OCTET THINGS ABOUT PROVIDENT FUND

Q&A BY: JAYAPRAKASH "JP" NAYAK

1. Do you know, what is the Contribution for Provident Fund both by the Employer & Employee?
• Answer is The Employee contributes 12% of his /her Basic Salary & the same amount is contributed by the Employer.


2. Is it Compulsory for the all the employees to contribute to the Provident Fund?
• Employees drawing basic salary upto Rs 6500/- have to compulsory contribute to the Provident fund and employees drawing above Rs 6501/- have an option to become member of the Provident Fund.


3. Is it beneficial for employees who draw salary above Rs 6501/- to become member of Provident Fund?
• Yes because provident fund contribution by the employer & employee is not a taxable income for Income Tax purpose.


4. you may have a question that, What if an employee while joining establishment has a basic salary of Rs 4200 and after some period of time his basic salary increases above Rs 6501/-, does he have an option to terminate his member ship form the Provident fund act?
• Don’t worry the solution is, Employee who while joining the organization has a basic salary above Rs 6501/- have an option to either become or avoid becoming member of Provident fund but employees whose basic salary while joining the organization is less then Rs 6501/- but after some period of time their basic increases above Rs 6501/- have to compulsorily continue to be member of provident Fund.


5. What is the contribution percentage to the Provident fund and Pension Scheme?
• : Employers contribution of 12% of basic salary is totally deposited in provident fund account whereas out of Employees contribution of 12%, 3.67% is contributed to Provident fund and 8.33% is deposited in Pension scheme.


6. Which form has to be filled while becoming member of provident fund?
• : Nomination Form No 2 has to be filled to become a member of the Provident fund, form is available with HR department.


7. Which form has to be filled while transferring provident fund deposit?
• You just have to fill form no 13 to transfer your P.F amount.


8. What is the provision of the scheme in the matter of nomination by a member?
• Each member has to make a nomination to receive the amount standing to his credit in the fund in the event of his death. If he has a family, he has to nominate one or more person belonging to his family and none other. If he has no family he can nominate any person or persons of his choice but if he subsequently acquires family, such nomination becomes invalid and he will have to make a fresh nomination of one or more persons belonging to his family. You cannot make your brother your nominee as per the Acts.