What is Employees' Provident Fund or EPF?

The Employee Provident Fund is a fund designed for retirement benefits to the working class of India. Is overseen by the Employees Provident Fund Organisation (EPFO). It aims to support the stability of the salaried class, in India during their retirement or unexpected circumstances, like resignation or loss of life. 

Overview of the Employees’ Provident Fund

The Government of India introduced the Employee Provident Fund in 1952 which was constituted under the Employees' Provident Fund and Miscellaneous Act, 1952. The Employee Provident Fund Organization (EPFO) established under the Ministry of Labour and Employment, Government of India is the body responsible for the regulation and administration of EPF.

The primary goal of the EPF program is to motivate workers to save for their retirement and improve their circumstances post-retirement. Under EPF, employers of the company also need to deposit their portion into the fund as a way of recognising their contribution, to the company

In this scheme both the employer and employees allocate a part of the employee's wages to the EPF account which increases and builds up with interest over time and can be accessed upon retirement resignation or passing away Subscribers to EPF also have the choice to partially withdraw for reasons such, as building a funding children's higher education marriage, and medical costs linked to sickness. 

Today many employees are utilizing EPFs for tax benefits as the total amount invested in an EPFO account is considered deductible when calculating income tax liabilities.

Importance of EPF Registration for Employers

EPF contribution is mandatory for an employer with 20 or more employees. The employer must deduct PF from employees' salaries and contribute their share. Remittances are processed only after employers generate challans through EPFO portal, making the EPF Registration process important. 

Post-Retirement: Upon retiring permanently, most employees become helpless as they no longer have a fixed income. EPF ensures employees' social security to manage their post-retirement activities. Also Withdrawals at maturity/beyond 5 years are also tax-free (except in case of premature withdrawal).

Tax Benefits: The interest earned i.e. up to 9.5% on the funds held in an EPF account is tax-free. The employee contribution to its PF Fund is allowed as tax deductions under Section 80C of the Income Tax Act and the employer's contribution to EPF is also eligible for a tax deduction as a business expense. This helps to reduce the taxable income of the employer.

Emergency: Certain unforeseen emergencies may require immediate financial assistance for employees such as unexpected health conditions, illness, mishap or other urgent situations. EPF Act allows beneficiaries to withdraw some part of their accumulated funds for such needs.

Events: Employees are also allowed to withdraw a portion of their funds for various events like marriage, house construction, child education, etc.

Employer Incentives: Employers gain credibility by providing PF benefits and it helps in retaining employees. 

Life Insurance Benefits: EPF offers the benefit of Employee Deposit Linked Insurance (EDLI), ensuring life insurance for employees without extra cost. 

Legal Compliance: By registering with EPFO, employers ensure compliance with labour laws.  

Applicability of EPF Registration for Employers

EPF Registration applies to businesses or establishments in India if -

In the case of a factory: Factory engaged in any industry specified in Schedule I and in which 20 or more persons are employed

In the case of other establishments: Establishments with 20 or more employees, or any class of such establishments that the Central Government may decide through a notification in the Official Gazette.

Such factories or establishments must apply for EPF registration within 1 month of reaching the minimum employee count. Once a business comes under this statute, it will continue to be covered by the law even if the number of employees goes below 20. For instance, in case a business is split among partners, the law will still apply to each partner, even though the strength is less than 20 employees.

If a business is split into smaller, independent businesses that do not have regular employees, it need not have to pay the same administrative charges as before. However, just for the law to apply, businesses should at least have one employer and employee.

For EPF, the employee and the employer contribute an equal amount, which is 12% (10% for the establishment having less than 20 employees) of the employee's salary. However, employees can contribute more than 12% of their salary voluntarily. In such a case, the employer is not bound to match the extra contribution of the employee.

While the entire contribution from an employee is directed towards his/her provident fund, a part of the employer's contribution goes towards a pension (8.33% - for an employee whose age does not cross 58 years), provident fund (3.67%), insurance (0.5%) and also administration costs (0.5%)

Contribution towards pension and insurance is to be paid on the maximum wage ceiling of Rs. 15,000/- even if PF is paid on higher wages and the balance contribution shall be contributed towards PF.

Employees getting more than  ₹15,000 can voluntarily contribute to EPF, however, they must get it approved by the Assistant PF Commissioner. 

NOTE: Central government can even extend the law to any businesses with less than 20 employees, after giving not less than two months' notice for EPF registration.

Furthermore, if both the employer and the majority of employees agree that the provision of this act must apply to their establishment, they must apply to the Central Provident Fund Commissioner. The Commissioner may decide to apply the provisions of the Act to such establishment through a notification in the Official Gazette from the Agreement date or as specified in the agreement.

How to Apply for EPF Registration Online

There is an online as well as offline option to register for EPF. The process to register for EPF for Employer is mainly in 5 steps · Step 1: Visit EPFO Portal · Step 2: Register & Login on USSP · Step 3: Fill in the EPFO Registration Form  · Step 4: Upload employees' consent letter · Step 5: Submit for Verification

Step 1: Visit EPFO Portal

Visit the official EPFO website and On the home page click on “Establishment Registration” button.

Step 2: Register & Login on USSP

Create an account on the USSP portal using your name, email ID, and phone number and verify your account using OTP.

Step 3: Fill up the EPFO Registration Form

Once the above process is done, the next is to log in using the registered credentials and click on "Apply for New Registration". This is followed by fill in the organisation details, address, PAN details, bank details, employee information and information of the authorised signatory. 

Step 4: Upload Required Documents

Upload the self-certified scanned copies of all the documents that are required to be submitted for registration. 

Step 5: Attach DSC

Click on the Digital Signature Button and attach the authorised signatory's DSC

Step 6: Submit the Form

Once the document and all the details have been filled in, the registration form can be submitted.

Verification & Approval: The provided details will be verified by EPFO and the registration will be approved. 

Obtain PF Code: Upon successful approval, the EPFO will issue a unique PF code to the organization. 

EPF Advance and Withdrawal Options

The EPF Scheme allows employees to withdraw some portion of their Provident Fund savings when they need extra financial support in the case of crisis or emergencies. The following are the allowable circumstances:

1. Employees can obtain non-refundable advances to pay Life Insurance Premiums.
2. Employees can withdraw funds to buy or build a home, including the land. They can also use it to complete or improve an existing home that they or their spouse started.
3. Employees can take a non-refundable advance if a factory or establishment temporarily closes (not due to a strike) for over 15 days or if wages are delayed for two months or more. However, if such closure lasts more than six months, only a refundable advance can be obtained.
4. For serious health issues that require long-term hospital stays, major surgeries, or illnesses such as tuberculosis, cancer, or heart disease, employees can take a non-refundable advance. This also applies to treatment for family members in similar situations.
5. Employees can take a non-refundable advance for family events like marriage (for yourself, children, or siblings).
6. Education expenses for children’s higher studies are also covered.
7. Withdrawals are permitted in certain cases to repay loans.
8. Physically handicapped employees can take a non-refundable advance to buy disability equipment that helps manage their disability.
9. If frequent power outages in the factory affect the employees' wages, he can obtain a non-refundable advance to assist in overcoming the situation.
10. Where the employee's property is damaged due to natural calamities such as flooding, earthquakes or civil unrest, they can obtain a non-refundable advance for repairing or reconstruction of damaged property.

These withdrawals and advances help employees access financial support during important life events and emergencies

UAN and EPFO Portal

UAN is a unique 12-digit number assigned to each employee contributing to the EPF. To sign in to the EPFO portal using your UAN, follow these steps:

1. Visit the official EPFO Member Portal.

2. In the login section, enter your UAN received from your employer. 

3. Now type the password during the UAN activation process. 

4. Enter the captcha code shown on the screen. 

5. Click the ‘Sign In’ button to access your EPF account. 

EPF Penalties for Non-Compliance

Employers who fail to comply with EPF regulations may face:

1. Fines: EPF Penalties ranging from ₹5,000 to ₹25,000 depending on the severity of non-compliance. 

2. Interest on Late Payments: Employers who delay EPF contributions are liable to pay interest.

3. Legal Action: Continued non-compliance can result in legal proceedings from the EPFO.