Employee Provident Fund Scheme 1952
India, being a welfare state strives to provide its citizens with certain rights and privileges designed to enhance their quality of life. The Directive Principles of State Policy put the onus on the government to make certain provisions towards its people, including social security. It was with this intention that the government set up a statutory body, The Employees’ Provident Fund Organisation which monitors and administers the Provident Fund Scheme, Insurance Scheme, and Pension Scheme. The Employees’ Provident Fund Scheme of 1952 acts as the backdrop for the government to enforce certain policies, with the Ministry of Labour and Employment in charge of its implementation.
Physical Applicability of Scheme
The Employee Provident Fund Scheme is enforceable throughout the territory of India, except the state of Jammu and Kashmir. This ensures that every eligible individual is covered by the Scheme regardless of his/her domicile or place of work, making in at inclusive scheme.
Eligibility Criteria
The provisions of Employees’ Provident Fund Scheme are applicable to the following categories of organizations.
- An organisation which is involved in an activity mentioned under Schedule 1 of this Act.
- A company which employs more than 20 people.
- A cinema theatre which employs more than 5 people.
Exceptions
While this Scheme is designed to cover every working individual, there are certain exemptions provided. These exceptions are mentioned below.
- Co-operative societies which work without the aid of power and employ under 50 people.
- Organisations established by central or state acts under which employees are provided benefits including contributory PF or pension.
- Organisations under the control of central or state governments wherein employees are eligible for benefits like PF and pension.
Cover offered by Employees’ Provident Fund Scheme
The Employee Provident Fund Scheme is designed to offer certain benefits to individuals covered under it, taking care of the following needs.
- Medical care and Housing
- Education of dependents (children)
- Finance of insurance and health policies
- Family obligations
- Retirement
Contributions under Employees’ Provident Fund Scheme
As per the provisions of The Employees’ Provident Fund Scheme, both an employer and an employee are expected to make contributions towards this fund. A contribution equivalent to 12% of the Basic DA, retaining allowance and a cash component of food allowance needs to be made, provided this contribution is limited to under Rs 6,500 per month. Individuals can choose to enhance their contribution voluntarily, provided both the employee and employer agree for the same.
This contribution is lowered to 10% for companies covered before 22/9/1997, employing under 20 people. Sick industrial companies, organizations which suffer financial losses equivalent to their net worth and those manufacturing bricks, jute, beedi, coir and guar gum products also fall under this category.
When are accumulated funds payable?
An employee can withdraw Employee Provident Fund balance under the following circumstances.
- On retirement from service. An employee should have attained the age of 55 years to be eligible for withdrawal.
- On moving to another country in pursuit of employment or permanent settlement.
