Employees' Provident Funds Scheme 1952 Last Updated : 17 Oct 2019

The Employees Provident Fund of 1952 can be enforced in all parts of India other than Jammu and Kashmir. All the individuals will be covered under this scheme irrespective of the place or type of work. This makes the fund an inclusive scheme.

The growth and welfare of a nation is closely related to the welfare of its citizens and the strength of a company/organisation lies in its employees’. A satisfied workforce has the ability to propel an organisation to newer heights, helping them achieve greatness. One way to motivate employees is to offer them peace of mind regarding their future, a future where financial needs could outweigh personal goals and ambitions.

India, being a welfare state strives to provide its citizens certain rights and privileges designed to enhance their quality of life. The Directive Principles of State Policy put the onus on the government to make certain provisions towards its people, including social security. It was with this intention that the government set up a statutory body, The Employees’ Provident Fund Organisation (EPFO) which monitors and administers the PF Scheme, Insurance Scheme and Pension Scheme. The Employees’ Provident Fund Scheme of 1952 acts as the backdrop for the government to enforce certain policies, with the Ministry of Labour and Employment in charge of its implementation.

Physical Applicability of EPF Scheme

The Employees’ Provident fund (EPF) Scheme is enforceable throughout the territory of India, except the state of Jammu and Kashmir. This ensures that every eligible individual is covered by the Scheme regardless of his/her domicile or place of work, making in at inclusive scheme.

EPF Eligibility

The provisions of EPF Scheme are applicable to the following categories of organisations.

  • An organisation which is involved in an activity mentioned under Schedule 1 of this Act.
  • A company which employs more than 20 people.
  • A cinema theatre which employs more than 5 people.


While this Scheme is designed to cover every working individual, there are certain exemptions provided. These exceptions are mentioned below.

  • Co-operative societies which work without the aid of power and employ under 50 people.
  • Organisations established by central or state acts under which employees are provided benefits including PF contribution or pension.
  • Organisations under the control of central or state governments wherein employees are eligible for benefits like PF and pension.

Who is an Employee?

Under the provisions of this scheme, an employee is defined as any individual who is employed for wages in an organisation. This includes individuals working on a contract basis and those who are hired permanently. Wages under the scheme refer to all remunerations which an employee earns while associated with the organisation. Food concession, dearness allowance, bonus, presents and overtime do not classify as wages under this scheme.

Cover offered by EPF Scheme

The EPF Scheme is designed to offer certain benefits to individuals covered under it, taking care of the following needs.

  • Medical care and Housing
  • Education of dependents (children)
  • Finance of insurance and health policies
  • Family obligations
  • Retirement

Contributions under EPF Scheme

As per the provisions of the EPF Scheme, both an employer and an employee are expected to make contributions towards this fund. A contribution equivalent to 12% of the Basic DA, retaining allowance and cash component of food allowance need to be made, provided this contribution is limited to under Rs 6,500 per month. Individuals can choose to enhance their contribution voluntarily, provided both the employee and employer agree for the same.

This contribution is lowered to 10% for companies covered before 22/9/1997, employing under 20 people. Sick industrial companies, organisations which suffer financial losses equivalent to their net worth and those manufacturing bricks, jute, beedi, coir and guar gum products also fall under this category.

When are accumulated funds payable?

An employee can withdraw EPF balance under the following circumstances.

  • On retirement from service. An employee should have attained the age of 55 years to be eligible for withdrawal.
  • On moving to another country in pursuit of employment or permanent settlement.

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