How Will the New Administrative Charge Reductions Impact Your Business Costs?

Please find enclosed a copy of the above-said Order/notifications issued by the Ministry of Labour & Employment for information and necessary action.

1. The notifications may be applicable from 1st January 2015.
2. 0.85 percent (zero point eight five percent).
3. A minimum sum of seventy-five rupees per month for every non-functional establishment having no contributory member and five hundred rupees per month per establishment for other establishments.
4. The amount of administrative charges payable by the employers shall be subject to a minimum of twenty-five rupees per month for every non-functional establishment having no contributory member and two hundred rupees per month per establishment for other establishments.

Thanks and Regards,

Sumit Kumar Saxena

Understanding Contribution Changes

I do not understand the actual changes. Please give me an example of both A/c Contribution of a functional establishment having contributory members and a non-functional establishment having no contributory members.

Furthermore, I have submitted my filing.

For one establishment, the basic wages are $7000.00:
- A/c 1 = $840 + $257 = $1097.00
- A/c 2 = $75.00
- A/c 10 = $584.00
- A/c 21 = $35.00
- A/c 22 = $25.00
Total = $1816.00

For one establishment which is a non-functional establishment having no contributory members:
- A/c 2 = $500.00
- A/c 22 = $200.00
Total = $700.00

In respect of 5+2 = $7.00

Regards,
Abhishek Sani

[Phone Number Removed For Privacy Reasons]

The correct calculations are as follows:

- One establishment's basic wages are 7,000.00.
- A/c 1 = 840 + 257 = 1,097.00
- A/c 2 = 500.00
- A/c 10 = 584.00
- A/c 21 = 35.00
- A/c 22 = 200.00
- TOTAL = 2,416.00

For non-functional establishments where no contributor exists, A/c-2 is Rs. 75/- and A/c 22 is Rs. 25/-.

Thank you.

FROM: DAYANAND [Phone Number Removed For Privacy Reasons]

Notification Analysis: Administrative Charges Hike

Who says it's reduced? Please read the Notification dated 2.2.2015 carefully. The reduction of percentage is just an eyewash.

Effective from 1.1.2015, the minimum administrative charges under Account II for non-functioning establishments/factories shall be Rs. 75 per month (a 1,500% hike) from the current Rs. 5 per month. For operational establishments/factories, the minimum administrative charges shall be Rs. 500 per month, up from Rs. 5 per month. This represents a 10,000% increase in minimum administrative charges.

Under the EDLI Scheme, the current minimum administrative charges are Rs. 2 per month, which will increase to Rs. 25 per month (a 1,250% hike) for non-functional establishments/factories. For operational establishments/factories, it will increase to Rs. 200 per month from the current Rs. 2 per month, marking a 10,000% increase.

Reducing PF administrative charges from 1.1% to 0.85% is just an eyewash, and you all must ask your clients to protest this through appropriate forums such as FICCI, IMC, AHAAR, CII, etc., to represent such a 10,000% hike in minimum administrative charges. It's not at all acceptable.

For those availing services from EPFO, their administrative charges are reduced, whereas for those not availing services (non-functional), their charges are drastically increased.

At least for non-functional establishments/factories, it must be reduced to Rs. 10 per month and not Rs. 75 per month since they are already ailing and do not have any source of revenue.

Employees of non-functional companies withdrawing their PF is not the employer's problem. Hence, why should the employer be penalized by being asked to pay Rs. 75 per month (under Account II) and Rs. 25 per month (under Account XXII) since in the case of non-functional establishments/factories, there shall not be any employees in the company? Those who have left will not be able to avail any benefit under the EDLI Scheme since EDLI benefits are given to employees if they die while in service and not otherwise. Hence, where is the question of paying Rs. 25 per month?

It's daylight robbery.

Please take up this issue with your clients and start a movement to challenge it before the appropriate forum.

Hope you all will agree with my opinion.

Your calculation should be for filing like this:

Establishment with Basic Wage of 7000.00

- A/c 1 = 840 + 257 = 1097.00
- A/c 2 = 500.00
- A/c 10 = 584.00
- A/c 21 = 35.00
- A/c 22 = 200.00
- **TOTAL = 2416.00**

Non-Functional Establishment with No Contributory Member

- A/c 2 = 75.00
- A/c 22 = 25.00
- **Total = 100.00**

In respect of 5 + 2 = 7.00.

Thanks,

Rama Mohan CH