EPF Coverage Limit Change: How Does the New 10-Employee Rule Affect Your Business?

Hi All,

EPF coverage limit has been reduced to 10 employees from 20 employees. However, the judgment copy is awaited. Kindly visit this topic for further details.

Thanks,
Mehul K.
Serve HR Corporate Services
Labour Laws Consultants & Practitioners
9892188218
Mumbai Based Consultants operating in Maharashtra, Goa & Gujarat

05/07/08

Government on Saturday, 5th July 2008 approved the proposal of bringing industries with ten or more employees under the ambit of Employee's Provident Fund (EPF) against the earlier limit of twenty or more workers.

A high-level meeting of board members of central provident fund chaired by Union Labour Minister Oscar Fernandes decided that the industries with ten or more employees will have to contribute towards the EPF accounts from now on.

"The ceiling for the industries has been revised and now any industry with ten or more employees will have to deduct EPF money of the employees," Union Labour Minister Oscar Fernandes said.

Currently, ONLY Schedule industries with twenty or more employees are covered under the ambit of EPF. Now as per new directions any Industry or Establishment or Commercial Establishment or Factory or Charitable Institute or Education Institute or Shop or IT Establishment or Research Centers employing more than 9 employees will be covered under the EPF Act.

Please note the same and inform to all concerns.
Yours truly,
HIREN LAXMICHAND CHHEDA
9821078457
13, POONAWALA BUILDING, ELPHISTIN ROAD, PAREL TT, MUMBAI – 400 012.

Hi all,

I want to know the rules of EPF. What is the threshold limit if an employee is getting Rs. 6500? What is the contribution of the employee and employer for the above salary? Also, if an employee is getting more than Rs. 7000, what is the contribution of the employee and employer? Kindly clarify.

The EPF contribution limit is ₹6,500. However, if the employer is willing to contribute more than the EPF ceiling, contributions can be made based on the actual basic salary.

Example Scenarios

For example, if A's basic salary is ₹7,500:

- **Case 1:** If the employer pays the contribution based on ₹6,500 only, then ₹780 is from the employee, and ₹780 is from the employer.
- **Case 2:** If the employer wants to pay their contribution based on the actual basic salary, then the contribution from the employee is ₹900, and from the employer, it is ₹900.

Thank you.

Provident Fund: Is it Optional? No, it is not optional.

The first issue is whether the employee is covered under the Employees Provident Fund and Miscellaneous Provisions Act. If an employee joins an organization (covered under the Act) as a first job or subsequently at a pay of Rs 6500 or less, he is covered under the Act. Once covered, he remains covered under the Act unless he has withdrawn from the Provident Fund finally, which he can do if he is employed for less than six months. Once he has finally withdrawn, he will be covered or not depending on whether his pay is less than or more than Rs 6500. If he is covered under the Act, he has no option; he has to be covered.

Let's say he is not covered under the Act; in that case, it depends on whether the company has a provident fund for such employees who are not covered under the Act. These PFs are approved by the Income Tax and have income tax benefits for the members. The condition of these PFs is that all employees coverable will be covered. Again, the employee has no option. If the company has such PF, the employee has to be covered.

For PF coverage, does a salary of 21,000/- mean gross or Basic+DA?