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Overview

Employees Provident Fund (EPF) is a scheme covered under the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952. Provident Fund (PF) registration is applicable for all establishments with 20 or more employees. The capacity of 20 includes contract employees like housekeeping, security or other contractual workers in the business. Those companies, which do not have the endorsed number of employees but willing to register themselves to provide the advantages of Provident Fund to their employees can register voluntarily with the Regional Provident Fund Office. Registration has to be done within One month from the date of hiring 20 employees. Any delay may result in a penalty.

Eligibility for EPF Registration

Employees Provident Fund (EPF) is a scheme that is regulated by the Employees’ Provident Fund Organisation (EPFO) and it was introduced due to the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. The work culture today depends on the welfare of employees, with employers scrambling to ensure their employees are entitled to the best care and benefits. An Employee Provident Fund is an initiative designed to offer social security benefits to employees of a particular organization, building stronger employee-employer bonds. In order to enjoy these benefits to the hilt, employers need to follow a set of rules and guidelines laid out, with registration forming the first step.

Companies, which grow to a strength of 20 members, are expected to register themselves within one month from the time of attaining this strength, with penalties applicable for delays in registration. Co-operative societies are expected to register if their employee strength increases to 50 or more and registered organizations continue to be under the purview of the rules and regulations of the Act even if their employee strength falls below the minimum specified number.

Contribution of PF

The employer has to obtain the PF registration within 1 month of attaining the strength, in case of failure to abide by applicable penalties. A registered establishment continues under the purview of the Act even in case the No of employees falls below the required limit.

The employer has to contribute 12% of the (Basic Salary + Dearness Allowance + Retaining Allowance). An equal amount of contribution is to be made by the employee. If the establishment has engaged less than 20 employees the EPFO rules state that the contribution rate for both the employees and the employer is limited to 10 %. In most cases the employees who are employed in the private sector it is on the basic salary on which the whole contribution is calculated.

The breakup of the PF contribution

  • The 12 % contribution is divided into the following subdivision:
  • 3.67% of the contribution towards the Employees Provident Fund
  • 1.1% of the contribution towards the EPF administration Charges
  • 0.5% of the contribution towards the employee's deposit linked insurance
  • 0.01% contribution towards the EDLI administration charges
  • 8.33% towards the Employees’ Pension Scheme.

EPF Registration Procedure

For EPF Registration procedure, an employer can choose to register either offline or online, with the online option being the preferred mode for registration today. The registration form can be downloaded from the website of the Employees’ Provident Fund Organization (EPFO). Employers need to provide the following details to successfully register themselves.

EPF Registration

  • Name and address of company
  • Head office and branch details
  • Mention date of incorporation/registration of company
  • Fill up details of employees – total employee strength
  • Activity the business/enterprise is involved in – i.e. manufacturing, production, service, etc.
  • Legal details – This pertains to legal status of a company, i.e. whether it is a private firm/public company, partnership or society, etc.
  • Owner details, including designation and address of Directors and partners
  • Particulars related to wage component of employees, i.e. total wage disbursed during a month
  • Details of bank with whom company has banking relationship
  • PAN details
  • Basic details of employee (name, date of joining, salary, etc.)

A form titled “Proforma for Coverage” needs to be filled with the details mentioned above to finish the registration process. In addition to this Proforma for Coverage, employers are expected to submit Form 5A with Annexure 1 to complete the formalities.

 

Steps for EPF Registration for Employers

The employer needs to follow the below-mentioned steps:

  1. To register the organisation, the employer will need to visit the EPFO portal and click on the option that says, ‘Establishment Registration’.
  2. Clicking on ‘Establishment Registration’ will lead you to the next page, which is https://registration.shramsuvidha.gov.in/user/register, where the manual can be downloaded. A new user before registration must read the user manual completely.
  3. Click on ‘Sign Up’ Button.
  4. Clicking on ‘Sign Up’ will ask for the Name, Email, Mobile Number, and Verification Code to be filled. After these details are filled, click on ‘SIGN UP’ to create your account.
  5. There will be an option called ‘Registration For EPFO-ESIC’.
  6. The next page will give you an option called ‘Apply for New Registration’. Clicking on that will give two options called ‘Employees’ State Insurance Act, 1948’ and ‘Employees’ Provident Fund and Miscellaneous Provision Act, 1952’, which can be checked and then click on the ‘Submit’ button
  7. This leads you to a page where the details of the employer such as Establishment Details, eContacts, Contact Persons, Identifiers, Employment Details, Particulars of workers, Branch/Division, Activities, and Attachments are mentioned. All mandatory details that must be filled under each section are displayed with a red asterisk.
  8. The summary of the registration form can be viewed on the dashboard.
  9. Click on the ‘Submit’ button to submit the registration.
  10. This is followed by the employer’s Digital Signature Certificate (DSC) registration. For a fresh EPF registration application, DSC registration is mandatory.
  11. On completion of DSC registration, you will receive an email from Shram Suvidha with a confirmation that the registration has been completed.

Documents required for PF Registration

Any business that wishes to apply for PF needs to submit the following mandatory documents:

  • PAN card of establishment
  • Certificate of incorporation
  • Cross cancelled cheque of establishment
  • Address proof that is in the name of the establishment. It can be: Rent agreement
  • Water
  • Electricity
  • Telephone bill
  • Specimen signature of directors and authorized signatories
  • Digital signature of the authorized applicant
  • In case of voluntary registration, consent of the majority of employees

In some entities, the underlying may also be needed:

  • First sale bill
  • First purchase bill of raw material and machinery
  • GST Registration Certificate
  • Bankers details
  • Record of a monthly employee strength
  • Register of salary and wages

Benefits of EPF Registration

  • The employer contributes some proportion to the EPF fund along with the employee. The employer also adds his contribution that is inclusive of the employee pension scheme (EPS).
  • Provident fund acts as financial support at the time of retirement, illness, demise, disability or any similar risk occurred to the employee.
  • PF account of an employee needs not to be closed in case the employee switches his job as the same can be carried forwarded.
    PF funds can be used by the employee for long term plans.

EPF Registration UAN (Universal Account Number)

Once the establishment is registered in the EPFO portal, it updates the KYC documentation of its employees by generating a Universal Account Number (UAN). Every employee can use their UAN number to claim PF fund, transfer of PF fund online to the bank account, etc. The only necessary step that an employee has to follow is activate UAN through the following procedure:

  • An employee can visit online for its UAN activation on the official website of EPFO 
  • Complete the details such as UAN, Member Id, Aadhar Number, PAN number, etc
  • After that mention your details such as name, address, contact details and complete the form by filling captcha on the screen
  • After completing these details, the employee will receive an OTP on his mobile number registered with UAN.
  • Employee shall check the box “I Agree” and validate the OTP for activating UAN.

EPF charges

  • The contribution is rounded to the nearest rupee for each of the employees for the employee share, the contribution towards pension, and the EDLI contribution.
  • The employer share is the difference between the employee Share and the pension contribution.
  • The monthly payment amount towards the EPF administrative charges is rounded to the nearest rupee and a minimum of Rs.500 is payable.
  • In case the establishment has no member in the month the minimum administrative charges applicable will be Rs.75.
  • The monthly payment amount under the EDLI administrative charges is rounded to the nearest rupee and a minimum of Rs.200 is payable.
  • In case the establishment has no member in the month, the payable minimum administrative charge is Rs.25
  • Suppose the establishment is exempted from the PF scheme inspection charges of 0.18% ( Minimum Rs 5 ) is payable in place of the admin charges
  • In case the establishment is exempted under the EDLI scheme. The inspection charges of minimum Rs.1 @0.005% are payable in place of the administrative charges.

Due date

Before paying the Salary to the employees, the employer must deduct the employee's contribution from his wages. Later, the employee portion and the employer’s share will be payable to the EPFO within 15 days of the close of every month.

The EPF stands tall in terms of returns from a debt instrument. The money is sovereign backed and the interest earned is tax-free. The PF enjoys EEE (exempt, exempt, exempt) status, as contributions are deductible from the income. Hardly any debt instruments provide such high returns with safety and assurance. Hence, it is better to transfer the PF account at the time of switching jobs and also avoid the temptation to withdraw the money.

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