PF Registration for Employers

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The Employees’ Provident Fund serves as a social security scheme for salaried employees. It inculcates and encourages the practice of saving employees so that they have money to fall back on in the future. As per Indian laws, all eligible companies must offer their employees an option for PF registration. The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 governs the operation of such organisations. In this article, we will take a look at the importance of PF registration, and why you need to do so.

What is the Eligibility criteria for PF Registration in India?

To be eligible for PF Registration, any business will have to meet the following criteria:

 

  1. Factory employing over 20 people

  2. Establishment employing over 20 people with the Central Government defining the firm’s class 

  3. An establishment with less than 20 workers but has been asked to undergo compulsory PF registration for at least two months

  4. Companies with less than 20 employees, if they wish, may join the program after notifying the appropriate organisation

  5. EPF registration is also compulsory for all employees who receive less than INR 15,000 in a month.

 

Both the employer and employees have to apply for PF registration in case it is voluntary. The application goes to the Central PF Commissioner, and if the request is accepted, they notify the Official Gazette regarding the date of the agreement. All employees will be eligible for PF registration from the start of their employment, and the responsibility of contributing and deducting to the fund falls on the employer. 

 

PF Contribution

 

All employees who are eligible for PF registration and the employer must contribute a particular percentage of their salary to the fund every month. These contributions must occur regularly, and defaulting on them may lead to fines and penalties. The money collected through these deductions then forms a sort of retirement fund or investment, which will be handed back to the employee when they retire or switch jobs. The interest rate for the year 2019-2020 stands at 8.5%, and the money accumulated in the PF account is liable for 100% tax exemption. The minimum contribution allowed by an employer is 12% of 15,000, which comes to INR 1800 every month. 

 

The rate of contribution to business places that hire over 20 employees is as follows:

 

  1. Employer’s contribution rate: 12% of Basic salary + Dearness allowance

  2. Employee’s contribution rate: 12% of Basic salary + Dearness allowance

  3. Out of the employer’s contribution, 8.33% go into the Employees’ Pension Scheme while the remaining 3.67% goes into an EDLI account. 

 

The rate of contribution in business places that hire less than 20 employees is as follows;

Contribution rate: 10% of Basic salary + Dearness allowance


Withdrawing the EPF Amount

When an employee retires at 55, they have the option of withdrawing their cumulative EPF account balance. At this point, they will also be eligible to receive their employer’s contribution to their share of the fund. If the employee switches jobs before retiring, then they have the option to withdraw the full amount if they don’t find employment for more than 60 days. While the process of PF withdrawal was complicated and offline in the past, the entire system has been moved online recently to facilitate faster processing. Additionally, under the EPF scheme, employees are assured a minimum pension amount of INR 30,000.

 

What are the benefits of PF Registration?

 

  1. Pension Coverage: Since the employer provides one-half of the PF amount, PF registration can help employees save a robust pension for life after retirement. 

  2. Risk Coverage: The PF helps employees out during times of need, such as illness, retirement, and demise, helping to lower the overall financial risks an employee faces.

  3. Single Account: Since the PF registration is a one-time process, the employee’s account gets transferred whenever they switch jobs. 

  4. Efficient process: The entire process is straightforward and easy as it only requires the Universal Account Number from the applicant’s Aadhaar card. This number will help the officials complete the linking ensuring uniformity.

  5. Emergency Fund: PF registration helps employees prepare for personal emergencies by helping people cope with illnesses, educational expenses, and other immediate troubles. 

  6. Insurance Scheme: PF account holders can also avail of an insurance scheme that takes only 0.5 % of the salary as a premium.

  7. Long-term Goals: PF registration helps employees meet their long-term objectives and goals, such as buying a house or paying for their children’s college. 

 

How to check the balance in PF account

Individuals who have registered with the UIDAI or UAN portal can check their EPF details by giving a missed call to the following number from their registered mobile number –

011-22901406. However, for this to work, the same number must be linked to the user’s UAN portal, EPF portal, and bank account. Members who have registered with the portal and check their PF account balance by sending an SMS from their registered mobile number to the following number- 7738299899.

 

What is the process of PF Registration in India?

  1. Collect relevant information regarding your employees

  2. Make sure you obtain all the required supporting documents

  3. Contact an establishment that works for the EPFO.

  4. Obtain a DSC to authorise your documents.

  5. Fill out an application form, submit the required documents, and pay the necessary processing fees.

 

EPF Forms

  1. Form 31: For the partial withdrawal of employee’s EPF fund

  2. Form 19: For the full withdrawal of the EPF fund

  3. Form 10C: For willing withdrawal of pension amount from EPS

  4. Form 10D: For helping employees claim a monthly pension

  5. Form 11: For EPF Account Transfer

 

Documents required for PF Registration in India

  • Business PAN card 

  • Certificate of incorporation

  • Cancelled cheque 

  • Office address proof which may be any of the following:

 

  1. Rent agreement

  2. Water Bill

  3. Electricity Bill

  4. Telephone bill

  5. Gas bill or property tax receipt

 

  • Specimen signature of all directors 

  • The digital signature of the applicant

  • For voluntary PF registration, an affidavit stating the consent of the majority of employees

  • First sale bill and raw material purchase bill 

  • GST Registration Certificate

  • Bank details

  • Record of monthly employee strength

  • Register of salary and wages paid to employees

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