Is Provident Fund Really Necessary for Student Interns? Seeking Expert Advice on Stipend Rules

From time to time, our company takes a few students in their final MCA and BTech year on a six-month internship training as part of their degree program. We have letters from the concerned colleges for each individual stating that as part of the MCA/BTech degree, the students are required to undergo six months of full-time internship training in a company during the final year of their degree. Our company pays a stipend of Rs. 6000 to Rs. 6500 per month to such interns. The EPF office is insisting that PF is applicable on the stipend being paid to these students. This does not seem correct.

I request PF experts to please shed more light on the matter.

- I Yadav

As per the Provident Fund Act, only apprentices engaged through Related Instruction Centres under the Apprentice Act, 1961, and those engaged as per certified Standing Orders of the company are excluded from coverage. Regarding interns, there is no separate ruling given either in the Employees' Provident Fund and Misc. Provisions Act or in any judgment. However, you can defend by saying that they are not 'employed' but are doing their 'project which is mandatory as per their curriculum for the award of their degree/diploma' and request to drop the proceedings/demand. In any case, you will get an opportunity to be represented under section 7A of the Act, and in that hearing, you can present your views and categorically say that "if we are asked to give coverage to these trainees, nobody will give opportunities to such project trainees, and finally, the Universities will have to find out a solution."

In fact, I had experienced a similar observation by an ESI Inspector, and when I contended as above, they dropped it. But I didn't book the allowances to project trainees under the head 'stipend' but as Conveyance under the Training and Development Expenses.

Anyway, defend the directions of the EPFO and involve others like the student community and the University in the matter. Do not pay the amount as demanded.

Regards,

Madhu T.K.