Employee Provident Fund (EPF) rules amendment 2019: The government is planning to amend certain sections of The Employees' Provident Funds And Miscellaneous Provisions Act, 1952 to bring more clarity to the law.
Employee Provident Fund (EPF) rules amendment 2019: The government is planning to amend certain sections of The Employees’ Provident Funds And Miscellaneous Provisions Act, 1952 to bring more clarity to the law. The proposed amendments also seek to empower subscribers by making the payment of PF dues the topmost of priority of companies. At a time when a lot of companies are going bankrupt or closing down or facing downtrend because of several reasons, this proposal is set to boost the confidence of lakhs of employees enrolled under the EPF scheme.
The government has put the draft ‘The Employees’ Provident Funds and Miscellaneous Provisions (Amendment) Bill, 2019’ for discussion. It proposes to amend Section 11 of the EPF Act. Upon Amendment, it would read, “11. Priority of payment of contribution over other debts. – Notwithstanding anything contained in any other law for the time being in force, any amount due under this Act shall be the first charge on all assets of the establishment and shall be paid in priority to all other debts.”
The current provisions under Section 11 of the Act appear complex and leave ordinary readers confused. The amendment would make it clear to companies that the payment of PF due is the priority and it can’t be compromised.
The draft law also proposes to increase the fines for companies trying to avoid payment towards PF, contravene of make default in complying with the law. It also allows subscriber an option to switch from Employee Pension Scheme (EPS) to National Pension System (NPS).
Under the Employee Provident Fund (EPF) scheme, the employer contributes a minimum 12 per cent of the employee’s basic pay and DA towards EPF and EPS. Of this, 8.33 per cent goes towards EPS. The employee contributes 12 per cent of basic and DA towards EPF. The government has also proposed to reduce the employee’s contribution from 12 per cent to 10 per cent.
6.8 lakh companies closed
The government had informed the Lok Sabha in July this year that around 6.8 lakh companies have been closed across India. Of these, over 1.42 lakh were in Maharashtra, over 1.25 lakh in Delhi, over 67,000 were in West Bengal These companies have closed since the government has started taking action against companies not filing their annual financial statements, or returns, or fake companies.