Provident Fund: India
This is a collection of articles archived for the excellence of their content. |
Contents |
Employees' Provident Fund
EPFO to settle death claims within 7 days
EPFO to settle death claims within 7 days, Nov 02 2016 : The Times of India
Employees' Provident Fund Organisation (EPFO) issued guidelines in Nov 2019 to its field offices to settle death claims in seven days and retirement cases before a worker superannuates from the job, a move which comes days after PM Narendra Modi slammed the labour ministry for the provident fund manager's poor service.
The central provident fund commissioner informed labour minister Bandaru Dattatreya that on the PM's directions, EPFO had issued guidelines to field offices to take “proactive action to settle death claims within seven days and reti rement cases on or before the day of retirement,“ the ministry said.
Interest rates
Dec 2016: cut to 8.65%
The Times of India, Dec 20 2016
EPFO cuts interest rate to 8.65%
The Employees Provident Fund Organisation (EPFO) recommended a minor reduction in interest rate to 8.65% for the financial year 2016-17 compared to 8.8% in 2015-16 but it still remains the best investment bet given that there is no cap on how much you set aside and the entire corpus remains tax free.
The reduction in interest rate to a four-year low is in line with the falling regime although bank fixed deposit rates have seen a sharper decline due to demonetisation of Rs 500 and Rs 1,000 notes. State Bank of India, for instance, has lowered fixed deposit rates by 15 basis points (100 basis points equal one percentage point), while on deposits of over Rs 1 crore (known as bulk deposits) rates have been slashed by up to 190 basis points. In any case, with the RBI singalling a shift towards a low rate regime, the government was forced to pare returns on small savings schemes.
Trade unions were demanding that EPFO central board headed by labour minister Bandaru Dattatreya retain the rates at least year's level, something that did not appear feasible given the retirement agency's projections. At 8.8%, EPFO would have faced a deficit of Rs 384 crore, while at 8.65% it will have a surplus of Rs 296 crore.
“The decision was arrived at after detailed consultations with all stakeholders. With consensus we have taken this decision,“ Dattatreya said in Bengaluru after the meeting.Interest income from PF investments for 2016-17 has been estimated mainly on the basis of interest income received or receivable in this financial year, including surplus of Rs 410 crore from previous year, an official said.
“In 2015, the interest rate decided was at 8.8%. At that time, along with the income of EPFO, the surplus from the previous year was Rs 1,600 crore. This year, along with the income, the surplus available is Rs 410 crore,“ Central Provident Fund Commissioner V P Joy said.
The recommendation of the EPFO board needs to be ratified by the finance ministry , which notifies the rates. Last year, the finance ministry had suggested a reduction but was forced to go with the board's decision after public uproar.
Amnesty scheme, 2017
Lubna Kably, India Inc can enrol employees under EPF amnesty scheme, Jan 3, 2017: The Times of India
Cos Have To Pay Only Rs 1 Damages For Each Year Of Default
Companies which have not enrolled their employees as members under the Employee Provident Fund (EPF) scheme will now get a chance to do so, against payment of a minimal damage fee of Re 1per year of default.
Additionally , if the employee wasn't enrolled earlier and hisher share of contribution was not deducted from salary , the employer company had to pay this sum also in addition to the past defaults of its own contribution. Now under the amnesty scheme, only the employer's contribution has to be deposited.
The objective of the amnesty is to ensure enrolment of employees and spread the benefit of the EPF scheme.Companies having 20 or more employees are required to mandatorily enrol those employees under the EPF scheme who have a salary of up to Rs 15,000 per month.The EPF scheme is optional for those drawing a higher salary . However, once an employee opts for the scheme, he or she cannot opt out.
Both the employer and employee are required to contribute 12% per month towards EPF against the employee's basic salary plus dearness allowance. However, under the amnesty , interest at the rate of 12% on the amount due for delayed deposit of the contribution will be payable for the period of delay .This amnesty scheme, which comes into force from January 1, is open until March-end.“The main purpose of the amnesty is to expand coverage of the EPF scheme,“ said a government official.
Arrears in payment of EPF dues is rampant. More than a lakh employers had not deposited PF contributions and the arrears outstanding as of March 31, 2015 was nearly Rs 3,000 crore. “More damaging is that there is an equally large number of companies (especially micro, small & medium enterprises, or MSMs), say in the garment or auto ancillary sector, who do not enrol their employees at all,“ adds the government official.
Sonu Iyer, partner and leader people advisory services at EY India, explains, “Companies that had not enrolled employees under the EPF scheme for the period beginning April 1, 2009 to December 31, 2016 can take advantage of the amnesty scheme by making a declaration to the regional employee provident fund office.“
“The employer will be required to deposit the required sum, which denotes its share of contribution, employee's share of contribution only if deducted from employee's salary but not deposited, interest and a nominal damage charge within 15 days of making the declaration.The biggest largesse under the amnesty is that the company doesn't have to make good the share of the employee's contribution,“ adds Iyer.
After depositing the sums, adetailed return has to be filed with the Regional Provident Fund Commissioner. Employers are eligible to participate in the amnesty only if proceedings under section 7A (inquiries) have not already commenced against them.
However, it is not clear whether the amnesty scheme will cover cases where employees had been enrolled in the EPF scheme but where there was a shortfall in depositing contributions.
Public Provident Fund (PPF)
Premature closure for studies, medical expenses
The Times of India, Jun 22 2016
Premature PPF closure okayed for studies, med expenses
Subscribers of the Public Provident Fund (PPF) can now close their accounts before maturity , but after it completes five years, for reasons such as higher education or expenditure towards a medical emergency . “A subscriber shall be allowed premature closure of his account, or account of a minor of whom he is the guardian, on the ground that the amount is required for treatment of serious ailments or life-threatening diseases of the account-holder, spouse or dependent children, on production of supporting documents from the competent medical authority ,“ the finance ministry said in a notification..
Similarly , the closure of account to seek funds for higher education will require the submission of documents and fee bills confirming the account-holder's admission in a recognised institution in India or abroad.
Withdrawals
For housing, health
The Times of India, Apr 19 2016
PF withdrawal allowed for housing, health
The labour ministry eased the planned restriction on withdrawal of contribution to the employees' provident fund. It said withdrawal can be allowed for housing, major medical treatment for self and family members, medical, dental and engineering educa tion of children, and for their marriage.
The relaxation has also been extended to members who have joined an establishment belonging to or under the central or state government, and become a member of contributory provident fund or old age pension.
These norms will come into effect from August.
The amendments were made after labour minister Bandaru Dattatreya received representations from trade unions. A government release said the ministry had decided to pay the full accumulations to the credit of a member, including interest up to the date of payment, if he or she fulfils any of the above-mentioned conditions. In February , the ministry had said PF subscribers would not be able to withdraw their provident fund after attaining the age of 54 years, and will have to wait till they are 58 years old.
