8.33% of EPS wages |
|
EDLIS Inspec.
charges |
22 |
|
0.18% (Min.₹5) (In case
Establishment is exempted under PF Scheme) 0.005% (Min.₹1) (In case
Establishment is exempted under EDLI Scheme) |
|
|
EPF Admin.
charges |
2 |
|
0.50% (Min. ₹75) (for every
non-functional establishment having no contributory member) 0.50% (Min. ₹500) (per establishment for other establishments) |
On EPF wages |
|
EDLIS |
21 |
|
0.50% |
|
Contribution is rounded to the nearest rupee.
Under EPF :-
The contributions are payable on maximum wage ceiling of
Rs. 15000/-. The employee can pay at a higher rate and in such case, employer
is not under any obligation to pay at such higher rate. Ø To pay contribution on higher wages,
a joint request from Employee and employer is required [Para 26(6) of EPF
Scheme]. In such case employer have to pay administrative charges on the higher
wages (wages above 15000/-). For an International Worker, wage ceiling of
15000/- is not applicable.
Under EPS :-
Contribution is payable out of the employer’s share of PF
and no contribution is payable by employee. Pension contribution not to be
paid: When an employee crosses 58 years of age and is in service (EPS
membership ceases on completion of 58 years). When an EPS pensioner is drawing
Reduced Pension and re-joins as an employee.
Under EDLI :-
Contribution to be paid on up to maximum wage ceiling of
15000/- even if PF is paid on higher wages. For example, each employee getting
wages above 15000, amount will be 75/-. EDLI contribution to be paid even if
member has crossed 58 years age and pension contribution is not payable. This
is to be paid as long as the member is in service and PF is being paid.
Employees must link their
Aadhaar number and bank account with their UAN. You can nominate anybody for
your EPF account. In the case of the account holder’s demise, the account
balance will be paid to the nominee. You can change the nominee by submitting
Form 2 to your company’s finance department or to the EPFO department. About
8.33% of your employer’s monthly contribution (up to Rs.1,250 i.e. 1,500 x
8.33%) will be redirected to the Employee Pension Scheme (EPS). This will help
you get a monthly pension once you retire and fulfil certain conditions. No
interest will be accrued on the contributions made towards EPS account. If you
decide to quit your employment and withdraw the balance from your EPF account
once and for all, you will only be able to withdraw a portion of it based on
the purpose of withdrawal. Some of these valid purposes are unemployment,
retirement, purchase of land, purchase/construct a house, renovating a house,
wedding, education, repaying a home loan, and medical reasons. In the case of
unemployment, withdrawal of EPF can be made before 58 years of age, with 100%
withdrawal after two months of resigning from employment. An employee can also
withdraw 75% of the EPF balance after one month of resigning from employment,
with the balance 25% transferable to a new employer. If you are a retired
person and have worked consecutively for the last 10 years, you can withdraw
100% of the EPS account balance. In case, you have not consecutively worked for
the last 10 years, you can only withdraw money from EPS account according to
the slabs based on your last drawn salary as mentioned in the below table :-
|
No.of years of service |
Eligible portion of EPS withdraw * |
|
1 |
1.02 |
|
2 |
1.99 |
|
3 |
2.98 |
|
4 |
3.99 |
|
5 |
5.02 |
|
6 |
6.07 |
|
7 |
7.13 |
|
8 |
8.22 |
|
9 |
9.33 |
* Effective
from 10 June 2008 as stated by the EPFO website.
Irrespective of the last drawn
salary, the maximum salary considered for this calculation is Rs.15,000.
Therefore, if your last drawn salary is Rs.42,000 and you have worked for 8
years consecutively, the EPS amount you can withdraw is: Rs.15,000 x 8.22 =
Rs.1,23,300. You don’t have to withdraw EPF contributions or close the account
when you switch jobs. Just provide your UAN to the new employer and that’s it.
The new PF number created by your new employer will still be under your
existing UAN. You must manually transfer the PF account balance from your
previous employer to the PF account created by your new employer by filling
Form 13. Alternatively, you can fill Form 11 so that the PF contributions are
automatically transferred to the new account. If your basic salary per month is
above Rs.15,000, you have the freedom to opt-out of EPF. You can check your EPF
account balance, request for transfer, check claim status, request to withdraw,
and raise grievance online using the EPFO portal or even on the Umang app.
Effective from 01st May 2020 to 31st
July 2020 :-
|
Contribution |
Account # |
Employee |
Employer |
Calculated on |
|
EPF (Employee) |
1 |
10% |
- |
on EPF wages
(Basic + DA) |
|
EPS |
10 |
|
8.33% |
on EPS wages |
|
EPF (Employer) |
1 |
|
1.67% |
10% of EPF wages
- 8.33% of EPS wages |
|
EDLIS Inspec.
charges |
22 |
|
0.18% (Min.₹5) (In case
Establishment is exempted under PF Scheme) 0.005% (Min.₹1) (In case
Establishment is exempted under EDLI Scheme) |
|
|
EPF Admin. charges |
2 |
|
0.50% (Min. ₹75) (for every
non-functional establishment having no contributory member) 0.50% (Min. ₹500) (per establishment for other establishments) |
On EPF wages |
|
EDLIS |
21 |
|
0.50% |
|
Announcement from Finance minister for the period 01.05.2020
to 31.07.2020) :-
1. Both the employee and employer contribution of PF i.e.
24% (12 + 12) will born by Central government for this 3 months for those
establishments which are having up to 100 employees and from those 100
employee, who 90% or more are draw less than ₹15,000 per month.
2. Their own fund which lies in the EPF book, because of
pandemic situation prevailing, regulation will be amended so that workers can
draw up to 75% from that fund for a contingency expenditure which is
non-refundable advance which they will be take 75% of standing to the credit of
the amount, or 3 months wages, whichever is lower.
FAQ :-
1. Who are eligible for the reduced
rate of contributions?
It is applicable to all class of establishments covered under the EPF & MP
Act, 1952 except the establishments like Central and State Public sector
enterprises or any other establishments owned or controlled of the Central govt
or State govt. The reduced rate is also not applicable to establishments
eligible for PMGKY benefits, since the entire employees EPF contributions (12%
of wages) and employers' EPF & EPS co ..
2. What will be the rate of
contribution for administrative charges and insurance?
There is no change in the EPF administrative charges (0.5% of EPF wages subject
to minimum prescribed) and EDLI contributions (0.5% of wages) both payable by
employers.
3. Can the employer or employee pay at
higher rate or the combination rate of 10% is mandatory?
The reduced rate of contribution is minimum rate of contribution during period
of the package. The employer, employee or both can contribute at higher rate
also.
4. My establishments will not be able
to remit dues timely during the scheme period. Is it still eligible for reduced
rate of contribution?
Yes, the rate of contribution is 10% for the three wage months- May 2020, June
2020 and July 2020 irrespective of the date of payment.
What is EDLI Scheme?
The Employees Deposit Linked Insurance scheme is
widely known as shortly EDLI Scheme. Briefly, this EDLI scheme
is a group term insurance which gives life coverage to an Employee of an
organization who is a member of the Employees Provident Fund (EPF) scheme. OR
you can say in other words, in case if an EPF member dies his family members/
dependents get a lump-sum amount (up to 6 lakhs) through this EDLI scheme.
Previously, the lump-sum assured in the event of an EPF member death was an
amount between 1.5lacs and 3.6 lacs. Presently the amount increased to minimum
Rs.2.5 lakhs and maximum Rs.6 lakhs. The Eligible claim amount under the EDLI
scheme is calculated 30 times of the last basic salary which was drawn by the
employee before death + 50% of the average balance in the member's account or
amount during the last 12 months /entire period of his/her membership whichever
is lower with an upper limit of Rs.1.5lakhs as a bonus i.e. EDLI scheme claim
amount = 30 x basic salary + 50% of average EPF balance in the diseased
account/ maximum Rs.1.5lakhs as bonus.
Due
Dates – PF :-
- The PF will be deducted from every employees’
salary, and the payment due date is within the 15th of the following
month. For example, if you want to deposit the PF contribution for June,
then as an employer you should clear all the payments before the 15th of
July.
2.
The
due date of the PF return also is the same as the payment date i.e. 15th of the
following month.
3.
The
PF annual return due date is 25th April of the following year.
PF
Delay Payment interest :-
An
employer who does not pay the contribution within the time limit shall be
liable to pay simple interest at the rate of 12% per annum for each day of the
default or delay in payment of contribution.
PF
penalty :-
Delayed
remittance of PF deposit will incur penal damages. The charges as specified by
the EPFO, are as follows:
|
No.of months delayed |
Penalty rate |
|
Delay for up to 2 months |
5% per annum |
|
Delay ranging from 2 months to 4 months |
10% per annum |
|
Delay ranging from 4 months to 6 months |
15% per annum |
|
Delay exceeding 6 months |
25% per annum (It may correspondingly go up to 100%) |
|
Payroll category |
Payment Due date |
Returns filing |
|
|
Type of return |
Filing Due date |
||
|
PF |
15th of every
month |
Monthly |
15th of every
succeeding month |
------------------------------- The end -------------------------
Thank you,
Chandra Sekhar Reddy
Author and Sole proprietor,
SCR Gallery
Website : https://www.scrgallery.com
Blogger : https://scrgalleryindia.blogspot.com/
E-mail : scr@scrgallery.com
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