Employees Provident Fund and Miscellaneous Provisions Act, 1952 – CMA Inter Business Laws and Ethics Study Material is designed strictly as per the latest syllabus and exam pattern.
Employees Provident Fund and Miscellaneous Provisions Act, 1952 – CMA Inter Law and Ethics Study Material
Descriptive Questions
Question 1.
Explain basic wages under The Employees Provident Fund Act, 1952. Enumerate the items which are not included in it. (June 2014, 3 marks)
Answer:
Basic Wages: As per Section 2(b) of the Employees Provident Funds and Miscellaneous Provision Act, 1952, the term “Basic Wages” means all emoluments which are earned by an employee while on duty or on leave or on holidays with wages in either case in accordance with the terms of the contract of employment and which are paid or payable in cash to him, but does not includes:
- the cash value of any food concessions;
- any dearness allowance (that is to say all cash payments, by whatever name called, paid to an employee on account of rise in the cost of living), house rent allowance, overtime allowance, bonus, commission or pay and other similar allowance payable to the employee in respect of his employment or of work done in such employment; or
- any presents made by the employer.
Question 2.
State the Salient features of Employees Deposit Linked Insurance as outlined in Employee’s Provident Fund & Miscl Provisions Act, 1952. (Dec 2014, 4 marks)
Answer:
Employees Deposit-linked Insurance Scheme:
1. The Central Government may, by notification in the Official Gazette, frame a scheme to be called the Employees’ Deposit-linked Insurance Scheme for the purpose of providing life insurance benefits to the employees of any establishment or class of establishments to which this Act applies.
2. There shall be established, as soon as may be after the framing of the Insurance Scheme, a Deposit linked Insurance Fund into which shall be paid by the employer from time to time in respect of every such employee in relation to whom he is the employer, such amount, not being more than one per cent of the aggregate of the basic wages, dearness allowance and retaining allowance (if any) for the time being payable in relation to such employee as the Central Government may, by notification in the Official Gazette, specify.
Explanation: For the purposes of this sub-section, the expressions “dearness allowance” and “retaining allowance” have the same meanings as in Section 6.
3. The employer shall pay into the Insurance Fund such further sums of money, not exceeding one-fourth of the contribution which he is required to make under sub-section (2), as the Central Government may, from time to time, determine to meet all the expenses in connection with the administration of the Insurance Scheme other than that expenses towards the cost of any benefits provided by or under that scheme.
4. The Insurance Fund shall vest in the Central Board and be administered by it in such manner as may be specified in the Insurance Scheme.
5. The Insurance Scheme may provide for all or any of the matters specified in Schedule IV.
6. The Insurance Scheme may provide that any of its provisions shall take effect either prospectively or retrospectively on such date as may be specified in this behalf in that Scheme.
Question 3.
Answer the question:
A person was declared insolvent and the Court ordered attachment of all his properties. State whether the accumulations in the Provident Fund Account of the person is attachable. (June 2015, 3 marks)
Answer:
According to Sec. 10 of E.P.F. & M.P. Act, 1952 the amount standing to the credit of any member in the fund or of any exempted employee in a fund shall not in any way be capable of being assigned or charged and shall not be liable to attachment under any decree or order of any Court in respect of any debt or liability incurred by the member or order of any Court in respect of any debt or liability incurred by the member or exempted employee and neither the Official Assignee or any Receiver appointed under respective Acts shall be entitled to or have any claim on any such amount.
The said treatment will also hold good in case of the death of the person and accumulated amount is payable to his nominee.
Question 4.
Answer the question:
Is the amount standing to the credit of a member of the Provident Fund attachable in the execution of decree or order of the Court Examine the law, on this point, laid down in the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. (June 2016, 7 marks)
Answer:
Protection against attachment:
Section 10 provides that the amount standing to the credit of any member of the Fund shall not in any way be capable of being assigned or charged and shall not be liable to attachment under any decree or any court in respect of any debt or liability incurred by the member and neither the official assignee nor any receiver shall be entitled to, or have any claim on, any such amount.
Question 5.
Answer the question:
Employees provident funds and Miscellaneous Provisions Act, 1952 is not applicable to certain establishments. List out those establishments. (Dec 2016, 5 marks)
Answer:
The Employees Provident Fund and Miscellaneous Provisions Act, 1952 does not apply to certain establishments as specified under Section 16 of the said Act.
They are as follows:
(a) Any establishment registered under the Co-operative Societies Act, 1912 or under any other law for the time being in force in any state relating to co-operative societies employing less than 50 persons and working without the aid of power or
(b) To any establishment belonging to or under the Control of the Central Government or a State Government and whose employees are entitled to the benefit of Contributory Provident Fund or old age pension.
Or
(c) Any other establishment set up under any Central Provincial or State Act and whose employees are entitled to any Contributory provident fund or old age pension.
(d) Any newly set up establishment (less than 3 years).
Central Government having regard to the financial position of any class of establishment or other circumstances of the case may exempt that case of establishment from the operation of this Act for such period as specified in the notification Issued for this purpose.
Question 6.
When can a member withdraw from his National Pension Funds account? (Dec 2017, 5 marks)
Answer:
Withdrawal from the Natiònal Pension Fund Account is allowed for the following purposes-
For the purchase ‘of a dwelling house/flat or for the construction of a dwelling house including the acquisition of a suitable site for this purpose;
For repayment of loans in special cases;
Withdrawal within one year before the retirement; Such withdrawals are not required to be repaid.
Practical Questions
Question 7.
‘A’ on retirement withdrew the entire amount of his accumulation in the Provident Fund. Later on he was appointed for a fixed tenure. Employer disagreed to allow P.F. benefit in view of his retirement and withdrawal of entire amount. Offer your views based on Rule’s position. (Dec 2012, 2 marks)
Answer:
When any employee withdraws all his deposited amount from his provident. fund account, his account is treated as closed and no further benefit can be given to the employee on this account. Hence employer was right.
Question 8.
An inspector appointed under the Employees’ Provident Funds and Miscellaneous. Provisions Act, 1952 takes an inspection at 10 p.m. (five hours after factory timings) and seeks to take copies of the “shareholders Register”. How far under the Act is his action reasonable? (Dec 2013, 3 marks)
Answer:
Under Section 13(2) of the Employees Provident Funds and Miscellaneous Provision Act, 1952, an inspector can inspect and make copies of, take extract from any book, register or other documents maintained in relation to the establishment and where he has reason to believe that any offence under this Act has been committed by an employer seize with assistance as he may think fit, such book, register or other documents or portions thereof as he may consider relevant in respect of that
offence. The register of shareholders is not relevant in any offence mentioned in the Act. He is not justified in taking the copies of such register.
Moreover, he should take copies of documents during working hours. It is unreasonable on his part to take copies at 10.00 p.m. In the present case, the inspector had sought to take copies of the shareholder’s register which is irrelevant to the offence, after the working hours (10.00 pm) which is not reasonable.
Question 9.
Sushi retired from the services of ABC Limited, on 31st March 2014. He had a sum of lo lakhs In his Provident Fund Account. It has become due for payment to Sushil on 30th April 2014, but the company made the payment of the said amount after one year. Sushil claimed for the payment of interest on due amount at the rate of 15 per cent per annum for one year. Decide, whether the claim of Sushil is tenable under the provisions of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. (Dec 2015, 3 marks)
Answer:
According to Section 7Q of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, the employer shall be liable to pay simple interest @ of 12% per annum or at such high rate as may be specified in the Scheme on any amount due from him under this Act from the date on which the amount has become so due till the date of its actual payment.
However, the higher rate of interest specified in the Scheme cannot exceed the lending rate of interest charged by any scheduled bank. As per above provision, Sushil can claim for the payment of interest on due amount @ 12 per cent per annum or at the rate specified in the Scheme, whichever is higher, for one year. Here in the absence of specified rate Sushil can claim only 12 percent per annum interest on the due amount. Hence, claim of Sushil for interest rate 15% is not tenable.
| Repeatedly Asked Questions | |
| Question | Frequency |
| 1. Discuss the different provisions relating to pension fund as per section 23 of the PFRDA Act, 2013. 21 – Dec, 22 – Dec |
2 Times |
Employees’ Provident Fund And Miscellaneous Provisions Act, 1952 CMA Inter Law, and Ethics Notes
1. Objective and Scope of the Act
- An act to provide for institution of provident funds, pension funds and deposit-linked insurance fund
- Applies to whole of India excluding Jammu & Kashmir.
- Administered by Govt. of India through Employees’ Provident Fund Office.
- Objective of the act is protect the interest of workers and provide to them security in old age.
2. Applicability of the Act
- Factory having 20 or more persons engaged in industry mentioned under Schedule
- Any other establishment to which Central Govt. notifies.
Excludes:
- Co-operative establishments with less than 50 persons and working without power
- Establishment of! under control! under Act of CG/SG where employees are entitled to benefits of provident or pension schemes.
Note:
- Act to apply even if later on number of person reduce to less than 20
- Act to apply even if the unit divides itself and operates as an independent unit
3. Employee for the purpose of the Act
Person employed for wages.
Includes:
- Contract employee
- Apprentice excluding apprentice engaged under Apprenticeship Act
- Part-time employee.
4. Provident Fund (Section 5)
- Every employee working in a factory or establishment shall be entitled and required to be a member from the date of joining onwards.
- Contribution is mandatory.
- 10% of the basic wage, dearness allowance and retaining allowance of an employee to be paid by employer as Employer’s Contribution.
- Employee needs to pay an amount equal to the employer’s contribution.
- Employee may even opt to pay higher, but this cast no obligation on employer.
5. Pension Scheme (Section 6A)
The Central Government framed Employees’ Pension Scheme for the purpose of providing for-
- Superannuation pension;
- Retiring pension or permanent total disablement pension to the employees of any establishment or class of establishments to which this Act applies; and
- Widow or widower’s pension;
- Children’s pension or orphan pension payable to the beneficiaries of such employees.
- The Pension Scheme may provide for all or any of its provisions shall take effect either prospectively or retrospectively on such date as may be specified in that behalf in that scheme.
Contribution
There is no contribution from the employee. The employer is to contribute 8.33% of the basic wages, dearness allowance and retaining allowance, if any of the concerned employees as may be specified in the pension scheme. Contribution is not payable when the employee crosses 58 years of age since the scheme ceases on completion of 58 years.
6. Employee Deposit Linked Insurance Scheme (Section 6C)
The Central Government made the Employees’ Deposit Linked Insurance Scheme, 1976 which came into effect from 01.09.1976. It applies to all factories and other establishments to which the Act applies except tea factories in State of Assam.
The wage ceiling limit under Employees Deposit Linked Insurance Scheme has been increased from ₹ 6,500 to ₹ 15,000.
The insurance benefit under the scheme shall be an amount between 2.5 lakhs and 6 lakhs.
7. Withdrawal from the fund
Withdrawal from the fund is allowed for the following purposes-
- For the purchase of a dwelling house/flat or for the construction of a dwelling house including the acquisition of a suitable site for this purpose;
- For repayment of loans in special cases;
- Withdrawal within one year before the retirement;
- Withdrawal up to 75% of the balance, if not employed from one month or more, subject to approval of P.F. Commissioner or any officer authorised by him.
- Such withdrawals are not required to be repaid.
8. Advances from the fund
Advances from the fund are paid for the following purposes-
- For illness in certain cases;
- For marriages or post-matriculation education of children;
- In abnormal conditions such as calamity of exceptional nature such as floods, earthquakes or riots – (non-refundable)
- Granted to members affected by cut in the supply of electricity; (non-refundable)
- Grant of advance to members who are physically handicapped; (non-refundable)