The Provident Fund (PF) Act becomes applicable when an organization reaches a size of twenty employees and falls in the category mentioned in “Schedule I” (see www.epfindia.com for more information). When the PF Act is applicable (now most of the companies will fall under the PF Act), the Provident Scheme implies a 12% contribution of the basic monthly salary of the employee by both the employee and employer.

PF is mandatory for any employee having a salary less than INR 6,500 whereas voluntary who is earning above that.

Nowadays, in point of Human Resources , PF is considered to be part of employee benefit package (CTC).

For Start-ups the Decision on implementing PF depends on how it needs to be set up, i.e. does it need to be an Exempted Trust or is the Non-Exempted Fund whichever is applicable. This is determined by both the choice of the organization as well as the applicable rules from the government.

After the setup of the PF, the following activities need to be arranged:

Non-Exempted Fund (RPFC)

Submitting Proposal form for allotment of EPFO Number.

Exempted Trust / Excluded Trust / Private Trust

Drafting of Provident Fund Trust Deed and Rules & Regulations
Application to Income Tax office for Recognization of Trust

Once chosen for a PF Scheme, an ongoing process of recording, coordinating and administrating starts. The main activities that are required to carry out are given below, divided in the applicable form of PF Fund / Trust.

Unexempted Fund (RPFC)

Preparation of challan for monthly pension contributions to Regional Provident Fund Commissioner with proper break-up of EPF & EPS and to ensure proper calculation of EDLI charges
Maintenance of 3-A / 12-A Register required under EPF & MP Act 1952.
Filing of monthly returns in Appendix to RPFC
Filing of monthly returns for new entrants and resigned / retired by submission of Form 4.5.6 and 71F
Submission of Form no. 2 pertaining to nomination with RPFC as and when it comes and also maintenance of the same with employer for records and reference.
Liasoning and Follow-up with Local RPFC for claims and transfer from previous employers PF accumulation for new entrants.
To advise in all matters relating to Provident Fund scheme, Pension scheme and EDLI Scheme.
Attending periodic inspections as and when it occurs and correspond with RPFC in respect of any query raised by them.
Filing of Annual returns (Form 7 & 8) to RPFC
Preparation and submission of yearly information for observance month as well as for annual report of PF

Exempted Trust / Excluded Trust / Private Trust

Writing of the books of accounts of the Trust to the satisfaction of the Auditor
Maintenance and preparation of the members individual account statements and control account
Managing the Investments of the Trust
Attending to all Income Tax, Provident Fund and other related matters and representing to relevant authorities on behalf of the Trust
Secretarial duties in respect of meetings held by the Trust

Bank Statement upload
Reconciliation of Payment Accounts
Interaction with the Finance & Accounting Department for Troubleshooting
MIS to Investment and Accounts teams for provision of funds every month
End-to-End PF related queries and interactions with employees as well as the management

The first and most visible impact of PF on the organization is a budgetary one. Both employer and employee will need to contribute 12% of the employee’s basic salary to PF. Hence, when introducing PF, the organization needs to decide how to approach this from a financial- and HR point of view.
Secondly, there will be a consequence regarding the (HR) administration. Calculations, handling forms and –mostly- dealing with the Authorities (or employee settlements in case of an exempted trust) can be time consuming.

Our Benefit Services team is handling all of the mentioned activities for many of our clients and therefore we have experience with various situations and exceptions, as well as the relationships and track record with the authorities.
We would be happy to carry out the same for your organization.
We offer the highest standards of Quality and Professionalism at the best Price.