Provident fund - a briefing

Provident Fund – A Briefing

There are two types of Provident Fund:

1. PPF - Public Provident Fund
2. EPF - Employee Provident Fund

Here we are concerned with EPF only:

1. PF is a statutory deduction. It is deducted on Basic + DA + Cash value of Food Allowance @ 12%. Note: DA is provided only in Govt. Departments. Private Companies generally do not provide Daily Allowance to its employees.
2. Company pays PF on either Actual or Capped Basic. Capped basic is decided as per company rules and is not restricted. It is applicable to those employees whose basic salary exceeds Rs. 6,500.
3. Employer and Employee Contribution are equal which is 12%. This means 12% Contribution from Employee and 12% Contribution from Employer. Employer’s contribution is split into two parts i.e., 8.33% on Family Pension Fund (FPF) and 3.67% on Employee Provident Fund (EPF).
4. Every month, Employer needs to pay additional charges over and above PF Contribution as per the below break up: 1.1% PF Administration Charges, 0.5 % on Employee Deposit Linked Insurance (EDLI) Charges 0.01% EDLI Administration Charges. Note: In case the company has exemption in EDLI u/s 17(2a), Company need not to pay EDLI charges 0.5% and the EDLI Admn. Charges are levied at 0.005% instead of 0.010%.
5. The company needs to file Monthly and Annual Returns. Every month company has to submit duly paid PF Challan. Form 12A, Form 5 (Additions) and Form 10 (Deletions) and Nomination Form 2 (Newly joined Employee details). In Annual Return we need file Form 3A and 6A along with the details of Annual PF Challan payments.
6. The employer needs to collect, certify and submit the Nomination and Declaration of every new joiner to the scheme in Form 2 along with the monthly report.
7. PF Monthly payment due date is 15th with a grace up to 21st. Monthly Returns due date is 25th of following month and Annual Return due date is 30th April. Note: As per PF Authorities, FY is from 1st March to 28th February.
8. Any employee who wishes to transfer his old Company’s PF balances he can transfer his PF Current A/C using Form 13 signed by the New Employer and Old Employer has to submit Form 3A to PF Office. Note: Employee PF Number will be changing in every Company.
9. Any employee who wants to en-cash his PF amount, can do so using of Form 10C & Form 19. Form 10C is for EPF & Form 19 is for FPF.
10. Recently PF Authorities introduced e-filling system. In this systems, we have to submit every month PF details in soft copy and hard copy, here no need to submit Annual Returns. (Currently this is not in use)
11. There are 5 number of accounts in PF Challan as shown below:

• A/C#01 - PF Contribution by Employers & Employee (12% & 3.67% respectively)
• A/C#02 – PF Admn. Charges (1.1%)
• A/C#10 – Family Pension Fund (8.33%)
• A/C#21 – EDLI Charges (0.5%)
• A/C#22 – EDLI Admn. Charges (0.10%)