Personal Finance

Applicability of the Employees Provident Funds Scheme

Applicability of the Employees Provident Funds Scheme

Generally both employers and employees are always confused about applicability of provident fund act on their establishment. The applicability is very simple but in order to escape, people tend to confuse themselves. Some frequently asked questions regarding applicability of Employees Provident Funds and Miscellaneous Provisions Act, 1952

Q. Which states are covered under the Act?

Extended to all the states of India except the state of Jammu & Kashmir.

Q. What is the limit of wages for a subscriber?

W.e.f. 01/09/2014 the limit of wage is set to be Rs. 15000.

Q. How is wage of a subscriber calculated for the above?

Basic Salary and Dearness Allowance is considered while calculating eligibility of a subscriber. Employees earning a (Basic + DA) wage of more than Rs. 15000 are exempt from the scheme.

Q. If a person joined at a (Basic+DA) salary of Rs 13000 and his salary gets revised to Rs. 16000, what will be the impact on PF, can he opt out of the scheme?

No, once benefit of PF is extended to an employee cannot be revoked even if his salary exceeds qualifying limit. But employer can limit his contribution upto ceiling of Rs 15000.

Q. My employee strength crossed 20 this month but I have 10 employees drawing salary more than Rs. 15000. Still Act is applicable on my establishment?

Yes, for the applicability of Act, you must have 20 employees on payroll irrespective of the number of exempt employees.

Q. If count of employees goes below 20 in subsequent months; will I be able to cancel my PF registration?

No, EPF & MP Act is applicable for lifetime unless you close the business permanently.

Q. My establishment is located in an SEZ, is the act applicable?

No, only few SEZ were notified by the government wherein act is not applicable irrespective of the count of employees.

Still have any question unanswered? Post your questions in the comment section below.

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