1)
Which establishment or company eligible for this scheme?
This scheme applies
to all companies or establishment, which employs 20 or more than that. Do
remember that once the employees’ strength reaches to 20 or more then
irrespective of employee strength (whether fall or rise) the company must
continue with this scheme. However, suppose company or establishment
stopped its operation or continue without any employee then in that case this
scheme not applicable. In addition, employee if considered as trainee or
apprentice will not be covered under this act.
2) Which employees are excluded from
this scheme?
An
employee who was a member of this scheme and withdrawn all amounts of his
contribution based on either retirement from service after attaining age of 55
years or who migrating abroad for permanent settlement.
- An employee whose salary (BASIC+DA) at the time of entry into scheme more than Rs.15, 000.
- If a member is considered as an apprentice then he will not come under EPF.
3) What do you mean by salary for this
purpose?
Salary for this purpose is only
BASIC+DA. Also remember that if your salary at the time of entry is Rs.15, 000
or less than that, but after a few years or a month if your salary revised then
raised to more than Rs.15, 000, then in that case too member must continue with
this scheme. So for example, this month your salary is Rs.14, 000 and you are a
member of this scheme. But in March 2015 your salary revised and crossed the
limit of Rs.15, 000 then too you need to continue with this scheme.
Only employees who are eligible to stay
away from this scheme are those whose salary are more than Rs.15, 000 at the
entry of employment.
4) What is the contribution percentage
of employer and employee?
A)
EPF is now mandatory for all those whose salary is less than Rs.15,000/-
Previously the limit was Rs.6, 500. However, this now rises
to Rs.15, 000. Therefore, whoever falls below Rs.15, 000 of salary per month
will have to contribute compulsorily to EPF Scheme.
B) The minimum monthly pension will be Rs.1, 000 per
month. Under the new rules, widow of a member will get a minimum
monthly pension of Rs.1, 000. For children, it fixed at Rs.250 and the orphans
it is Rs.750 per month. In addition, to arrive at pension, salary will be
average of 60 months last drawn salary instead of earlier rule of last 12
months average salary.
C)
Insurance coverage to member increased to Rs.3, 00,000Earlier
each member who is part of the EPF Scheme had an insurance coverage of Rs.1,
56,000. This insurance coverage has now risen to Rs.3, 00,000.
D)
EPS contribution from employer raisedEarlier whether your
salary was Rs.6, 500 or at a higher level, employers used to contribute fix EPS
contribution of Rs.541 i.e. 8.33% of Rs.6, 500. This is increased now to Rs.1,
250 i.e. 8.33% of Rs.15, 000.
The overall effect on you will be
lesser take home salary. Because earlier, whoever earning more than Rs.6, 500
might contributed 12% of Rs.6, 500. Now onward it will be 12% of your salary if
you fall under Rs.15, 000 and if more than Rs.15, 000 then also 12% of Rs.15,
000. So compared to earlier, you will see higher outgo to EPF and lesser take
home salary. However, do remember that you are indirectly investing rather than
spending.
5) Whether one can mention nomination?
Yes, one needs to nominate for EPF.
This helps to get the money in case of sudden demise of member. Usually if the
member is married, then he should nominate to spouse or kids. If he is
unmarried then he can nominate his parents. Brothers or sisters are not allowed
for nomination. However, one can mention multiple nominations and must disclose
the percentage of sharing. In addition, if member doesn’t have any family
members then he can nominate anyone of his choice. Do remember that once the
member acquire a family, then such nomination will become void.
6) What about arrears if one receives
due to salary revision?
Salary revision is considered a normal
hike. Therefore, any such arrears payable to the employee are subject to EPF
deduction.
7) Whether an employee contributes more
than 12% of his salary?
Yes, you have the option to contribute
more. But the employer has no such obligation to match your contribution. Such
contribution is called Voluntary Provident Fund (VPF). Interest benefit will be
same as that of EPF.
8) Who is responsible to deposit to EPF
Scheme?
Your employer has whole responsibility
to deposit all amounts, which is deducted from the employee as well as an
employer contribution.
9) My employer deducting his
contribution from my salary, whether it is legal?
According to EPF rules, an employer
can’t deduct it from employee salary. It is illegal. I found that after
revising rules from 1st Sept 2014, few employers started to deduct their
contribution from the employee. This is illegal.
10) Whether my employer can split
salary components and reduce his contribution towards EPF?
This was happening since the latest
changes but such activity is also considered as illegal.
“Any agreement entered into
between the employer and its employees for splitting of the amount payable by
the employer to its employees for the service rendered by them, cannot take
away the power of the Commissioner under Section 7A of the Act to look into the
nature of the contract entered into between the employer and its employees and
decide that splitting up of the pay payable to the employees under several
heads is only subterfuge to avoid payment of contribution by the employer to
the provident fund. It was open to the Commissioner to lift the veil and read
between the lines to find out the pay structure fixed by the employer to its
employees and to decide the question whether the splitting up of the pay has
been made only as a subterfuge to avoid its contribution to the provident fund.”
11) Whether I am eligible for
withdrawal of EPF?
Among
all salaried only few members know that they can take advance from their EPF
contribution that too for specific reasons. Hence it is better to know the
rules and conditions which can apply to take that advance.
12) Is it legal to withdraw EPF during
job?
It is illegal if you withdraw your EPF
during typical job change. One can withdraw EPF only if one has no job for 2
months. Otherwise withdrawing for any new job change is actually illegal. Rules
allows only to transfer in case of job change.
13) How you can receive EPF
withdrawals?
Currently any EPF withdrawal will be
credited to beneficiary bank account directly. So no need to worry.
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