Employees' Provident Fund

Why in news?

• Several crores of Employees’ Provident Fund (EPF) savings have been withdrawn illegally at a regional office in Mumbai, as a result of officials of the Employees’ Provident Fund Organisation (EPFO) acting in connivance.

About Employees' Provident Fund Organisation (EPFO):

• Employees' Provident Fund Organisation (EPFO) is the social security body that is responsible for running and supervising the largest mandatory state pension scheme for people in India.
• The EPFO assists the Central Board in administering a compulsory contributory provident fund, pension and insurance scheme for the workforce engaged in India.
• It is also the nodal agency for implementing bilateral social security agreements with other countries.
• These schemes cover Indian workers as well as international workers in countries with which bilateral agreements have been signed. As of May 2021, 18 such agreements are operational.
• The EPFO's apex decision making body is the Central Board of Trustees (CBT), a statutory body established by the Employees' Provident Fund and Miscellaneous Provisions Act, 1952 and under the jurisdiction of the Ministry of Labour and Employment

Schemes Offered Under the EPFO

• Given below are the various schemes that are present under the EPFO:
  • Employees’ Provident Funds Scheme 1952 (EPF)
  • Employees’ Pension Scheme 1995 (EPS)
  • Employees’ Deposit Linked Insurance Scheme 1976 (EDLI)

About the Employees’ Provident Fund (EPF) Scheme:

• The Employee Provident Fund is open for employees of both the Public and Private Sectors.
• Additionally, any organisation that employs at least 20 individuals is mandatorily liable to extend benefits of EPF to its employees.
• Both employer and employee contribute 12% of an employee's monthly salary (basic wages plus dearness allowance) to the Employees’ Provident Fund (EPF) scheme.
• Of the employer's share of 12%, 8.33% is diverted towards the Employees Pension Scheme (EPS).
• EPF scheme is mandatory for employees who draw a basic wage of Rs. 15,000 per month.
• The EPF interest rate is declared every year by the EPFO.
• This savings scheme offers tax exemption under Section 80C of the Income Tax Act.

PRACTICE QUESTION:

Which of the following statements are correct regarding Employee Provident Fund Scheme?

1. The scheme is open for employees of both the Public and Private Sectors.

2. Both employer and employee contributes to the Employees’ Provident Fund

Select the correct answer using the code given below:

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

Answer