The Central Government can make it compulsory for organizations with less than 20 employees to contribute towards EPF by giving them two months’ notice. Organizations with less than 20 employees can also contribute towards EPF on a voluntary basis. The employee and employer each contribute 12% of the employee’s basic salary towards EPF. In case the organization has less than 20 employees, the employer’s contribution is 10%.

It is an important tool for workforce to make investment/saving in EPF or Employees Provident Fund. EPFO or Employees Provident Fund Organization of India manages the Provident Funds of the employees under Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. Once an establishment employs 20 or more people, it becomes mandatory for the organization to obtain an EPF Registration. The total contribution to the PF fund is 12% of basic salary plus DA plus retaining allowance by employee and employer both.

Statutory Guidelines adherence – PF Registration helps businesses adhere to statutory guidelines since it is mandatory for businesses with over 20 employees.

Employee savings – It aids savings for employees by maintaining a regular fund contribution from both employer and employees.

Fund availability – Contributions to Provident fund can be withdrawn by employees in their time of need such as medical emergency, marriage expenses, education, etc.

Tax benefits – The interest earned on the Provident fund savings are tax-free and the contributions to the fund are deductible from salary.

Safe Investment – The PF amount is safe and secure from any market variations and employees are assured a return on their principal amount.