Provident Fund Rules and acts. Must know things about Employees Provident Fund Scheme.
The Provident fund is a saving scheme which was started for Indian citizens throughout world through provident fund establishment in India. Scheme enables fund accumulation as well as interest on amount accumulated. Fund collected by employee for himself/herself and employer.
A universal account number (UAN) system was established in October 2014. This provides account portability of fund from one employer to another in case if there any switching of jobs. 12 digit number is generated by UAN.It is also very helpful in keeping a detailed record of account and enables centralized origin so as to conduct any or other additional purposes that are related to fund account.
Check our provident fund Rules
A Provident fund is contributed by both employers and employees. Only some portion of an employer contribution goes to fund and some portion goes towards pension scheme. current division of fund has been mentioned below
- 12% of salary portion of employees goes towards contribution to fund
12% of salary of employer is divided into following portion
- 67% of contribution goes to provident fund
- 1% of contribution goes towards EPF administration charges
- 5% of contribution goes towards employees linked deposit insurance
- 01% of contribution goes to toward EDLI charges of administration
- 33% of contribution goes toward pension scheme
Rules governing employee provident fund have undergone many changes over years and accordingly to exclusion and inclusion of employees as per rules also change. According to most recent changes made on rules, one should keep following in mind
Simple Steps to manage and learn about Provident Fund Rules
- Revision made on minimum salary amount – earlier, having a salary below INR 6500 monthly person should be required to contribute toward fund. amount was now revised to INR 15000. Therefore, employees with salaries less or equal to that amount are required to contribute towards fund
- Changes made to pension amount – minimum pension amount has now been placed at INR 1000 for a widow of a provident fund member. For orphan and children it has been fixed at INR 250 and INR 750 respectively per month. Therefore, pension henceforth will be calculated as per salary average for last 60 months in place of 12 months.
- Insurance coverage – initial required coverage under pension scheme was INR 300,000 per one member
- Change in limit of threshold – minimum on employees number was reduced to ten of them who are to be employed so that organization is required to pay some salary percentage to fund
- Withdrawals – withdrawals from account can be made through use of claim forms for different purposes such as insurance policy and buying of building houses
Rules are important because it ensures that people are acting as one force.