Understanding the Provident Fund Act: Common Questions and Real-Life Scenarios Explained

Dear All,



Please find enclosed the Frequently Asked questions on PF Act, which details are given below-



PROVIDENT FUND



Q1) What is the Contribution for Provident Fund both by the Employer & Employee ?

Ans : The Employee contributes 12% of his /her Basic Salary & the same amount is contributed by the Employer.

Q2) Is it Compulsory for the all the employees to contribute to the Provident Fund ?

Ans : Employees drawing basic salary upto Rs 6500/- have to compulsory contribute to the Provident fund and employees drawing above Rs 6501/- have an option to become member of the Provident Fund .

Q3) Is it beneficial for employees who draw salary above Rs 6501/- to become member of Provident Fund ?

Ans Yes because provident fund contribution by the employer & employee is not a taxable income for Income Tax purpose.

Q4) What if an employee while joining establishment has a basic salary of Rs 4200 and after some period of time his basic salary increases above Rs 6501/-, does he have an option to terminate his member ship form the Provident fund act?

Ans : Employee who while joining the organisation has a basic salary above Rs 6501/- have an option to either become or avoid becoming member of Provident fund but employees whose basic salary while joining the organisation is less then Rs 6501/- but after some period of time their basic increases above Rs 6501/- have to compulsorily continue to be member of provident Fund.

Q5) What is the contribution percentage to the Provident fund and Pension Scheme ?

Ans : Employers contribution of 12% of basic salary is totally deposited in provident fund account Whereas out of Employees contribution of 12% , 3.67% is contributed to Provident fund and 8.33% is deposited in Pension scheme.

Q6) Which form has to be filled while becoming member of provident fund ?

Ans : Nomination Form No 2 has to be filled to become a member of the Provident fund, form is available with HR department .

Q7 ) Which form has to be filled while transferring provident fund deposit ?

Ans : You just have to fill form no 13 to transfer your P.F amount.

Q8 ) What is the provision of the scheme in the matter of nomination by a member ?

Ans : Each member has to make a nomination to receive the amount standing to his credit in the fund in the event of his death. If he has a family, he has to nominate one or more person belonging to his family and none other. If he has no family he can nominate any person or persons of his choice but if he subsequently acquires family, such nomination becomes invalid and he will have to make a fresh nomination of one or more persons belonging to his family. You cannot make your brother your nominee as per the Acts.

Q9 ) When is an employee eligible to enjoy pension scheme ?

Ans : For an employee to become eligible for Pension fund, he has to complete membership of the Fund for 10 Years.

Q10 ) What does it mean by continuous service of ten years ?

Ans : When we say continuous service of 10 years in Employee Pension Fund, we mean to say that during services, for e.g., an employee who has worked with X company for say 3 years, then he resigned from that organisation and joined Y company, wherein he worked for 2 years, then resigned from there to join establishment for 5 years but during these 10 years of service he has not withdrawn but transferred his Employee pension fund, then we say continuous service of ten years.

Q11 ) When can an employee avail the benefit of Employee pension fund scheme which he has contributed during his ten years of continues service /

Ans : An employee can avail the benefit after completion of 58 years of service.

Q12 ) What happens to the provident fund & Employee Pension fund if an employee who wants to resign from the service before completion of ten years of continues service?

Ans : Employee can withdraw the PF accumulations by filling Forms 19 & 10 C which is available with the HR department.

Q13 ) What is this 19 & 10C form ?

Ans : Form No 19 is for Provident fund withdrawal & Form No. 10 C is for Pension scheme withdrawal.

Q14 ) Do we get any interest on the amount which is deposited in the Provident Fund account?

Ans : Compound interest as declared by the Govt. is given for every year of service.

Q15 ) What is the accounting year for Provident fund account?

Ans : Accounting year is from March to February.

Q16 ) What are the benefits provided under Employee Provident Fund Scheme?

Ans : Two kinds of benefits are provided under the scheme-

a) Withdrawal benefit

b) Benefit of non -Refundable advances

Q18 ) What is the purpose of the Employee's Pension Scheme ?

Ans : The purpose of the scheme is to provide for

1) Superannuation pension.

2) Retiring Pension.

3) Permanent Total disablement Pension

Superannuation Pension: Member who has rendered eligible service of 20 years and retires on attaining the age of 58 years.

Retirement Pension: member who has rendered eligible service of 20 years and retires or otherwise ceases to be in employment before attaining the age of 58 years.

Short service Pension: Member has to render eligible service of 10 years and more but less than 20 years.

Q19 ) How much time does it take to receive P.F & pension money if an employee resigns from the Service?

Ans : Normally the procedure for receiving P.F & Pension money is , the employee has to fill 19 & 10 c Form and submit the same to PF Desk , which is then submitted to the P.F office after two months, this two months is nothing but a waiting period as the rules are that an employee should not be in employment for two months after resigning if he has to withdraw his P.F amount. After completion of two months the form is submitted to the regional provident fund Commissioner office after which the employee receives his amount along with interest within a period of 90 days.

Q20 ) Do we receive money through postal order ?

Ans Previously there was a procedure wherein member use to get P.F through Postal order but now While submitting the P.F form withdrawal form you have to mention your saving Bank account No. & the complete address of the Bank where you hold the account.

Q21 ) How would I know the amount of accumulations in my PF account ?

Ans : PF office sends an annual statement through the employer which gives details about the PF accumulations. The statement contains details like, Opening balance, amount contributed during the year, withdrawal during the year, interest earned and the closing balance in the PF account. This statement is sent by the PF department on completion of the financial year.

Q22 ) Which establishments are covered by the Act ?

Ans : Any establishment which employs 20 or more employees. Except apprentice and casual laborers, every Employee including contract labour who is in receipt of basic salary up to Rs. 6500 p.m. is covered by the Act.

Q23 ) In case after registering the establishment at any point in time, the number of employees working in it becomes less than 20 then will the Act apply ?

Ans : Any establishment which has been covered under the Act once shall continue to be governed by the Act even if the number of persons employed therein at any time falls below 20.

Q24 ) Is the Act applicable to a factory which is closed down but is employing a few employees to look after the assets of the establishment ?

Ans : No, Where the establishment is closed down and only four security men are employed for keeping a watch over the assets and properties of the establishments, the Act would not be applicable.

Q25 ) Is a trainee an employee under the Act ?

Ans : Yes, a trainee would be considered as an employee as per the Act but in case the trainee is an apprentice under the Apprentice's Act then he/ she will not be considered as an employee under this Act.

Q26) Is it possible to appeal the orders of the Central Government or the Central Provident Fund Commissioner ?

Ans : Yes, there is a body called as Provident Fund Appellate Tribunal where an employer can appeal.

Q27 ) Who is the authority to decide regarding the disputes if any ?

Ans : In case there is a dispute regarding the applicability of the Act or the quantum of money to be deducted etc. the authority to decide are the

i)Central Provident Fund Commissioner,

ii)any Additional Provident Fund Commissioner,

iii)any Additional Central Provident Fund Commissioner

iv)any Deputy Provident Fund Commissioner

v)any Regional Provident Fund Commissioner or

vi)any Assistant Provident Fund Commissioner

Q28 ) What in case there are workers involved as Contract labour ?

Ans : It is the responsibility of the Contractor to deduct the PF and submit a statement to the Principal Employer in the prescribed format by 7th of every month. The Company becomes the Principal Employer would be responsible for the PF deduction of the workers employed on contract basis.

Q29 ) Are the persons employed by or through a contractor covered under the Scheme ?

Ans : Persons employed by or through a contractor are included in the definition of “ employee ” under the Employee's Provident Finds Act, 1952, and as such, they are covered under the Scheme.

Q30 ) In case the Contractor fails to deduct and submit the PF amount from the contract workers then what is to be done ?

Ans : The Company being the Principal employer is responsible for the PF to be deducted from the Contract workers as well. In case the Contractors fails to deduct and submit the PF dues then the Company has to pay the amount and can later on recover the amount from the Contractor.

Q31 ) Could the employer be punished in case the remittance of contribution by him is delayed in a Bank or post office ?

Ans : Employer cannot be punished or penalized in case there is a delay in the remittance of the contribution on account of delay in Bank or post office.

Q32 ) What happens in case there is a salary revision and a raise in the basic salary of the employee and arrears need to be paid, Do we need to deduct PF from the arrears as well ?

Ans : Arrears are considered to be emoluments earned by the employee and PF is to be deducted from such arrears.

Q33 ) Is it possible for an employee to contribute at a higher rate of interest than 12 % ?

Ans : Yes, if an employee desires to contribute an amount at a higher rate of interest than 12 % of basic salary then they can do so but it does not become obligatory for the employer to pay anything above than 12 %.This is called voluntary contribution and a Joint Declaration Form needs to be filled up where the employer and the employee both have to give a declaration as to the rate at which PF would be deducted.

Q34 ) What is the interest on the PF accumulations ?

Ans : Compound interest as declared by Central Govt. is paid on the amount standing to the credit of an employee as on 1st April every year.

Thank you. I always feel scared to read or learn about PF, but your material helps a lot in understanding the concept of PF.

I want some information about Payroll in HR.

Regards,
Geeta 😊

Dear Mr. PBS,

It is very valuable to every HR executive. I have a small doubt, i.e., if a contractor has not paid PF contributions to his workers, then the principal employer has to pay. If the principal employer has also not paid, what are the consequences? Please reply to this email.

Murali
murali_uma2003@yahoo.com

Can anybody help me with a declaration format for keeping the company assets with the employees? For example, cars, car RC books, laptops, mobiles, etc.

Thank you for the valuable information. Also, tell me what is to be done if the ex-employer doesn't bother to revert if you have sent mails for Form No. 16 for filing returns. We were also not provided with salary slips, and now we want the Form No. 16. Guide me on this matter.

Mr. Pawan,

Tell me something about ESI as we have a number of questions asked on PF & ESI for interviews in HR & Admin.

I have many more questions to ask you... :)
And will do that, hope you won't mind.

Excellent. Is there such an FAQ for ESIC as well? I would really be grateful if that is posted by the senior members.

Thank you very much, sir, for providing valuable information about the PF Act. I would also appreciate it if you could shed some light on excise rules and regulations. Your assistance in this matter would be greatly appreciated.

Regards,
Raj Chauhan
3-09873667077

Hi all,

A contractor takes contracts from some corporates and delegates them to subcontractors. While making the payment to the subcontractor, the contractor deducts for the Provident Fund account and Employee Stock Option Plan on behalf of the laborers. Is this valid? If so, please provide the evidence that the contractor must present for making payments to the Provident Fund account as per the act.

Can you please send me your views? 😄

Hi, can anyone forward me the PF form to remit my PF amount from the department? My last employer is in Bangalore, and I am in Noida. Can I get the form here and send it across? Is there any difference in forms between Bangalore and Noida??? It is a bit urgent.

Thanks in advance.

Hi Pawan Kashyap,

Can you please tell me the advantages and benefits for an employee of having PF? :icon13:

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When writing formally, it is important to use proper punctuation and spelling. Additionally, inquiring about the advantages and benefits of having a Provident Fund (PF) reflects an interest in understanding the perks associated with such a benefit.

Hi, I am Sachin from Jaipur. I resigned from my previous company in October 2008, and I started working in another company. Now, I would like to withdraw my PF amount as it is now July 2009. Could you please let me know if there is a time limit for withdrawing the PF amount? How long can I preserve my PF amount in my PF account, and could you please explain the process of withdrawal?

Thank you.

We have some employees under contract for one year. Can we deduct PF? If yes, why? If no, why? What are the administrative charges in PF, and what is the percentage?

Thank you.

Dear Sachin,

For the withdrawal of PF, you will have to apply in Form 19, get it signed by your last organization, and send it to the PF organization where the account is maintained. If you wouldn't like to withdraw the PF amount, you can transfer the PF to the present organization's PF account allotted to you. The forms are available on the provident fund organization's website.

For any further details, inquire at the PF office.

Useful message, but I want to know what benefits a family receives after the death of an employee.

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Thank you for your inquiry about the benefits available to the family of a deceased employee. In such unfortunate circumstances, there are several potential benefits that may be provided to the family members. These benefits can include financial assistance, such as life insurance payouts or survivor benefits, as well as any accrued leave or pension benefits owed to the employee. Additionally, there may be counseling services or other forms of support available to help the family during this difficult time. It's essential for the family to reach out to the HR department or relevant authorities to understand and access the benefits they are entitled to.

Hi,

I need some detailed information about the unclaimed money of the provident fund. Where is it utilized, and who is the authority to do so?

Kindly let me know whether an employee will receive the full part of the PF amount (Employee/Employer Contribution) if they resign after 10 years of continuous service with the same organization.

Regards,
Janardhan

Thank you for the good information. I have a question regarding the employee's entitlement to the full part of the PF amount (Employee/Employer Contribution) if he resigns after 10 years of continuous service with the same organization.

Best Regards,
Janardhan

Hi, it is understood that in the PF scheme, various loans are available, and a number of benefits are also included in the scheme. Kindly explain the procedure for applying for the loans mentioned above, the eligible period, and how much balance service is required to apply for the loans. Please provide a detailed description of the process.

Regards,
rns

In my company, both the 12% contribution is borne by the employee, and it's an unlimited PF. One of our employees doesn't want to opt for PF, but management declined his request. Please tell me whether it's legal in such a case. Employees must have an option. After 3 months, the PF account has not been given to me. I am afraid that my money should not go down the drain. PLEASE HELP, IT'S URGENT.

Regards

In my company, both the 12% contribution is borne by the employee, and it's an unlimited PF. One of our employees doesn't want to opt for PF, but management declined his request. Please tell me whether it's legal in such a case. Employees must have an option. After three months, the PF account is still not given to me. I am afraid that my money should not go down the drain. PLEASE HELP, IT'S URGENT.

More at https://www.citehr.com/131452-faq-pr...#ixzz0nPuxJ5iC

Dear PBS,

Can you provide me with one detail? If an employee has left the organization and has not withdrawn his PF amount after one year, is he eligible for an interest rate on his contributions during his service?

Thank you.

Can a married woman nominate her mother as a nominee in PF if her father is in service? Please advise on this issue.

Also, if anybody has not withdrawn the PF from his or her previous two companies, then what are the ways to get the amount from both companies?

Cheers,
Rashmi

My name is Shyamala. I joined a KPO job in June and left after two weeks due to personal reasons. I did not submit a formal resignation letter as my employer didn't request it. I informed the HR orally about my departure, and he said he would terminate my service. I didn't have a bank account during this period, so I didn't receive a salary for these two weeks. I've been unemployed since then.

Query Regarding PF Number

I'm aware that the PF number assigned to someone is permanent and cannot be changed even when moving from one company to another. I signed the Employee PF enrollment form on my first day during the formal induction procedures. What will be its status now? Will the HR cancel it since I have left their organization? Will this PF number pose a threat to me by revealing my old employer when I join another company later? I'm a fresher engineering graduate, and I'm quite tense about this situation.

I hope someone can resolve my query. Thanks in advance. :)

Best regards,

Shyamala.

I have a query regarding your statement that "Brother cannot be a nominee as per the act" in Question no. 8. Could you please provide me with the reason for this? Why is it that "Brother cannot be a nominee as per the act"?

Thank you.

I worked in a company for a period of 3 months and 23 days, during which the contribution for PF from both ends was Rs. 1200. Upon the closure and withdrawal of the PF account, I received only Rs. 7340. Upon inquiring about this with my previous company's HR, they mentioned that PF authorities would deduct administrative charges if one quits before completing 6 months of service, which is why the amount is reduced. Is this true? If so, how much will they deduct as charges?

My previous employer has not remitted the PF employee share and also the employer share for the past year (Oct 2011 to Oct 2012) to the department. The company is now closed. Even after several 7A notices issued by the department, the employer is not in a position to pay the PF amount. It has been six months since my resignation. Since the factory is closed and no officer is working there, I have not been issued duly filled Form 19, 10C along with 3A, Form 5, and 10.

Claiming Provident Fund

My question is, since the employer has not remitted the amount as mentioned above, can I apply for the claim of PF? If yes, what are the necessary steps I should follow to get the claim? Without remittance from the employer, will the PF office settle my account until the date of my resignation? Can anybody help me with this issue?

Regards.

Is it compulsory for higher-salary staff earning above Rs. 6500 to have PF deductions or not? For example, if the salary is 50,000.

Regards,
Pradeep

Dear all, your posts are really helpful. I have a doubt: are the rules of PF the same for companies under the Factories Act?

My query is whether any eligible employee can individually apply for a loan from their PF account. Is consent from the owner required or not?

Hi,

I need to ask about the limit for employees who wish to deduct the full or a part of their basic salary for PF.

Dear All, everything is fine as per the questions mentioned above. However, there have been several amendments made in the Provident Fund effective from the financial year 2014-15 and Assessment year 2016-17.

Amendments to Provident Fund

Like Question no 2 and 3: The wage ceiling limit of the Provident Fund has been raised to Rs 15,000 (w.e.f. 1 Sep 2014).

Employer's Role in Provident Fund

Q4: An employer cannot force the employee to be a part of the Provident Fund if his basic salary + DA is more than Rs 15,001 unless specified in their HR policy.

New Amendments from 1 Sep 2014

Q5: As per the new amendments effective 1 Sep 2014, new employees who get registered for the Provident Fund will not have any amount deducted towards EPS (8.33%) and EPF (3.67%). It's a total of 12% towards both employers and employees. An employee can now withdraw a total of 24% even if he has worked for the company from 0 months to 9 years. However, withdrawing PF before 5 years of service and that too of a sum equal to or more than Rs 30,000 will attract tax. But if the employee submits Form 15G/15H along with his PAN card, no tax will be deducted.

Form Changes for PF Transfer

Q7: Form no 13 R has now been replaced by a new form called Form 11(N) in case the employee has a UAN number for transferring PF from one company to another.

In addition, continuous service in employment is considered where the employee has completed 240 working days in a year. Though this applies to the rule of calculating gratuity, it's the same for other statutory benefits. EPFO has no responsibility to send any annual statements to individuals. However, to check the PF balance, it is easier to go to the PF website (www.epfindia.com) to check the balance.

Voluntary Provident Fund (VPF)

Q33: VPF is an account only meant for employees and not for employers. If an employee feels like contributing anything extra towards his savings (8-20%), he can do so by opening a VPF. But no employer can make a contribution to such VPF, and such is not mentioned in the PF Act 1952.

Hope this clarifies.

Regards

Hi, I need information. If an employee resigns from the company, who has to submit the PF form - the employee or the employer? After submitting the form, what happens if there is a rejection?

Sir/Madam,

I left the company in July '15 and applied for my PF in Jan '16 through my former employer. However, I have not received any updates or my PF amount yet. When I contacted my previous company, they informed me that they had forwarded my PF application to the PF office. As of today, 14 Apr, I still have not received my PF amount. I have also checked the PF site, but it shows "no records found."

Could you please guide me on what steps I should take?

Thank You,
Vimal Tiwari