Client: Fuevation Technology Solutions Private Limited

Year Ended: 31 March 2021

Audit Area: Employee Compensation
Sub Audit Area: PF

Applicability of THE EMPLOYEES' PROVIDENT FUNDS AND MISCELLANEOUS

PROVISIONS ACT, 1952

As per provisions of section 1(3) subject to provisions of section 16, it applies -

(a) to every establishment which is a factory engaged in any industry specified in
Schedule I and in which twenty or more persons are employed, and

(b) to any other establishment employing twenty or more persons or class of such
establishments which the Central Government may, by notification in the Official
Gazette, specify in this behalf:

Provided that the Central Government may, after giving not less than two months‟
notice of its intention so to do, by notification in the Official Gazette, apply the
provisions of this Act to any establishment employing such number of persons less
than [twenty] as may be specified in the notification.]

Statutory rates of employer and employee contribution

Generally
Employee contribution share classification as follows:
1. Employee Share is 12% of salary(Basic salary + Dearness allowance) = minimum
2. Any other contribution over and above the 12% is the voluntary provident fund.

Employer contribution share classification as follows:

1. Pension Scheme 8.33% of salary which is less than Rs. 15,000.
2. Provident fund 3.67% of salary which is less than Rs. 15,000.
3. Provident fund 12% of salary which is more than Rs. 15,000.
4. Contribution to EDLI 0.5% of salary.
5. EPF Adminstrative Charges 0.5% of salary.

Here Salary = Basic salary + Dearness allowance

10% PF rate is applicable for:

(I) Any establishment in which less than 20 employees are employed.
(II) Any sick industrial company and which has been declared as such by the
Board for Industrial and Financial Reconstruction
(III) Any establishment which has at the end of any financial year, accumulated
losses equal to or exceeding its entire net worth and
(IV) Any establishment in following industries:-
Jute
Beedi
Brick
Coir
Guar gum Factories.
Read comment
Here Salary = Basic salary + Dearness allowance

Notified vide SO 1513 (E) dated 18.05.2020

for May, June and July 2020 month
1. Employee Share is 10% of salary(Basic salary + Dearness allowance) = minimum
2. Any other contribution over and above the 10% is the voluntary provident fund.

Employer contribution share classification as follows:

1. Pension Scheme 8.33% of salary which is less than Rs. 15,000.

2. Provident fund 1.67% of salary which is less than Rs. 15,000.

3. Provident fund 10% of salary which is more than Rs. 15,000.

4. Contribution to EDLI 0.5% of salary.

5. EPF Adminstrative Charges 0.5% of salary.

Here Salary = Basic salary + Dearness allowance

Due date for payment of contribution towards provident fund

Provident fund payments are due on 15th of next month.

Provided further that where no such deduction has been made on account of an
accidental mistake or a clerical error, such deduction may, with the consent in writing
of the Inspector, be made from the [subsequent] wages.

Consequences of late deposit of contribution towards PF

Under section 7Q an interest of 12% Per annum, is
Interest for
levied on employer every day in case of failure to
late payment:
deposit the EPF Contribution before the deadline.

Penalty for late Under section 14B, the following penalties need to be
payment: incurred in case of failure of EPF Challan payment
For delay upto2 months 5%
For delay of 2 - 4 months 10%
 For delay of 4 - 6 months 15%
For delay of more than 6 months 25%

TAX of EPF
EPF deposits and interest was completely exempt from tax until the year 2020. However, in Budget 2021, the government has
2.5 Lakh in a financial year, then the interest earned on the contributions above Rs. 2.5 Lakh will be taxable. i.e. it will be adde
In case no contribution is made to the EPF account by the employer, then interest component will be exempt up to the deposi

& also TDS u/s194A @ 10% will be deducted

So suggestion is that EE shoukd explore other investment option & should try to refrain from contributing in excess of 250000

How can I pay EPF online?

EPF online payment can be made either on the official website of EPFO or directly through authorised net banking acconts of u

How long a member can retain his Provident Fund in his account? Ans : The membership can be retained till the withdrawal of

UAN enables linking of multiple EPF Accounts (Member Id) allotted to a single member
All employees with wages upto Rs 15,000 required to join the Fund
Accumulations payable on retirement, resignation, death.
Partial withdrawals permitted for financing life insurance policies; Acquiring house or site; Marriage of self or dependents; Edu

UAN ALLOTMENT & ACTIVATION

• EPF members in respect of whom at least one contribution is received in or after Jan-2014  UAN is allotted by EPFO
• EPF members not having UAN & no contribution received in or after Jan-2014  can request EPFO to allot UAN.
• Any citizen (whether EPF member or not) can request for UAN  UAN is allotted by EPFO
• UAN holder can register his/her mobile with EPFO for UAN activation
• UAN holder has the option to change the mobile number linked with his/her UAN

CORRECT UPDATED INFORMATION ABOUT MEMBERS’ EPF ACCOUNT

• Post Activation member receives SMS about credits/debits to their EPF account.
• Members can give a missed call to get details about their PF account.
• Members can download EPF mobile app to track their EPF account.
• Members may list all existing EPF accounts – EPFO would facilitate consolidation of all accounts.

UAN ENABLED MEMBER SERVICES

-->In case of Aadhaar enabled UAN, members can submit their claims directly with EPFO
-->Online applications for all EPFO services.
-->No need to go to the employers for claims attestation.
-->Especially useful for EPF members who change their jobs and/or locations frequently.
-->Members can themselves download UAN Card.

Mmebers request UAN from Current Employer

Activate the UAN; (Visit UAN Members e-sewa on http://uanmembers.epfoservices.in)
Provide requisite KYC details (Aadhaar, Bank Account details & PAN)

MEMBERS ALREADY HAVING A UAN

• On joining any new establishment provide the same to new employer.
• IF KYC not provided to previous employer, provide the same to new employer.
• If KYC provided to previous employer give the same to new employer.
• This will facilitate auto-transfer of previous EPF account.
 Acha dekh ab….std wages(basic+DA) hai applicability dekhne ke liye…ki pf applicable or not…if it is upto
15000.

MISCELLANEOUS

on 16, it applies -
ny industry specified in
employed, and

persons or class of such

tification in the Official

t less than two months‟

ial Gazette, apply the
number of persons less
fication.]

owance) = minimum
ntary provident fund.

00.
0.
or EE share minus row 30 wala amt.
.

wance

re employed.
lared as such by the
cial year, accumulated

Administrator:
What he did that first of all
he added standadr basic +
Std. DA then he considered
Actual days for which EE will
get salary… then he
computed PF wali salary
Administrator: from standard & actual days
wance Basic + DA+Basic arrear AND also he added Arrerar
+ DA Arrear……maximum in that.
ye chijjen aa skti hai

owance) = minimum
ntary provident fund.

Applicability of this notification on all establishment

follows:
except
an Rs. 15,000. a) Central and State Public Sector enterprises

an Rs. 15,000. b) Establishments owned or controlled of Central

Government or State Government.
c) Establishments eligible for PMGKY benefits i.e.
an Rs. 15,000. Where employees and employers contribution to be
paid by Government
.
ary.

ce

e on account of an
th the consent in writing
n Budget 2021, the government has announced that if the deposits in EPF and VPF (Voluntary Provident Fund) exceeds Rs.
h will be taxable. i.e. it will be added to taxable income of employee.
ent will be exempt up to the deposit of Rs. 5 Lakh in the said financial year.

m contributing in excess of 250000 Per FY.

authorised net banking acconts of ur bank a/cs . At present EPFO has tied up arrangements with 10 banks including SBI,PNB,INDIAN BANK

an be retained till the withdrawal of his Provident Fund dues. However, if the account does not receives any contributions for more than 3

Marriage of self or dependents; Education of children; Treatment of illness etc.

4  UAN is allotted by EPFO

est EPFO to allot UAN.
or not…if it is upto
ing SBI,PNB,INDIAN BANK , union bANK etc.

tributions for more than 3 years interest won't be credited to the account after the 3rd year
Client: Fuevation Technology Solutions Private Limited
Year Ended: 31 March 2021
Audit Area: Employee Compensation
Sub Audit Area: ESI

Applicability of THE EMPLO

As p
Sub section 4 - It shall apply, in the first instance, to all fact
seaso

Provided that nothing contained in this sub-section shall ap

of the Government whose employees are otherwise in r
provide

Sub section 5 - The appropriate Government may, in

Government is a State Government, with the approval o
intention of so doing by notification in the Official Gazett
establishment, or class of establishments

Provided that where the provisions of this Act have been

stand extended to any such establishment or class of es
extended to similar establishment or clas

Sub section 6 - A factory or an establishment to wh

notwithstanding that the number of persons employed th
or the manufacturing process therein

The ESI scheme is applicable to all fac

Applicability in
more persons employed in such estab
short
21,00

Statutory rates of employer and employee contribution

Employer’s Contribution – 3.25% of the wages paid/payabl
Employee Contribution – 0.75% of the wages paid/payable
Employees in receipt of a daily average wage upto Rs.13
however contribute their own
 Here components of salary are:

- Basic pay,
– Dearness allowance,
– City compensatory allowance,
– House Rent Allowance (HRA),
– Incentives (including sales commissions),
– Attendance and overtime payments,
– Medical allowance,
– Meal allowance,
– Uniform allowance and
– Any other special allowances.

Due date for payment of contribution towards ESI

The Employers must deduct the employee contribution fro

employer and employee contribution at the rates specifie
of the month in which contribution

Consequences of Non-Payment or Late

Contribution

An employer who fails to pay the contri

Interest for late the regulation shall be liable to pay sim
payment annum in respect of each day of d
contributi

Penalty for late

Period of Delay
payment:

Less than 2 months

2 to 4 months

4 to 6 months

6 months and above

 Applicability of THE EMPLOYEES’ STATE INSURANCE ACT, 1948
As per section 1 -
in the first instance, to all factories (including factories belonging to the Government] other than
seasonal factories.

ned in this sub-section shall apply to a factory or establishment belonging to or under the control
e employees are otherwise in receipt of benefits substantially similar or superior to the benefits
provided under this Act.

propriate Government may, in consultation with the Corporation and where the appropriate
vernment, with the approval of the Central Government], after giving one month’s notice of its
otification in the Official Gazette, extend the provisions of this Act or any of them, to any other
ent, or class of establishments, industrial, commercial, agricultural or otherwise.

rovisions of this Act have been brought into force in any part of a State, the said provisions shall
ch establishment or class of establishments within that part if the provisions have already been
to similar establishment or class of establishments in another part of that State.

tory or an establishment to which this Act applies shall continue to be governed by this Act
mber of persons employed therein at any time falls below the limit specified by or under this Act
manufacturing process therein ceases to be carried on with the aid of power.

scheme is applicable to all factories and other establishments as defined in the Act with 10 or
rsons employed in such establishment and the beneficiaries' monthly wage does not exceed Rs
21,000 are covered under the scheme.

and employee contribution

25% of the wages paid/payable.
5% of the wages paid/payable.
daily average wage upto Rs.137/- are exempted from payment of contribution. Employers will
however contribute their own share in respect of these employees.
of salary are:

ay,
owance,
ry allowance,
wance (HRA),
ales commissions),
rtime payments,
wance,
wance,
ance and
allowances.

ntribution towards ESI

the employee contribution from the wages bill and must pay the
ntribution at the rates specified above within 15 days of the end
e month in which contributions are made.

ences of Non-Payment or Late Payment of Employees’

Contribution

oyer who fails to pay the contribution within the limit specified in
ation shall be liable to pay simple interest at the rate of 12% per
um in respect of each day of delay or default in payment of
contribution.

Rate of Damages in
Period of Delay
% p.a.

Less than 2 months 5%

2 to 4 months 10%

4 to 6 months 15%

6 months and above 25%