Seeking Clarity on EDLI and Admin Charges: Is There a Recent Notification or Amendment?

After a long study of articles available on Cite-HR and other sites, it is concluded that the applicability of Admin charges and EDLI are as follows:

Types of Wages or Bifurcation of Wages

1. Wages for EPF Contribution (Total wages including higher rates above ₹6500/-).
2. Wages for EDLI/EPS Contribution (Total wages-ceiling @₹6500/-).

My Viewpoint

1. A/c No. 21 EDLI - 0.5% of wages subject to ceiling calculation of @₹6500/- or can be said on the number 2 type wages called Wages for EDLI contribution.
2. A/c No. 22 - 0.01% --------------do------------

If the above is correct, is there any latest notification from the department that supports/clarifies it? My base confusion is the payment of EDLI charges on which total wages mentioned in the challan on Admin charges (A/c 02) payable or on the ceiling amount up to a total of @₹6500/-? I need a notification/order that specifically shows it or mentions any amendment.

It has already been mentioned in the principal act itself that the calculation of the EDLI Contribution is imposed on the employer. The amount of the contribution is calculated based on the maximum ceiling of Rs. 6,500 for EDLI at 0.5% of the basic salary, subject to the maximum salary taken into consideration for this head being Rs. 6,500.

As far as the question of A/c 22 is concerned, it is the administration charge to be paid by the employer for the administration of the EDLI account. The amount is calculated in accordance with your formula, subject to a minimum of Rs. 2 and based on the wages of the EDLI Account.

Regards

While thanking Govindsinghnegi for his input, I am providing some more insights on the exemption and its advantages for everyone's benefit, as follows:

Advantages of Employees' Deposit Linked Insurance Fund Scheme

Advantages to the Employer:

- The premium payable by the employer is usually less than the total contribution being paid to the R.P.F.C., especially when the salary level is high and the average age of the group is low.
- Settlement of claims is quicker; LIC requires only the death certificate and the Claim Form from the employer.
- Premiums paid by the employer are treated as normal business expenses for Income Tax purposes.

Advantage to the Employee:

- Each employee is covered for a sum assured ranging between 5,000 to 2,00,000 depending on the current salary and service from day one, irrespective of the actual balance in the Provident Fund. Alternatively, every employee/worker can be covered for a uniform sum assured, which will be decided based on the group size.

Accident Benefit:

- Double accident benefit can be allowed to the extent of the Sum Assured for an extra premium.

Steps to Introduce the Scheme:

- Put up a notice for the employees to inform them that you are opting for LIC's Scheme in lieu of EDLI.
- Apply to the Regional Provident Fund Commissioner under Sec.17 (2A) of the E.P.F. and M.P. Act 1952 to exempt you from the EDLI Scheme. The application should be accompanied by the prescribed requirements, including the Rules of the Proposed Group Insurance scheme. The Central PF Commissioner has authorized the R.P.F.C. to grant exemption from the 1st of the month in which the application for relaxation is submitted. LIC also offers necessary guidance to employers for seeking relaxation.

Exemption from the Employees Deposit Linked Insurance Scheme, 1976

- Section 17 (2A) of the Act provides for granting exemption from the operation of the Employees Deposit Linked Insurance Scheme, 1976. It is granted to an establishment where the employees, without making any separate contribution or payment of premium, enjoy benefits in the nature of Life Insurance, whether linked to their deposits in Provident Fund or not, and such benefits are more favorable than those admissible under the Insurance Scheme. It is granted by the Central Provident Fund Commissioner by notification in the official gazette and is subject to conditions that may be specified in the notification. It is granted either prospectively or retrospectively.
- Pending the grant of exemption to an establishment, a relaxation order may be issued under Para – 28 (7) of the Employees Deposit Linked Insurance Scheme, 1976.
- An establishment exempted from the operation of the Employees' Deposit Linked Insurance Scheme, 1976 is required to submit a monthly return to the Regional Provident Fund Commissioner by the 25th of the month in Form 7(IF).
- Para 28 (4) of the Scheme provides for granting exemption by the Central Provident Fund Commissioner to any class of employees.
- Under Section 17 (2B) read with Para – 28 (1) of the Employees' Deposit Linked Insurance Scheme, 1976, the Regional Provident Fund Commissioner may grant exemption from the operation of all or any of the provisions of the Employees' Deposit Linked Insurance Scheme to an employee.
- The establishment shall pay inspection charges at the rate of 0.005% of the basic wages and Dearness Allowance, subject to a minimum of Rs.1/- per month.

Regards

Please find below the example to understand the calculation of PF, EPS, and EDLI:

Consider an employee getting a basic salary of ₹7500.

• **Contribution Towards Calculation Amount:**

- **A/C 1. EPF Employees Share:** ₹7500 x 12% = ₹900 + EPF Employer Share ₹6500 x 3.67% = ₹239
- **A/C 10. EPS Employer Share:** ₹6500 x 8.33% = ₹541 + 1.16% contributed by the Central Government
- **A/C 21. EDLI Charges:** ₹6500 x 0.5% = ₹33
- **A/C 2. EPF Admin Charges:** ₹6500 x 1.1% = ₹72
- **A/C 22. EDLI Admin Charges:** ₹6500 x 0.01% = ₹0.65 (Round up to ₹1)

In case the employer takes insurance from any other company, then A/C 21 charges would be Nil, and A/C 22 charges would be 0.005% applicable. Once we take the EDLI exemption from LIC or any other, then it is applicable for three years, after that, we need to renew the same.

10% contribution in the case of any establishment in which <20 employees are working. Sick Industries (Declared by BIFR) Any establishment in the Jute, Beedi, Brick, Gum industry.

Dear Shri Akhil Gupta Ji,

With due respect to you, Sir, I would like to make certain corrections as follows:

1. A/c. 22 EDLI Admin. Charges minimum payable is Rs. 2/- and not Re. 1/-.
2. In case the employer contributes towards the insurance scheme in lieu of EDLI, then A/c 21 and A/c. 22 charges would be Nil. Inspection charges are payable at 0.005%.
3. The rate of contribution at 10% is applicable only to establishments covered prior to 22.9.97 in which fewer than 20 persons are employed. (Sick units and establishments in the Jute, Beedi, Brick, and Gum industry - the rate of contribution at 10% as stated by you.)

Thank you.

Dear Akhil, as far as we are doing, Rs 541 (6500*8.33) will go. The rest amount (7500*12-541) = 900-541 = 359 will go as an employer contribution in EPF.

Regards,

Sudhir Tiwari

1. This is a scenario where the salary of the employee is more than Rs. 6500. The employer does not want to contribute more than Rs. 6500 as per Para 26A(2) of the PF Scheme. In such a scenario, the following method may be adopted to pay their contributions.

2. In the second scenario where both the Employee and Employer are willing to pay contributions on more than Rs. 6500/-, Mr. Sudhir Tiwari is correct.

3. Mr. KA, thank you for the correction.

Example of PF, EPS, and EDLI Calculation

Consider an employee receiving a basic salary of ₹7500. The contribution towards the calculation amount is as follows:

- **A/C 1. EPF Employee's Share:** ₹7500 x 12% = ₹900
**EPF Employer's Share:** ₹6500 x 3.67% = ₹239

- **A/C 10. EPS Employer's Share:** ₹6500 x 8.33% = ₹541 + 1.16% contributed by the Central Government

- **A/C 21. EDLI Charges:** ₹6500 x 0.5% = ₹33

- **A/C 2. EPF Admin Charges:** ₹6500 x 1.1% = ₹72

- **A/C 22. EDLI Admin Charges:** ₹6500 x 0.01% = ₹0.65 (Rounded up to ₹1)

**Note:** If the employer takes insurance from another company, then A/C 21 charges would be nil, and A/C 22 charges would be 0.005% applicable.

**EDLI Exemption:** Once we take the EDLI exemption from LIC or any other company, it is applicable for three years, after which we need to renew it.

**10% Contribution in Specific Cases:**
- Any establishment with fewer than 20 employees.
- Sick industries (Declared by BIFR).
- Any establishment in the Jute, Beedi, Brick, or Gum industry.

I believe admin charges are applicable on wages including higher contributions, calculated as ₹7500 x 1.1% instead of ₹6500 x 1.1%.

Regards.

Dear HR Manager, you are absolutely correct. Administrative charges on PF are calculated based on the salary on which PF is deducted.

I would like to make a certain correction. A/c. 22 EDLI Admin. Charges minimum payable is Rs. 1/- and not Rs. 2/-; since it is calculated as Basic + DA (max. 6500) * 0.001%.

Regards,
Sudhir Tiwari

Yes, Admin charges are applicable on wages, including a higher contribution of 7500 X 1.1%, instead of 6500 X 1.1%.

Regards,
Sudhir