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Employees Provident Fund
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Employees Provident Fund

Employees Provident Fund is considered as one of the primary schemes under the Employees’ Provident Fund and Miscellaneous Provisions Act 1952. This scheme is managed under the supervision of the Employees’ Provident Fund Organization. An employee has to pay a certain amount as a contribution to this scheme. The employer also makes an equal contribution to the Employees Provident Fund. On retirement, the employee gets a lump sum amount, including both (his and employer’s) the contribution with interest.

Employees Provident Fund

An employee whose pay is more than Rs. 15,000 per month at the time of joining is not eligible under the Employees Provident Fund scheme whereas an employee whose pay is less than Rs. 15,000 per month is eligible under the Employees Provident Fund scheme. It is mandatory to become the members of the Employees Provident Fund, in case if any employee is earning less than Rs. 15,000 per month. An employee drawing more than Rs. 15,000 can become a member with the permission of Assistant Provident Fund Commissioner proviso if he and his employer agree. The employee can also pay higher contribution above 12% of his salary towards the Voluntary Provident Fund. There is no need for an employer to match the same contribution as of the employee under the Voluntary Provident Fund. Both Mandatory and Voluntary Provident Fund earns tax-free interest. The Employees Provident Fund interest rate for the year 2019-2020 is 8.65%.

Contribution under Employees Provident Fund

The employer deducts 12% of the employee’s salary every month in order to contribute towards the Employees Provident Fund. The entire contribution of an employee goes in the Employees Provident Fund account. The employer also contributes 12% of the employee’s salary every month towards the Employees Provident Fund. The employer’s contribution is divided into the Employees Provident Fund, Employees’ Pension Scheme, Employees Provident Fund Admin Charges, Employee’s Deposit Link Insurance Schemes and Employee’s Deposit Link Insurance Schemes Admin Charges.

Types of Employees Provident Fund Forms

Following are the types of the Employees Provident Fund Forms:

  • Form 10C is used by an employee to claim benefits under the Employees Provident Fund scheme. It is used to withdraw the funds that the employer contributes towards the Employees’ Pension Scheme.
  • Form 10D is used by an employee for availing a monthly pension.
  • Form 13 is used by an employee to transfer the Provident Fund amount from the previous job of the employee to the current job. It helps the employee to keep all the Provident Fund money under one account.
  • Form 19 is used by an employee to claim the final settlement of the Employees Provident Fund amount.
  • Form 20 is used by the family members of an employee to withdraw the Provident Fund amount in the case where the account holder (employee) had died.
  • Form 31 is used by an employee for obtaining withdrawals, loans, and advances from the Employees Provident Fund account.
  • Form 51F is used by the nominee to claim the benefits of the Employee’s Deposit Link Insurance.

Case Law

Uma Baksi Vs Union of India and Others.

Calcutta High Court (Appellate Side) - 22nd August 2019

Writ Petition No. 13606 (W) of 2019

Uma Baksi is the 2nd wife of an employee who was serving in the Eastern Coalfields Limited. On 3rd June 2009, the employee retired after attaining the age of superannuation. On 16th August 2011, the employee died. After the death of an employee, Uma Baksi, and the deceased employee’s daughters put forward their claim in order to obtain the death benefits of the deceased employee. The deceased employee had incorporated the name of the Uma Baksi as the nominee in the nomination form for the disbursement of the provident fund and gratuity. As per the nomination which was exercised by the deceased employee, the amount of provident fund and the gratuity was disbursed in favour of the Uma Baksi. After the death of the employee, the Uma Baksi is also receiving the family pension.

Uma Baksi has raised a claim on the money that has been accumulated on account of the performance-related pay of the employee. According to Uma Baksi, the performance-related money must be disbursed in her favour as the deceased employee had incorporated her name as the nominee in the nomination form for the disbursement of the provident fund and gratuity. On 17th January 2019, the Court directed the General Manager of the Eastern Coalfields Limited to decide according to the applicable rules, regulations, circulars and notifications within a prescribed period of time. The General Manager of the Eastern Coalfields Limited stated that there was no set rules and regulations related to the disbursement of the performance-related amount in case of the death of a retired executive. The claimants were directed to settle their dispute before the Court. He also stated that he is not competent authority also he has no jurisdiction either to accept or deny the claims which are raised by the heirs of the deceased employee.

The Court held that the employee had not nominated Uma Baksi as a nominee to receive the amount of performance-related pay. Hence, she cannot claim the entire amount of performance-related pay. On 22nd August 2019, the Court directed the General Manager to disburse the amount of performance-related pay in favour of Uma Baksi and the daughters from the first marriage of the employee equally.

Conclusion

Employees Provident Fund is a retirement benefit plan. Once an employee stop working, he cannot contribute to the Employees Provident Fund. The interest earned on the Employees Provident Fund is exempted from tax. According to the Employees’ Provident Fund and Miscellaneous Provisions Act 1952, the employee that has retired from his service after attaining the age of 55 years has a right to claim final Provident Fund settlement. However, the employee can withdraw the full amount of Provident Fund, in case if he quits his job or is out of employment for a period of 60 days or more. The employee can also transfer the amount of Provident Fund to the new employer. The employee can withdraw 90% of the accumulated Provident Fund with interest if he is above 54 years of age and is near the retirement period.

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