PROVIDENT FUND
Provident Fund is a fund, plan or scheme to provide retirement income. The Employment Provident Fund and Miscellaneous Provisions Act 1952 and the rules there under provide for the law on Provident Fund and pension benefits. The Act was enacted with a view to provide for compulsory contribution to provident fund, both by the employer and the employee.
It applies to every establishment which is a factory engaged in any industry specified in Schedule-I of the act and in which 20 or more persons are employed. The Central Government by notification can bring in any other establishments employing 20 or more persons or less than 20 persons under the purview of this act. The appropriate government may by notification in official gazette exempt any establishment from the operation of all or any of the provision of any scheme under this act.
An employee, to become eligible to the provisions of the Act is required to be a member, by filing the Form 2. Under the scheme of PF the employer and employee will each contribute 10% or 12% of the basic salary towards the PF. The remittance of the same should be done on or before the 15th of the following month. Accordingly the monthly returns have to be filed before the 25th of every month by filling the Forms 12A, 5 and 10. Annual returns are also to be filed by the employer under Form 3A and Form 6A.
The PF amount is also transferable when the employee upon termination / resignation, joins the services of another employer. The same is done by filling the Form 13, which will be provided by the former employer. Upon the form being filled, the new employer shall forward it to the provident fund organization. The transfer of the PF amount ordinarily takes 40 days.
A member is eligible to apply for withdrawing his provident fund and pension fund only after 2 months from the date of resignation, provided that he / she is not employed during the said 2 months. The member should submit Form 19 to withdraw his provident fund dues on leaving service/retirement/termination. The same has to be signed by the previous employer and submitted to the provident fund office. Ordinarily it takes about 40 days for the PF amount to be credited to the bank account. The withdrawal of PF is not taxable provided the employee has rendered continuous services; else the applicable tax slab for the income would apply.
Members are also entitled to withdraw monies from as advances from the PF account for purposes like marriage, education, medical treatment, purchase of residential property etc.
Contributed by:
Naqsha Biliangady
Advocate