EPF Registration for Private Limited Company

Applicability Of EPF Registration

For the Employer

The EPF is mandatory for every establishment that:

• Is a factory which is engaged in any industry and has 20 or more persons as employees
• Or any other establishment with 20 or more persons as employees or class of such establishments which have been notified by the central government.

Every employer must obtain the requisite EPF registration within one month of achieving the above-mentioned strength. Non-compliance with this mandate will lead to heavy penalties. Once an establishment has been granted EPF registration and even if the employee strength falls far beyond the required minimum, they are required to follow the mandate under the EPF Act.

Central Government may, by notification, make the provisions of the EPF Act applicable to establishments having less than 20 employees after giving such establishment and notice not less than two months for compulsory registration. Where the majority of the employees and the employer have mutually agreed other provisions of the EPF Act should apply to the establishment, they themselves can apply to the Central Commissioner for Provident Fund. Central PF commissioner can of her own volition apply the provisions of the EPF Act establishment after the passing off notification in the Official Gazette from the date of the agreement or the date which is specified in such agreement.

For the Employee

It is mandatory for every employee drawing a salary of less than ?15,000 per month, along with basic pay and dearance allowance, to have an EPF account by their employer. However, employees drawing a salary of more than ?15,000 per month makes them non eligible employees and its not mandatory for such employees to become a member of the EPF.

All such employees shall be eligible for PF from the day the employment commences, and the responsibility of such deduction lies with the employer along with payment of the PF. 12% of PF contribution must be divided equally between the employee and the employer. The contribution to the EPF is 12% of the basic salary.

Contribution Percentage To The EPF

As mentioned above, both the employers and employees are required to contribute to the EPF. The 12% contribution to be made by the employer is calculated by taking the following into consideration as well- basic wages, retaining allowance, and dearance allowance. The employee is also required to make an equal contribution. If there are less than 20 employees in an organization, then the contribution rate by both the employer and employee shall be 10% of the salary.

From the 12% or 10% contribution of the employers, the Employees’ Pension Scheme shall receive 8.33% of the contribution. However, it should be calculated at ?15,000 for every employee receiving a salary of ?15,000 or more. Thus, for every such employee, ?1250 is transferred to the Employees’ Pension Scheme. In contrast, if the basic salary is less than ?15,000, then 8.33% of the whole amount shall be transferred to the Employees’ Pension Scheme. Any balance other than this 8.33% is transferred to the EPF scheme. When the employee retires, she shall receive her entire share of contribution along with the percentage retained by the employer in the EPF account balance.

Detailed Breakup Of The EPF Contribution

The 12 % Contribution made to the PF is divided as provided below:

• 3.67% of the contribution goes towards the Employees’ Provident Fund.
• 0.5% of the contribution goes towards the Employee Deposit Linked Insurance Scheme.
• 1.1% of the contribution goes towards the administration charges of EPF.
• 0.01% of the contribution goes towards the administration charges of EDLI.
• 8.33% of the contribution goes towards the Employees’ Pension Scheme.

Reasons To Obtain EPF Registration.

As TDS is deducted from the salaries of the employees, EPF registration is highly essential for the employers. Some of the important reasons to obtain an EFPO registration are as follows:

• Coverage of Risk:?The most essential benefit that the Provident fund provides to the employees is to cover the risk that employees or their dependents might face due to death or illness, or retirement.
• Uniform Account:?One of the most vital aspects of the provident fund is that the account is constant and transferable. This means that it can be transferred to any other place of employment.
• Employee Deposit Linked Insurance Scheme or EDLIS:?TheEmployee Deposit Linked Insurance Scheme is available for every holder of a PF account. According to the scheme, 0.5% of the salary shall be deducted as the life insurance premium.
• Emergency Needs: One must always be prepared for an unexpected event like an accident or illness or any other events like family gatherings where there might be a requirement for immediate financial assistance. The PF fund can be extremely beneficial during these times.
• Long-Term Loans: The money accumulated in the PF fund can be used to meet the paucity of funds for certain milestones or long term events like a wedding or for higher education.
• Pension Coverage: The PF fund can always be used to add to one’s pension fund. Other than the 12% of the employee’s salary to the EPF, the employer shall also be required to contribute an equal amount, which shall also include 8.33% to the Employee Pension Scheme or EPS.
• Tax-Free Interest and Withdrawals: Interest on the EPF shall be tax free along with EPF withdrawals.
• EPF Contribution by the government in certain situations: The government has offered to pay the EPF contribution on the employer’s behalf for a period of three years for new employees and women employees hired before March 2019.
• Reduction in EPF Contribution for Women Employees: To increase the take home salary for women employees, the government has reduced the EPF contribution to % for women employees.

Exclusion From Wages Under EPF

The below mentioned shall be excluded while calculating PF deduction from the wages of the employees:

• Bonus
• Food allowance
• Overtime Allowance or OTA
• Dearance Allowance or DA
• House Rent Allowance or HRA

Pre-Requisites For Obtaining An EPF Registration

• Details of the Establishment

There are some details regarding the establishment which are required to be provided registration process. The details include the following:

1. The name of the establishment
2. the address of the establishment.
3. The incorporation date of the company
4. TAN and PAN of the establishment
5. The type of establishment
6. If the establishment happens to be an?MSME[1] , and the proof of MSME registration.
7. If the establishment is a factory, then details pertaining to the factory license, like the license number, the date on which the license was obtained and the place from where such license was granted.

• Contact Details

The employer is required to provide the contact details like the email ID and mobile phone number of the authorized person or the contact person. The employer is also required to provide details regarding the name, date of birth, PAN details, designation of the contact person, date of commencement of employment, along with the address details of the contact person.

• Employment?details

The employer is required to provide employment details of the establishment, like the number of employees, gender of the employees, type of activities involved, and the wages paid, among other information.

• Branch or division details

The employer shall also provide details regarding the branch of the establishment, like the name, premise number and address of the establishment, along with the labour identification number or LIN.

• Activities of the Establishment

The employer is required to provide details regarding the nature and business of activities in which the establishment is involved in. The employer shall be required to enter the National Industrial Classification or the NIC code and then select the business and the nature of the activities of the establishment.

Documents To Obtain An EPF Registration

There are certain documents which every employer is required to submit to obtain an EPF registration. Below mentioned are the essential documents which are necessary for EPF registration:

• The Aadhaar card of the director or partner, or proprietor of the establishment
• The PAN card of the director or partner, or proprietor of the establishment
• Digital signature of the director or partner, or proprietor of the establishment
• Proof of address of the registered office of the establishment utility bills not older than two months like telephone bill or water bill, or electricity bill.
• Bank statements of the establishment or a cancelled cheque
• Proof of ownership of the establishment premises, like a sale deed. If the establishment premises is on a rented property, then the lease deed is.
• Proof of registration of the establishment, like the certificate of incorporation in case of a company.
• Any certificate or licenses issued by the Government of India for the establishment
• Proof of licence, which has been issued by the licensing authority

Steps To Obtain An EPF Registration

• Step One: Sign up on the Unified Shram Suvidha Portal
• Step Two: Log in to your USSP account.
• Step Three: Fill out the registration form
• Step Three: Attach the Digital Signature Certificates

Due Date For EPF

Before an employer pays salaries to its employee, the employer is required to deduct the contribution of the employee to PF from her wages. Both the employer’s and employee’s share shall be payable to the EPF within 15 days of the end of every month.

Thanks & Regards

Syed Basith - Busniess adviser

+91-9164200094 ?-?

[email protected] ?-?www.corpbiz.io