Ensuring the well-being of employees should be a top priority for any business. One crucial step in achieving this is registering your private limited company for the Employee Provident Fund (EPF).
Today we will explore how to go about EPF registration for your Private Limited Company. It covers everything from understanding the eligibility criteria and necessary documents to highlighting the importance of EPF for your company.
Additionally, it offers a step-by-step guide on how to apply for EPF, guaranteeing financial security for your employees even after their working years.
What is EPF Registration?
EPF registration refers to the process of enrolling a business or organization under the Employees' Provident Fund (EPF) scheme. The EPF is a social security scheme that provides retirement benefits and savings for employees.
Key Reasons for Obtaining EPF Registration for Employers
EPF registration holds significant importance for employers due to the deduction of TDS from employee salaries. Here are some key reasons to consider obtaining EPF registration:
1. Risk Coverage: The Provident Fund offers crucial protection to employees and their dependents in the face of risks such as death, illness, or retirement.
2. Uniform Account: An essential aspect of the provident fund is its consistent and transferable account. This means that the account can be transferred to any new place of employment.
3. Employee Deposit Linked Insurance Scheme (EDLIS): The EDLIS is available to all PF account holders. Under this scheme, 0.5% of the salary is deducted as a life insurance premium.
4. Unforeseen Financial Needs: It's crucial to be prepared for unexpected events like accidents, illnesses, education expenses, or family gatherings that may require immediate financial assistance. The Provident Fund (PF) can be highly beneficial during such times.
5. Pension Benefits: The PF can be used to enhance one's pension fund. In addition to the mandatory 12% of the employee's salary contributed to the EPF, the employer is also required to contribute an equal amount, which includes 8.33% towards the Employee Pension Scheme (EPS).
6. Tax-Exempt Interest and Withdrawals: The interest earned on the EPF is tax-free, and withdrawals from the EPF are also exempt from taxes.
7. Government Contribution to EPF in Specific Scenarios: The government has introduced a scheme where they undertake the EPF contribution on behalf of employers for three years. This applies to newly hired employees as well as women employees hired before March 2019.
8. EPF Contribution Reduction for Women Employees: To enhance the net salary for women employees, the government has implemented a reduction in the EPF contribution percentage specifically for women employees.
Documents Required for EPF Registration under EPFO
The EPFO requires the following documents for EPF registration:
1. PAN Card of the Proprietor/Partner/Director.
2. Proof of address, such as an Electricity bill or Telephone bill (not older than 2 months) for the Registered Office.
3. Aadhar Card of the Proprietor/Partner/Director.
4. Shop and Establishment Certificate/GST Certificate/Any Government License issued for the establishment.
5. Signature of the Proprietor/Partner/Director (digital signature if applicable).
6. Cancelled Cheque or Bank Statement of the entity.
7. Hired/Rented/Leased Agreement (if applicable).
8. Proof of License issued by the Identifier/Licensing Authority.
Pre-Requisites For Obtaining an EPF Registration
To enroll in the EPF scheme, it is necessary to fulfill the following eligibility criteria:
1. Companies with a workforce of 20 or more employees are legally obligated to deduct EPF from their employees' salaries.
2. Under certain circumstances, organizations with less than 20 employees can also choose to register for the EPF scheme.
3. Employers must complete the EPF registration process within one month of hiring 20 employees; failure to do so may result in penalties.
4. If the number of employees in a registered organization falls below the minimum threshold, it remains subject to the provisions of the Act.
5. Employers and a majority of employees have the option to jointly apply to the Central Provident Fund (PF) Commissioner, expressing their agreement to be governed by the regulations of this act.
Detailed Breakup Of EPF Contribution
As mentioned earlier, both employers and employees have a responsibility to contribute to the EPF. The employer's contribution, which amounts to 12% of various components such as basic wages, retaining allowance, and dearness allowance, needs to be taken into account.
Similarly, the employee is also required to make an equal contribution. However, if the organization has less than 20 employees, the contribution rate for both the employer and the employee will be 10% of the salary.
Out of the 12% or 10% contribution made by the employer, it is allocated as follows:
- 3.67% of the contribution is directed toward the Employees' Provident Fund.
- 0.5% of the contribution is allocated to the Employee Deposit Linked Insurance Scheme.
- 1.1% of the contribution is utilized for EPF administration charges.
- 0.01% of the contribution is used for EDLI administration charges.
- 8.33% of the contribution is specifically allocated to the Employees' Pension Scheme.
Upon retirement, employees will receive their entire share of contributions, along with the percentage retained by the employer, in their EPF account balance.
Step-by-Step EPF Registration Process for a Private Limited Company
Employers who wish to obtain EPF registration for their establishment have the option to register online through the official Shram Suvidha Portal. However, it's important to note that new private limited companies are no longer able to obtain EPFO registration on the Shram Suvidha Portal.
Since 2020, newly established private companies can acquire EPFO registration by submitting the SPICE+ and AGILE Pro forms on the Ministry of Corporate Affairs' official website.
On the other hand, other existing private limited companies can still proceed with EPFO registration through the Shram Suvidha Portal. The following steps outline the process for obtaining registration:
Step 1: Register on the Unified Shram Suvidha Portal
To start the EPFO registration process, the employer needs to sign up on the Unified Shram Suvidha Portal (USSP). They will provide details like their name, mobile number, and email ID. After entering the verification code, they can click on "Sign Up" to create a new account. This account will be used for EPFO registration.
Step 2: Log in to the USSP Account
Once the USSP account is created, the employer can log in using their credentials. On the left side of the screen, they should find and select the "EPFO-ESIC Registration" tab. Within this tab, they will see the option to "Apply for New Registration" and should click on it.
At this point, two choices will be presented: the Employees' State Insurance Act, 1946, and the Employees' Provident Fund and Miscellaneous Provisions Act, 1952. To proceed, the employer must choose the option labeled "Employees' Provident Fund and Miscellaneous Provisions Act, 1952" and subsequently click the "Submit" button.
Step 3: Completing the Registration Form
After clicking the "Submit" button mentioned earlier, the applicant will be directed to the next page, where the EPFO registration form is located. It is crucial to fill in all the required fields and sections of the form accurately.
The eContact section will require additional information related to the primary email address and mobile number. In the Contact Person section, details of the designated contact person or primary manager responsible for EPFO registration, such as their email address and contact information, should be provided.
The Identifiers section requires the applicant to enter the relevant details. This includes employee-related information such as gender, the number of employees in the establishment, the date when the required employee strength was achieved, wages, and establishment premises details.
The Branch/Division section will require information specific to the branch or division of the establishment. The last section pertains to the activities of the establishment, where the NIC Code, nature of work, and primary business activity details must be entered.
There will also be an Attachment section where important documents, such as scanned copies of the PAN card, proof of address, proof of setup date, license proof, specimen signature, scanned copy of a cheque, and any relevant attachments for leased or hired premises, should be uploaded.
Once all the necessary details have been filled in and the required documents have been attached, a summary of the application form will be displayed. Review the details carefully.
Step 4: Uploading Digital Signature Certificates
After completing the application form and attaching all the necessary documents, the next step is to upload and affix the digital signature certificates (DSCs) of the applicant. This is an important step to ensure the authenticity and security of the registration process.
Once the digital signature certificates have been successfully uploaded and affixed, the applicant will receive a confirmation email from the Unified Shram Suvidha Platform, acknowledging that the registration form has been successfully submitted.