We would like to bring your attention to the Provident Fund Act, a Central Government legislation that binds entrepreneurs who employ a specified number of employees. From an employee’s perspective, it serves as a Social Security Act, providing a lump sum amount upon retirement and continued pension funds for the unorganized and private sectors.

Applicability:

• Mandatory for organizations with 19 or more employees.
• Mandatory for organizations with at least one foreign employee.
• Directors receiving a salary and contract manpower are included in the employee headcount.
• Voluntary registration is possible even with one or more employees.

Registration:

• Online registration with accurate details and submission of required documents.
• Enroll employees on the day of registration with their basic salary.
• Submission of Aadhar, PAN Card, and nominee details.

Computation of Liability:

• Basic salary is typically calculated as 40-50% of the employee’s gross salary
• To provide a sample calculation, assuming a basic salary of Rs. 50,000:

Option 1: Employee contribution of 12% on basic – Rs. 2,400 (deductible from salary), and employer contribution of 13% on basic – Rs. 2,600 (payable by employer).

Option 2: Employee contribution of 12% on restricted basic (Rs. 15,000) – Rs. 1,800 (deductible from salary), and employer contribution of 13% on restricted basic (Rs. 15,000) – Rs. 1,950 (payable by employer).

Option 3: When the basic salary exceeds Rs. 15,000, the employee can request non-coverage of PF by submitting Form 11, resulting in no contributions.

Compliance:

• Monthly payment due on the 15th of each month; delayed payments attract interest and penalties.
• Online submission of returns with additions and deletions of employees.
• Enrollment of new employees every month.
• Submission of settlement forms for departed employees.

Troubleshooting:

We understand that certain issues may arise, such as:

• Backdated coverage: It is crucial to be mindful of backdated coverage. In some cases, a company may have a perceived employee count of 18 and may not provide PF coverage. However, if there are additional contract employees, housekeeping staff, or salaried directors, the total employee count may exceed 19, necessitating mandatory coverage. The coverage will be effective from the date the required employee count is surpassed, resulting in backdated coverage.
• Foreign employees: Even if there is only one foreign employee, PF coverage applies.
• Notices of basic salary being less than 40%.
• Damages for late payment.
• Notices, inspections, and assessments.
• Coverage of part-time employees.
• Liability of principal employers for contract manpower compliance.

If you find these requirements overwhelming, we are here to assist you with comprehensive solutions. Please feel free to contact us on 9845068263 for further information and support.