RE: How Employee Provident Fund works...

Excluded Employee:
"Exclude Employee" as defined under pare 2(f) of the Employees' Provident Fund Scheme means an employee who having been a member of the fund has withdraw the full amount of accumulation in the fund on retirement from service after attaining the age of 55 years; Or An employee, whose pay exceeds Rs. Five Thousand per month at the time, otherwise entitled to become a member of the fund.
Explanation:
'Pay' includes basic wages with dearness allowance, retaining allowance, (if any) and cash value of food concessions admissible thereon.
Employee Provident Fund Scheme:
Employees' Provident Fund Scheme takes care of following needs of the members:
(i)   Retirement                                (ii) Medical Care                       (iii) Housing
(iv) Family obligation                        (v) Education of Children
(vi) Financing of Insurance Polices
How the Employees' Provident Fund Scheme works:
As per amendment-dated 22.9.1997 in the Act, both the employees and employer contribute to the fund at the rate of 12% of the basic wages, dearness allowance and retaining allowance, if any, payable to employees per month. The rate of contribution is 10% in the case of following establishments:
  • Any covered establishment with less then 20 employees, for establishments cover prior to 22.9.97.
  • Any sick industrial company as defined in clause (O) of Sub-Section (1) of Section 3 of the Sick Industrial Companies (Special Provisions) Act, 1985 and which has been declared as such by the Board for Industrial and Financial Reconstruction,
  • Any establishment which has at the end of any financial year accumulated losses equal to or exceeding its entire net worth and
  • Any establishment engaged in manufacturing of  (a) jute  (b) Breed  (d) coir  and  (e)  Guar gum Industries/ Factories. The contribution under the Employees' Provident Fund Scheme by the employee and employer will be as under with effect from 22.9.1997.    

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