Employee Provident Fund: An Ultimate Guide on its Registration Process

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EPF stands for the Employee Provident Fund. It is a scheme governed and administered by a body named the Employee’s Provident Fund Organization (EPFO) established under the Employee’s Provident Funds & Miscellaneous Provisions, Act 1952. Further, the Employee’s Provident Fund Organization is the largest social security organization with a large number of financial transactions happening. EPF (Employee Provident Fund) is a type of privilege or benefit availed by the employee on his or her retirement in the form of a Provident Fund.
Under the Employee’s Provident Funds & Miscellaneous Provisions, Act 1952, both the employee and employer are obligated to contribute equally to 12 per cent of the employee’s basic salary to the EPF account.  Further, one of the most significant advantages or the benefit of an EPF account is that regardless of changing jobs, the EPF (Employee Provident Fund) number remains the same. Furthermore, those organizations which are occupying more than 20 employees have to mandatorily apply for online EPF registration under the Employees Provision Scheme.

What is the Applicability of the online Employee Provident Fund Registration?

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Obtaining EPF registration is applicable to the following establishments –

  1. Any Establishment employing 20 or more employees any time during the previous year
  2. Any factory engaged in any industry employing 20 or more employees any time during the previous year.
  3. Any Establishment or Organization, which has received two months notice from the Central Government, needs to compulsorily apply for the EPF registration upon the receipt of the notice irrespective of their employee strength. 

Who all are exempted from obtaining online EPF Registration?

The Employee Provident Fund (EPF) is maintained and administered by the EPFO (Employee Provident Fund Organization).  Generally, any organization having the employee strength of above 20 employees is mandatorily required to register itself with the EPFO.  However, in the case where an organization is having the employee strength of less than 20 employees is exempted from maintaining an EPF account.

What are the Benefits of online Employee Provident Fund Registration?

Following are the Benefits of online EPF Registration – 

  1. Both the employer and employee contributions to the Employee Provident Fund. Further, the employer concerned also adds his contribution that is inclusive of the EPS (Employee Pension Scheme)
  2. Employee Provident Fund (EPF) acts as financial support to the concerned employee at the time of his retirement, illness, disability, demise or any other risk of similar nature.
  3. EPF account of an employee is not required to be closed, in the case where the employee changes his job, as the same account can be easily carried forward.

How is the concept of EPF different from EPS?

In India, both EPF and EPS are government based schemes, which are initiated to help individuals in saving money for their old age. Following are the points which differentiate the concept of Employee Provident Fund from Employee Pension Scheme –

Point of Difference EPF EPS
Contribution by the Employee 12 per cent Not Required
Contribution by the Employer 8.33 per cent 3.67 per cent
Deposit Limit Predetermined Fixed Rate Maximum – Rs 1250
Full-Form Employee Provident Fund Employee Pension Scheme
Age Limit for Withdrawal  No as such prescribed age limit A minimum service period of ten years and fifty years of age for an early pension.
Interest Rate 8.65 per cent p.a. for the FY 2019-2020 No interest rate is applicable

 

How can the Employee Provident Fund be calculated?

Given below is an illustration of EPF calculation presuming that the basic salary and DA (Dearness Allowance) of the individual are Rs 25,000 – 

  1. Basic Salary + Dearness Allowance = Rs 25,000
  2. Employee’s contribution towards the Fund (12% of Rs.25,000) = Rs 3,000
  3. Employer’s contribution towards the Fund (3.67% of Rs.25,000) = Rs 917.50
  4. Employer’s contribution towards the Fund (8.33% of Rs.25,000) = Rs 2082.50
  5. Employer’s contribution towards the Fund on Rs 15,000, which is the ceiling income (3.67% of Rs.15,000) = Rs 1249.50
  6. Excess amount of contribution made by the employer (Rs 2082.50 – 1249.50) = Rs 833
  7. Total monthly contribution towards the Fund (Rs 917.50 + Rs 833) = Rs.1750.50
  8. The total amount of contribution made by both the employee and employer per month = Rs 4,750.50, which is rounded off to Rs Rs.4,750 

What are the Types of Employee Provident Fund Prevailing in India?

In total there are three types of Provident Fund prevailing in India –

  1. Statutory Provident Fund – It is a provident fund registered under the Provident fund Act, 1925. This type of Provident is also known as the Government Provident Fund. Further, this fund is only meant for the Government or the Semi-Government employees, university or any educational institutions affiliated to a university established under the statue or any other specified institution.
  2. Public Provident Fund – Public Provident Fund is covered under the Public Provident fund Act, 1968. Any individual or member of the public whether he is employed or not can invest in PPF. Further, the minimum contribution required for this fund is Rs. 500 and the Maximum amount is Rs 1, 50,000 per year. Furthermore, the contributions made to the scheme together with the interests are repayable only after a period of 15 years unless extended. Lastly, the present rate of interest under the scheme is 8 per cent per annum.
  3. Recognized Provident Fund – This Scheme is registered under the Employee’s Provident Funds and Miscellaneous Provisions Act, 1952. As per his act, any organization that is having the employee strength of 20 or more employees is under an obligation to register itself under this Act. Further, any organization or factory or establishment can register itself by its own choice even when it had less than 20 employees.
  4. Unrecognized Provident Fund – The Provident Fund, which is not recognized by the Income Tax Commissioner is known as the Unrecognized Provident Fund.

What are the Documents Required for the EPF Registration?

Following are the set of documents required for obtaining EPF Registration

  1. Documents Required from the Company or Employer
  • Company’s Certificate of Incorporation
  • Address Proof for the Registered Office in the form of the property papers, possession letter, rent agreement
  • Memorandum of Association (MOA)
  • Article of Association (AOA)
  • Director’s Identity Proof in the form of the PAN Card, Aadhar Card
  • Director’s Address Proof in the form of the Passport, Voter ID Card
  • Details of the Company
  • GSTIN (Goods and Service Tax Registration Number) of the company 
  • Director’s Digital Signature Certificate
  • Director’s Director of Identification Number
  1. Documents Required from the Employee
  • Employee’s Name
  • Employee’s Date of Birth
  • Employee’s Postal Address
  • Employee’s Father Name
  • Employee’s Joining Date
  • Employee’s Contact Number
  • Name of the Employee’s Nominee
  • Employee’s Designation
  • Employee’s Salary
  • Employment Agreement
  • Voluntary Application
  • Bank Account Number together with the IFSC Code
  • Any other details, if required
  1. Additional Documents required for obtaining EPF Registration in India
  • Transaction Bill of the Company’s first sale
  • Transaction Bill of the Company’s first purchase of  raw materials
  • Salary statement together with the provident fund
  • Cancelled cheque
  • Balance Sheet
  • Monthly record of the employee strength 

What is the Procedure for Obtaining EPF Registration in India?

Following are the steps required in the procedure for obtaining the EPF registration in India – 

  1. Employer’s Registration – First step is to apply online on the official website of the EPFO (Employee Provident Fund Organization) https://www.epfindia.gov.in/ by clicking on the option of “Establishment Registration”. Now, complete all the required details of the employers such as the establishment’s name, establishments’ address, details of the owner or the employer, PAN card details of the employer, etc.
  2. Verification through One Time Password (OTP) – Once the online form is duly completed and submitted, the applicant will now receive an OTP (One Time Password) Pin on his registered mobile number and email id, which shall be used to verify and activate establishment login.
  3. Establishment Login – Once the process of employer registration is duly completed and verified, the applicant can now log in with the credentials provided for completing the details and particulars of the Establishment. 
  4. Digital Signature Certificate (DSC) Registration: After the process of establishment registration is complete, the applicant now needs to apply online for the Digital Signature Certificate by choosing the option of “DSC or E-Sign” from the drop-down menu. Further, the Digital Signature Certificate (DSC) is registered for the authorized signatory on behalf of such organization or establishment.
  5. Registration Certificate – Once the process of registration is duly completed, the department issues the certificate for EPF registration in form V containing the UIN (Unique Identification Number).
  6. Update KYC for every employee – Once the registration is complete and form V is duly allotted, the applicant shall now update the KYC (Know Your Customer) of every employee by uploading his or her Aadhar card details, bank statement details and other required particulars for the generation of Universal Account Number (UAN) of its employee.
  7. Common Registration – Organizations that are willing to get themselves registered under both EPF and ESI scheme, can now by way of common registration facility available under which the organization can get the ESI Code number and EPF Code number by just filling the single application.

Universal Account Number (UAN)

Once the establishment of the concerned organization is registered in the Employee Provident Fund Organization (EPFO) portal, it shall immediately update the KYC (Know Your Customer) documentation of its employees for the generation of UAN (Universal Account Number). Further, every employee can now use its UAN number to claim his provident fund, online transfer of PF to the bank account, etc. Hence, it is required for an employee to activate UAN (Universal Account Number) through the following procedure – 

  1. An employee can visit online for the activation of its Universal Account Number on the EPFO’S official website.  
  2. Next, step is to complete the required details such as the Member Id, UAN, Aadhar card number, PAN card number, etc
  3. After that, fill in all the required details and particulars such as the name, contact details, address and lastly complete the form by filling the captcha shown on the screen
  4. After completing all these details, the employee will get an OTP PIN on his registered mobile number with UAN.
  5. Lastly, the employee shall check the box saying “I Agree” and then validate the OTP (One Time Password) for activating UAN.

Mandatory Compliance for an Establishment registered with the EPFO

Once the establishment is registered with the Employee Provident Fund Organization (EPFO), it shall comply with all the certain mandatory provisions monthly and annually as prescribed under the act –

  1. Needs to file online Monthly return by way of the establishment login and by uploading the ECR sheet.
  2. Return is to be filed online by the 15th of succeeding month.
  3. ECR sheet can now be downloaded by way of EPFO in the XML (Extensible Markup Language) sheet that includes name and UAN (Universal Account Number) of every employee registered with the establishment or organization during the month for which the return is filed.
  4. XML (Extensible Markup Language) sheet shall then be converted into a Comma-dilemma file for the purpose of uploading the same for return filing.
  5. Lastly, complete the return filing by contributing to the online payment gateways.

Rate of Contribution

Rate of contribution for the Employee Provident Fund varies as per the number of employees employed in an establishment –

a) For establishment hiring employees 20 or above:

Both the Employer and employee of such establishment or organization shall contribute up to 12 per cent of the employee’s basic salary (Basic wages + Dearness allowances)

b) For establishment hiring less than 20 employees:

Following are the establishment that shall contribute at a rate of 10 per cent of the employee’s basic salary in spite of 12 per cent –

  1. An establishment or organization having employee strength up to 10 employees and opts for the voluntary registration under EPFO
  2. Any establishment or organization that has incurred loss during the previous financial year
  3. Any other establishments or organizations such as the Jute Factory, Brick Factory, Beedi making factory, etc.

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