Provident fund is a welfare scheme for the benefits of the employees. Under this scheme both the employee & employer contribute their part but whole of the amount is deposited by the employer. Employer deducted the employee share from the salary of the employee. The interest earned on this investment is also credited in pf account of the employees. At the time of retirement, the accumulated amount is given to the employees, if certain conditions are satisfied.
The Act shall apply to:
- Every establishment which is a factory
- Engaged in any industry mentioned in schedule I of the Act and
- Employing 20 or more persons or
- Any other establishment employing twenty or more persons or
- Such other establishment as the Central Government may notify.
Benefits
The employees covered under the various schemes of the Act are entitled for the following benefits
- Employees can take advances or make withdrawals*.
- PF amount of a deceased member is payable to the nominees or legal heirs.
- The employer not only contributes towards the PF but also makes the necessary contributions towards the employee’s pension which can be used by the employee post-retirement
- Under the EDLI Scheme employees are properly insured in order to avail the lump sum benefit at the time of death while in service.
- EEE (Exempt, Exempt, Exempt) tax benefit under the Income Tax Act enables tax-free returns for the employees.
- Employees receive special benefits in the form of added income to their savings in the form of interest.
- PF account can be transferrable if any member changes employment from one establishment to another where such Provident Fund scheme is applicable.