Hi Amol,
FOQ about PF.
PROVIDENT FUND
Q1) What is the Contribution for Provident Fund by both the Employer & Employee?
Ans: The Employee contributes 12% of his/her Basic Salary, and the same amount is contributed by the Employer.
Q2) Is it Compulsory for all employees to contribute to the Provident Fund?
Ans: Employees drawing a basic salary up to Rs 6500/- have to compulsorily contribute to the Provident Fund, and employees drawing above Rs 6501/- have an option to become a member of the Provident Fund.
Q3) Is it beneficial for employees who draw a salary above Rs 6501/- to become a member of the Provident Fund?
Ans: Yes, because Provident Fund contributions by the employer & employee are not taxable income for Income Tax purposes.
Q4) What if an employee, while joining an establishment, has a basic salary of Rs 4200, and after some time, his basic salary increases above Rs 6501/-, does he have an option to terminate his membership from the Provident Fund Act?
Ans: An employee who joins the organization with a basic salary above Rs 6501/- has the option to either become or avoid becoming a member of the Provident Fund. However, employees whose basic salary upon joining the organization is less than Rs 6501/- but increases above Rs 6501/- later on have to compulsorily continue to be a member of the Provident Fund.
Q5) What is the contribution percentage to the Provident Fund and Pension Scheme?
Ans: Employers contribute 12% of the basic salary, which is deposited entirely in the Provident Fund account. Out of the employees' 12% contribution, 3.67% goes to the Provident Fund, and 8.33% is deposited in the Pension scheme.
Q6) Which form has to be filled while becoming a member of the Provident Fund?
Ans: Nomination Form No 2 has to be filled to become a member of the Provident Fund, and the form is available with the HR department.
Q7) Which form has to be filled while transferring Provident Fund deposits?
Ans: You only have to fill Form No 13 to transfer your P.F. amount.
Q8) What is the provision of the scheme regarding 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 persons belonging to his family. If he has no family, he can nominate any person of his choice. If he subsequently acquires a family, the nomination becomes invalid, and he will have to make a fresh nomination of one or more persons belonging to his family. According to the Acts, you cannot make your brother your nominee.
Q9) When is an employee eligible to enjoy the pension scheme?
Ans: An employee is eligible for the pension fund after completing ten years of membership in the Fund.
Q10) What does it mean by continuous service of ten years?
Ans: Continuous service of ten years in the Employee Pension Fund means that during the 10 years of service, if an employee switches jobs but does not withdraw his Employee Pension Fund, the service is considered continuous.
Q11) When can an employee avail the benefit of the Employee Pension Fund scheme he has contributed to during his ten years of continuous service?
Ans: An employee can avail the benefits after completing 58 years of service.
Q12) What happens to the Provident Fund and Employee Pension Fund if an employee wants to resign from the service before completing ten years of continuous service?
Ans: An employee can withdraw the PF accumulations by filling out Forms 19 & 10 C, which are available with the HR department.
Q13) What are Forms 19 & 10C for?
Ans: Form No. 19 is for Provident Fund withdrawal, and Form No. 10 C is for Pension scheme withdrawal.
Q14) Do we get any interest on the amount deposited in the Provident Fund account?
Ans: Compound interest as declared by the Government is given for every year of service.
Q15) What is the accounting year for the Provident Fund account?
Ans: The accounting year is from March to February.
Q16) What benefits are provided under the Employee Provident Fund Scheme?
Ans: Two kinds of benefits provided under the scheme are:
a) Withdrawal benefit
b) Non-Refundable advances benefit
Q18) What is the purpose of the Employee's Pension Scheme?
Ans: The purpose of the scheme is to provide:
1) Superannuation pension
2) Retiring pension
3) Permanent total disablement pension
Superannuation Pension: Members with 20 years of eligible service retiring at 58.
Retirement Pension: Members with 20 years of eligible service retiring before 58.
Short Service Pension: Members with 10+ years but less than 20 years of service.
Q19) How long does it take to receive P.F & pension money if an employee resigns?
Ans: Normally, after submitting Forms 19 & 10 C, the PF amount is received within 90 days with interest.
Q20) Do we receive money through a postal order?
Ans: Previously, PF was received through a postal order, but now, bank account details need to be provided for direct deposit.
Q21) How can I check the accumulations in my PF account?
Ans: The PF office sends an annual statement through the employer detailing the PF accumulations.
Q22) Which establishments are covered by the Act?
Ans: Establishments employing 20 or more employees are covered.
Q23) If employee count falls below 20, does the Act still apply?
Ans: Yes, once covered, the Act applies even if the employee count falls below 20.
Q24) Is the Act applicable to a closed factory with minimal employees?
Ans: No, the Act does not apply in such cases.
Q25) Is a trainee considered an employee under the Act?
Ans: Yes, a trainee is considered an employee unless they are under the Apprentices Act.
Q26) Is there an appeal process for Central Govt. or Provident Fund Commissioner orders?
Ans: Yes, appeals can be made to the Provident Fund Appellate Tribunal.
Q27) Who decides disputes under the Act?
Ans: Disputes are decided by various Provident Fund Commissioners.
Q28) How are workers employed by contractors covered under the Scheme?
Ans: Contractors are responsible for PF deductions, but the Principal Employer must ensure compliance.
Q29) Are contract workers covered under the Scheme?
Ans: Yes, persons employed by or through a contractor are covered under the Scheme.
Q30) What if the Contractor fails to deduct PF from contract workers?
Ans: The Principal Employer must pay and can recover from the Contractor.
Q31) Can the employer be penalized for delayed contributions?
Ans: Employers are not penalized for delays due to Bank or post office.
Q32) Should PF be deducted from arrears?
Ans: Yes, PF is to be deducted from arrears.
Q33) Can an employee contribute at a higher rate?
Ans: Yes, with voluntary contributions, a Joint Declaration Form is required.
Q34) What is the interest rate on PF accumulations?
Ans: Compound interest as declared by the Central Govt. is paid annually.