If BP+DA is above Rs.10,000/-, employee would be out of the purview of the Bonus Act. No statutory obligation to pay bonus. If you want to reward the employee, either casual or otherwise, you can pay performance linked incentive after arriving at suitable parameters, depending upon the company's capacity to absorb such amount.
23rd September 2008 From India , Madras
What is Provident Fund?
Provident fund is a scheme by the Government of India by which:
- A fixed percentage is deducted from your salary and
- A fixed percentage added by the company
Provident fund is basically a retirement benefit scheme. Under this scheme a stipulated sum is deducted from the salary of the employee as his contribution towards the fund. The accumulated sum along with the interest is paid to the employee at the time of his retirement or resignation. In case of death of the employee the accumulated balance is paid to his legal heirs.
Types of Provident Fund
- Statutory Provident Fund (SPF) – Statutory Provident Fund is maintained by the Government and Semi-Government departments like Railways, Reserve Bank of India, Colleges, Universities, Local bodies, Insurance companies etc., The employer’s contribution to the employee’s SPF and the amount of interest on the accumulated balance to the employee’s credit balance are not to be included in the income of the employee and so it is ignored.
- Recognized Provident Fund (RPF) - It is a fund to which the Commissioner of Income-tax has given the recognition as required under the Income-tax Act.
- Unrecognized Provident Fund (URPF) - It is the Provident Fund, which is not recognized by the Commissioner of Income-tax. The employee and employer both contribute towards this fund.
The employee’s contribution to URPF will not be allowed any tax rebate.
- Public Provident Fund (PPF) – Self-employed people (doctors, lawyers, accountants, actors, traders, pensioners) can also enjoy the benefit of tax rebate under section 88 by contribution to PPF.
As per Amendment dated 22/9/1997, in the Act, both the employees and the employer contribute to the fund at the rate 12% of the basic salary, dearness allowance and retaining allowance if any, payable to employees per month. i.e. 12% (Basic + D.A. + R.A).
Withdrawal of PF
- Criteria for Withdrawal of PF
A member of the PF can withdraw the full amount on retirement from service after attaining the age of 55. The full amount can also be withdrawn if:
2. Member is retired on account of permanent and total disablement due to bodily or mental infirmity.
3. On migration from India for permanent settlement or employment abroad.
4. In case of mass or individual retrenchment.
- Withdrawal before retirement
A member can withdraw up to 90% of the amount of PF after attaining the age of 54 years or within one year before actual retirement, whichever, is later.
- Partial Withdrawal/ Advances
A member of provident fund can avail non-refundable advance for the following purposes:
2. Advances in special cases such as lock out in factory/establishment.
3. For treatment of illness.
4. For marriages or post matriculation education of children.
5. Financing of member's life insurance policy.
Criteria: Advances/loans for building a house or marriage purposes requires a minimum completion of 5 years of membership of the fund. In other cases a minimum membership of 7 years is required.
Employees Deposit-Linked Insurance Scheme, 1976 (EDLI)
This scheme is applicable to all members of the Employees Provident Fund Scheme 1952.
- Employees – not required to contribute
- Employer – required to contribute at the rate of 0.05% of the wages of the employees on which the
- Provident Fund has been paid.
The beneficiary under the EDLI Scheme is the person who is entitled to receive the Provident Fund of the deceased member. On the death of the member the beneficiary is paid an amount equal to the average balance in the account of the Provident Fund in the preceding 12 months or during the period of membership, whichever is less.
When the average balance exceeds Rs.25000 the amount will be - Rs.25000+25% of the amount in excess of 25000* (*This is subject to a maximum of Rs.35000).
Family Pension Fund
'Family Pension' means a regular monthly amount payable to a person belonging to the family of the member of the Family Pension Fund. The payment is made in the event of death of the member. The employees Pension Scheme 1995, which has replaced the Employees Family Pension scheme 1971, from 16.11.1995 provides for monthly pension.
In this Scheme, 'family' means-
- Wife in the case of a male member of the Family Pension Fund.
- Husband in the case of a female member of the Family Pension Fund; and
- Minor sons and unmarried daughters of a member of the Family Pension Fund. (The expressions "sons" and "daughters" shall include children adopted legally before death in service.)
- To the widow or widower up to the date of death or re-marriage whichever is earlier.
- Failing (a), to the children in the order of their birth.
- In cases where there are 2 or more widows, family pension shall be payable to the eldest surviving widow.
- In the event of remarriage or death of the widow or widower, the pension will be granted to the minor children through their natural guardian. In disputed cases, however, payments will be made through a legal guardian
- Medical care
- Family obligations
- Education of Children
- Financing of Insurance Policy
29th September 2008 From India , Bangalore
he is under some cout case filed by CBI.
only one year is left to get retirement.
he want his PF for construction of house.
30th September 2008 From India , Hyderabad
every body. this maruthi jeksani we r talking about bonus should be given to casual employees or not who are earning more 10000+ pay.
commenting on this . i would say first it should depend on that particular organization in terms of financial concerns. second more preference should be given to org employees rather than casual employees. third we should allow each and every employee in organization decision making system, so we can decide there much better to provide bonus to casual employees or not(speaking in terms of HRM)
6th October 2008 From India , Pune
12% of BP+DA minus EPS(8.33% on Rs.6,500) will be remitted to a/c no.1 at SBI a/c EPF, as an employer's contribution.
8.33% on Rs.6,500/- will be remitted to a/c no.10.
1.10% of pay will be remitted to a/c no.2 as admn.charges.
0.50% of pensionable salary for EDLI contribution to a/c no.21
0.01% of pensionable salary for EDLI admn.charges to a/c no.22.
These bifucations need to be mentioned in a separate challan (this challan is exclusively for remittance of PF amounts at SBI) and remitted by 15th of the following month.
The formula is
BP+DA * 15 days * No.of years of service/26 days.
Minimum service required is 5 years.
In case of death and disablement, the minimum service of 5 years not appliable.
If the service is over and above 6 months after meeting minimum service requirment, to round off to 1 year.
If the Group Gratuity scheme is taken with LIC or any other such companies, the above method is applicable. The only difference would be, we maintain a account with LIC and remit the amounts to meet the Gratuity Liability. The contributions made entails for interest.
Who arrive at contributions:
LIC itself will give acturial valuation report, quarterly, half year, yearly basing on the data (Employee details). Basing the said report, we need to remit the amount to LIC.
What is risk premium
LIC covers death cases on payment of yearly risk premium fixed by them.
In these cases, they Pay gratuity for the past service as well as future service, till notional retirement age. Of course, LIC has fixed a cap for the Gratuity payment towards future service.
16th October 2008 From India , Madras