Employees' Provident Fund Act
This is an Act to provide for the institution of provident funds, pension fund, and deposit-linked insurance fund for employees. Employees' Provident Fund Organisation (EPFO) is one of the largest social security organisations in India in terms of the number of covered beneficiaries and the volume of financial transactions undertaken.
Applicability:
The Employees’ Provident Funds and Miscellaneous Provisions Act provides for compulsory contributory fund for the future of an employee after his/her retirement or for his/her dependents in case of the employee's early death. It is applicable to:
- Every factory engaged in any industry specified in Schedule 1 in which 20 or more persons are employed.
- Every other establishment employing 20 or more persons or class of such establishments that the Central Govt. may notify.
- Any other establishment so notified by the Central Government even if employing less than 20 persons.
Every employee, including the one employed through a contractor (but excluding an apprentice engaged under the Apprentices Act or under the standing orders of the establishment and casual laborers), who is in receipt of wages up to Rs.15,000 p.m. shall be eligible for becoming a member of the fund.
While the entire 12% of employee’s share is directed towards the EPF account, such is not the case with the employer’s contribution. Though the employer matches 12% contribution, only 3.67% of the contribution goes into your EPF account. The remaining 8.33% of the employer’s contribution is directed towards Employee’s Pension Scheme.