Employees’ Provident Fund Organisation (EPFO) is a statutory body under the Ministry of Labour & Employment, Government of India which has been established by an act of parliament, namely Employees’ Provident Fund and Miscellaneous Provisions Act, 1952.
The Employees’ Provident Fund and Miscellaneous Provisions Act 1952 applies to the Factories engaged in Industries specified in Schedule I of the Act or to other establishments notified and engaging 20 or more employees. All such eligible establishments are mandatorily required to abide by the rules and regulations of EPFO for remitting contribution in provident fund, pension fund and deposit linked insurance fund.
Registration for EPFO is compulsory for new companies and the companies / establishments which employ more than 20 individuals. Also, small establishments which do not have the minimum strength can register themselves voluntarily. Establishments which grow to strength of 20 employees are expected to register themselves within 15 days of attaining the minimum strength. A 15 digit alpha-numeric EPF Code number is allotted on registration for the purpose of handling EPFO related matters.
With the SPICe+ form being effective, EPF Registration and ESIC registration has now become mandatory for all the new companies that are to be incorporated through SPICe+
ADVANTAGES of epf registration
The Employees’ Provident Fund and Miscellaneous Provisions Act 1952 applies to the Factories engaged in Industries specified in Schedule I of the Act or to other establishments notified and engaging 20 or more employees. All such eligible establishments are mandatorily required to abide by the rules and regulations of EPFO for remitting contribution in provident fund, pension fund and deposit linked insurance fund.
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To avoid penalty
If an employer does not get PF registration, if required to do so, or tries to escape PF payment, he will have to pay a penalty of INR 5,000/- or he may face imprisonment upto 1 year.
To cover risk
The most primary advantage of the EPF registration is that you can cover the monetary risks of your employees along with their dependents that might occur owing to untimely death, retirement etc.
Welfare of the society
The business uses the resources of the society, by contributing to the welfare of the employees; the employer is able to contribute to the general welfare of the society as whole.
Pension cover
Employee contributes 12 % of his salary towards EPF and the employer contributes the same amount which is bifurcated into 2 parts – 3.67% goes into EPF kitty and remaining 8.33% goes into Pension Fund through which the member will receive superannuation monthly pension or his family (widow and 2 children upto age of 25 years) will get the family pension after his demise.
Image building
The EPF compliant company has a great image in the eyes of the department as well as its clients.