getifyhr, Author at GetifyHR

EPF Act – Family Cover through EDLI and its benefits!

Introduction

The Employees Provident Fund Organization (EPFO) is one of the two main Social Security schemes under the Government of India, the other being Employees State Insurance (ESI). The EPFO comes under the aegis of the Ministry of Labour and Employment and is responsible for the regulation and management of Provident Funds in the country. The EPFO manages and administers the Employees Provident Fund (EPF), Employees Pension Scheme (EPS), and Employees Deposit Linked Insurance (EDLI).

EDLI

All the members of the EPFO are covered under the insurance scheme known as EDLI or Employees Deposit Linked Insurance. In this article, we explain the key features of the scheme, eligibility, and benefits of the scheme.

The EDLI scheme was launched in the year 1976 to provide insurance cover to members of the EPFO. Through this scheme, the family of a member gets financial assistance in the case of the death of the member while in service. The insurance cover will depend on the salary drawn in the last 12 months of employment before death.

Under this scheme, there is no exclusion.

EDLI Contribution

The employees and employers contribute to the EPFO scheme and this contribution is split among the three schemes namely, Employees Provident Fund (EPF), Employees Pension Scheme (EPS), and Employees Deposit Linked Insurance (EDLI). There is no contribution from the Employees towards the EDLI scheme, whereas, the employee contribution is 0.5% of the Basic salary + DA, subject to a maximum of Rs:75/-. Eligibility kicks in only when the member has continuously worked for 1 year and is an active member of the EPF.

EDLI Calculation

The average salary drawn by the deceased member during the 12 months before death is taken for calculation of the EDLI benefit. 35 times the average salary in the last 12 months is taken for the calculation, subject to a maximum salary that is capped at Rs:15,000/-. The calculation is as follows:

35,000 x 15,000 = Rs: 5,25,000/-

To this amount, an additional bonus amount of Rs:1,75,000/- is added taking the total amount payable to Rs:7,00,000/-.

Eligibility to claim the EDLI Benefits

The insurance benefits can be claimed by the family members, legal heirs, and nominees of the member.

– Member of the family nominated by the member under the EPF scheme

– In case a nomination has not been made, all the members of the family except major sons, married daughters with major sons, and married granddaughters.

– In case there is no family and no nomination, then legal heirs.

– In the case of a minor, the guardian/family member/legal heirs.

Forms Required

To claim the insurance, the nominee, legal heir, and family member have to apply in EDLI Form 5 IF. The claim form has to be filled separately by each claimant and if the claimant is a minor, the guardian has to fill the form on his/her behalf.

The form has to be filled offline and has to be submitted to the regional EPF Commissioner’s Office along with the Death Certificate issued by the Employer, mentioning the date of death of the member. The Form should also mention the mode of fund transfer.

How to claim EDLI benefits?

The member should have been an active member of EPF at the time of death.
Form 5 IF has to be filled and submitted to the EPF Commissioner to get the insurance benefit.
The form has to be signed and certified by the employer.
Where there is no employer, the form has to be attested by any of the following officials:

– A gazetted officer

– The District Magistrate

– Member of Parliament or MLA

– President of the Village Panchayat

– Chairman/Secretary/Member of the Municipal or District Local Board

– Postmaster or Sub-Postmaster

– Regional Committee of EPF or Member of CBT

– Manager of the Bank in which the account is maintained.

Documents required for claiming EDLI

- Death Certificate of the Member
- Guardianship Certificate if a person other than the natural guardian files the claim on behalf of a minor family member/nominee/legal heir.
- Succession Certificate in case the legal heir makes the claim
- A copy of the canceled cheque of the Bank account to which the payment has to be made.
- Where the member was last employed under an establishment that is exempted under the EPF Scheme, the employer of such establishment should furnish the PF details of the last 12 months under the certificate part and also submit an attested copy of the Member Nomination Form.

The EPF Commissioner is liable to settle the claim within 30 days failing which he is liable to pay interest @ 12% per annum from the stipulated date to the actual date of settlement.

The EDLI Scheme under the EPF Act provides critical support to the family members of a member who has died while in service. The family members, nominees, and legal heirs are eligible to get a maximum of ₹ 7,00,000 in the event of the death of the member in service. This is a great boon to the family at a very critical juncture.

GetifyHR has been able to provide strong support to clients across the country through its Payroll and HR management outsourcing module. This has provided our clients with a strong edge and helped them to improve the overall performance of the company. Through this outsourcing module, the entire gamut of Payroll processing and HR Management are handled seamlessly and efficiently. This has not only enhanced the performance of the company but has also ushered in a more harmonious work atmosphere.

What is the Labour Welfare Fund and what are its benefits?

Introduction

The Labour Welfare Fund is an initiative by the Government of India to extend a measure of social assistance to employees in the unorganized sector. It is a kind of financial assistance for workers to improve their working conditions and standard of living.

Out of the 36 states and Union Territories, only 16 States/UTs have so far implemented this Act. As per the Act, the employees and employers contribute towards this Fund, and in some states, the state also contributes. Since the Fund is managed by independent states, the rules vary from one state to another. Any business/industry that satisfies the criteria of number of employees required by the Act to come under its purview has to register with the concerned Labour Department of the state.

Eligibility

In Tamil Nadu, if a company has 5 or more employees on its payroll then it has to register with the Labour Department. In Kerala, it is 2 or more employees and in Gujarat, it is 10 or more employees. Each State/UT has its own rules to become eligible for registration.

The Act is not applicable to all categories of employees, and depends on the wages earned and the designation of the employees. Those employees who are in the managerial or supervisory position and drawing salary that is more than what is stipulated in the Act are not eligible for the Fund. This will vary from state to state.

States/UTs that have implemented the LWF Act

The following States and Union Territories have implemented the Labour Welfare Fund Act:

Andhra Pradesh
Chandigarh
Chattisgarh
Delhi
Goa
Gujarat
Haryana
Karnataka
Kerala
Maharashtra
Madhya Pradesh
Odisha
Punjab.
Tamil Nadu
Telengana
West Bengal.

States/UTs that have not implemented the LWF Act

The following States and Union Territories have not implemented the Labour Welfare Fund Act:

Andaman & Nicobar Islands
Arunachal Pradesh
Assam
Bihar
Dadra and Nagar Haveli
Daman and Diu
Himachal Pradesh
Jammu and Kashmir
Jharkhand
Lakshadweep
Manipur
Megalaya
Mizoram
Nagaland
Pondicherry
Rajasthan
Sikkim
Tripura
Uttar Pradesh

Amount of Contribution

The amount of contribution also varies from state to state. The following table provides details of the contribution period, contribution amount and due dates for remittance of the contribution.

State/UT	Contribution regularity	Contribution Months	Employee Contribution	Employer Contribution	Contribution Total	Return & Due Date
Andhra Pradesh	Annual	December	30	70	100	Form F Jan 31
Chandigarh	Monthly	April-March	5	20	25	Nil Oct.15 Apr.15
Chattisgarh	Half-Yearly	June- Dec.	15	45	60	Form A 31 July 31 Jan
Delhi	Half-Yearly	June-Dec.	0.75	2.25	6	Form A 15 July 15 Jan.
Goa	Half-Yearly	June-Dec	60	180	240	Form A 31 July 31 Jan.
Gujarat	Half-Yearly	June-Dec	6	12	18	Form A1 31 July 31 Jan.
Haryana	Monthly	Jan – Dec	31	62	93	Nil 31 Dec
Karnataka	Annual	December	20	40	60	Form D 15 Jan.
Kerala	Half-Yearly	June-Dec	4	12	16	Form A 15 July 15 Jan
Maharastra	Half-Yearly	June-Dec	6/12	18/36	24/48	Form A1 15 July 15 Jan
Madhya Pradesh	Half-Yearly	June-Dec	10	30	40	Nil 15 July 15 Jan
Odisha	Half-Yearly	June-Dec	20	40	60	Form F 15 July 15 Jan
Punjab	Monthly	April-March	5	20	25	Nil 15 Oct 15 April
Tamil Nadu	Annual	December	20	40	60	Form D 15 Jan
Telengana	Annual	December	2	5	7	Form F 31 Jan
West Bengal	Half-Yearly	June-Dec	3	15	18	Form D 15 July 15 Jan.

How is the Labour Welfare Fund utilized?

The Labour Welfare Fund is utilized by the Labour Welfare Board to cover the following activities.

To provide Libraries
For Vocational Training
To provide adequate nutrition to children
Towards transport facilities
For the education of children, through scholarships
To provide Medical facilities for employees and dependents
To provide entertainment facilities to the employees – sports, art forms, music
To provide vacation facilities for employees and their families
For providing subsidiary occupation for women and unemployed persons.
To provide assistance for Natural and Accidental Death. In Tamilnadu an Accidental death Assistance of ₹ 1,00,000 and ₹5,000 towards funeral expenses is provided. When death is natural, a sum of ₹25,000/- assistance along with ₹5,000 towards funeral expenses is provided.

Conclusion

The Labour Welfare Fund Act is an important legislation to protect the interests of the workers, especially in the unorganized sector. However, only 16 states and UTs have so far implemented the Act. Though it has not been implemented in all the States and Union Territories in the country, many states and UTs are in the process of implementing them shortly.

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What are the policies that should be maintained in a company that is covered by the Shops and Establishment Act?

Introduction

The Shops and Establishment Act was established to protect the rights of employees in commercial establishments like business houses, offices, stores, warehouses, hotels, amusement parks, theatres, etc., nationwide. The provisions of the Act form one of the most important regulations required to be complied with by businesses. Every state has framed its own separate Shops and Establishment Act. However, the scope of the Act is similar across the nation, barring a few minor changes from state to state.

The Shops and Establishment Act regulates the following areas:

– Working hours

– Rest intervals for employees

– Overtime eligibility

– Leave Policy

– Opening and Closing hours of the establishment

– Weekly holidays, national and religious holidays

– Wages for holidays

– Annual, Casual, Maternity, and Sick leave

– Time and conditions for payment of wages

– Deduction of Wages

– Termination conditions

– Cleanliness, lighting, and ventilation of premises

– Precautions against fire

– Prohibition of employment of children

– Employment of young persons or women

– Maintaining various records/registers

– Display of Notices-Certificates

The establishments that are registered under the Shops and Establishment Act have to frame certain policies that will enable them to comply with all the regulations of the Act. Failure to do so will attract penalties and other penal actions.

This article articulates the policies and actions to be taken by establishments that are registered under the Shops and Establishment Act.

Registration:

Any company or establishment that is subject to come under the rules of the Shops and Establishment Act has to register with the Labour Department. These registrations have to be made within the days mentioned in the Act and this would differ from state to state. In some states, the registration has to be obtained within 30 days of the commencement of business, whereas, in some other states it is 60, 90, or even 180 days from the commencement of business.

Hours of Business – Opening and Closing hours:

This should be fixed in accordance with the provisions of Chapter III of the Act. Typically the Act specifies that an employee has to work for 48 hours a week and shall not work for more than 9 hours in a day. This may vary from state to state.

Weekly, National, and Religious Holidays:

The Act provides for at least one-day weekly holiday. In addition to this, the employees are eligible for Casual Leave, Annual Leave, Sick Leave, and Maternity Leave as per the provisions of the Act in the states.

National Holidays may be common across the states but the Religious holidays may vary from state to state. A proper leave policy has to be maintained by the establishment.

Payment of Wages:

The Act provides that the employees are paid their wages on time and as per the employment contract. In addition to this paid leave can be availed by employees and this includes Annual Leave, Sick Leave, and Maternity Leave. Typically, employees are eligible for at least 12 days of paid leave per year and this may vary from state to state.

Overtime Wages:

Employees who work for extra hours are eligible for overtime wages and this should be paid in accordance with the rules.

Deduction of Wages:

Wage deduction policies should be as per the rules framed in the Act for such deductions.

Termination from Service:

Proper policies have to be framed as per Sec.66 the Act for Termination of Employees.

Employment of Children

The Act has provisions for the employment of children and this should be properly reflected in the policies of the establishment.

Employment of young persons and Women:

As per the Shops & Establishments Act, there are strict rules regarding the employment of young persons and women. These mostly pertain to the number of hours and working hours. These policies should be strictly maintained by the establishment.

Register and Records:

Specific Registers and records have to be properly maintained as per the Act. These include the Register of Employees, Register of Wages and Deductions, etc.

Cleanliness, Lighting, and ventilation of the premises:

The Establishment has to maintain a clean and dust-free workplace. Proper ventilation has to be provided on the premises with adequate lighting. The Act mandates that a safe and secure work atmosphere is provided to the employee.

Provisions for Fire Emergency

The Act envisages the need for having emergency exits in the event of fire risks.

Full-body Medical check-up:

All employees should undergo a full-body medical check-up by a certified surgeon or doctor at least once a year. These records have to be properly maintained.

Conclusion

Any establishment that comes under the purview of the Shops & Establishment Act has to strictly adhere to the rules and regulations, failing which they will be penalized.

These may be in the form of fines or in some cases imprisonment. Contravening these rules is a serious offense and it is therefore in the interest of the establishment to have clear policies that enable full compliance.

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ESIC eligibility criteria and benefits for members and dependents!

The Employees’ State Insurance (ESI) scheme was launched by the Government of India with the primary objective of providing cover to employees from health-related contingencies such as permanent or temporary disablement, sickness, death due to injury caused during employment or occupational disease that adversely affects the earning capacity of the worker. Through this scheme, an employee will be able to overcome the financial burden due to such eventualities.

Eligibility

The ESI Act provides Medical cover and other benefits to employees in factories, business establishments like hotels, cinema houses, road transport, newspapers, educational and medical institutions, and shops wherein 10 or more persons are employed. The scheme offers benefits to both the employees and their dependents in case of any emergencies like hospitalization or accidents at the workplace.

As per the Act, any worker or employee earning wages up to ₹ 21,000 per month is entitled to these benefits.

The Benefits

The benefits that members or their dependents are eligible to receive have been spelt out in Section 46 of the Act. Members are eligible to receive six social security benefits and they are as follows:

Medical Benefit
Sickness Benefit
Maternity Benefit
Disablement Benefit
Dependent Benefit
Other Benefits

I. Medical Benefit

Through this full medical care is provided to the Insured Person (IP) and his family members from the day of entering insurable employment. The family includes spouses, dependent children up to 18 years (if continuing education up to 21 years) dependent unmarried daughter, dependent infirm children, and dependent parents.

Also if the Insured Person is unmarried and his/her parents are not alive, the minor brother or sister wholly dependent on the earnings of the Insured person.

There is no ceiling on the expenditure incurred in the treatment of the insured person or his/her dependent. The Act also provides medical care to retired and permanently disabled insured person and their spouse on payment of a token annual premium of ₹ 120. The following are the provisions and benefits.

System of Medicine
Entitlement
Benefits to retired persons
Domiciliary Hospitalization
Consultation with Specialists
Investigation and Imaging Services
In-patient treatment
Artificial Limbs and Aids

1. System of Medicine

The Allopathic system of Medicine is the normal system of treatment. However, considering the request of a substantial number of workers to provide treatment in the Indian System of Medicine and Homoeopathy (ISM & H), treatment is now been provided through Ayurveda, Unani, Siddha, and Homoeopathy, and also through Yoga therapy.

The required certificates for availing of the benefits have to be issued by the concerned Insurance Medical Officer (IMO) or Insurance Medical Practitioner (IMP) appointed by the State government. This facility is available in 95 selected ESI Hospitals/Dispensaries throughout the country.

2. Entitlement

The State Government in consultation with the Corporation prescribes the level of entitlement benefits that members or their family members are entitled to. An IP or a family member can only avail of the medical benefits prescribed. All beneficiaries are entitled to reasonable medical, surgical, and obstetric treatment.

Entitlement of IPs

ESI Hospital / Dispensary / Diagnostic Centre and other recognized institutions offer the following treatment to all IPs.

– Outpatient Treatment

– Domiciliary Treatment

– Hospitalization as In-patient

– Full supply of Drugs, dressings, aids, appliances, and artificial limbs.

– Laboratory and Imaging services.

– Entitled to receive benefits under the Integrated family welfare scheme, MCH, and other national health programs.

– Ambulance service or reimbursement of conveyance charges for visiting hospitals or diagnostic centres.

– Medical Certification

– Other special provisions.

Entitlement of Family Members

Family members of an IP are entitled to one or other medical benefit:

– Full Medical Care which means all facilities entitled to IPs including hospitalization

– Extended Medical Care which includes all facilities provided to IPs but without hospitalization.

However, plans are afoot to provide uniform Medicare Care to family members in all implemented areas as the rates of contribution paid by the employee and employer are uniform across the country.

2. Benefits to Retired IPs and Disabled Persons

Under Section 56 of the Act, a member on payment of a lump sum ₹ 120 for one year in advance, (₹ 10 per month) can avail of the following benefits:

– This benefit is available till the period for which the Insured person contributes. The insurance should not be for less than five years and the IP should have left insurable employment on attaining the age of superannuation or taken VRS or retired prematurely. The spouse is also entitled to this benefit.

– An insured person or his/her spouse who ceases to be in insurable employment on account of permanent disablement due to injury suffered during employment shall be entitled to receive medical benefits.

3. Domiciliary Treatment

The IPs and his/her family members are entitled to free medical treatment at their residence when the patient’s condition is such that he/she cannot undertake travel to attend the clinic/dispensary. The concerned IMO/IMP is required to attend to the person at his/her residence. The IMO/IMP is required to maintain a proper record of the domiciliary visits in a register month-wise.

4. Consultation with Specialists

As per the Act, Specialist consultation to IPs and members of their family is to be provided in areas with “Expanded” and “Full” Medical care. Specialist consultation may be provided at Specialist/Diagnostic Center’s, ESI Hospitals, and at such other institutions where Specialists/Super Specialists have been appointed on a full-time/part-time basis.

Such Specialist Consultations are available in specialties like General medicine, Surgery, Pulmonary Medicine, Obstetrics and Gynaecology, Paediatrics, Ophthalmology, ENT, Orthopaedics, Cardiology, Neurology, Urology & Nephrology, Gastroenterology, Endocrinology, Oncology, and many other specialties.

5. In-Patient Treatment

In areas with “FULL” Medical Care facilities, the family members are entitled to hospitalization. IPs are eligible for hospitalization in all areas. All ESI Hospitals provide in-patient treatment. This facility is also available by reservation of beds in hospitals owned by the State government, or in Private institutions, or by constructing annexes to such institutions.

6. Investigation and Imaging Services

The IPs and family members are entitled to free Laboratory Investigation and Imaging Services. The Imaging facilities include CT Scans, MRI & Echo-Cardiograph. These services can be availed from state-level specialty hospitals or other institutions that have tie-up with ESIC.

7. Artificial Limbs and Aids

IPs and their family member are provided the following Artificial Limbs and aids as part of the medical care under the ESI scheme.

Artificial Limbs, Hearing Aids, Wigs (for women beneficiaries only), Cardiac Pacemaker, Wheelchair/Tricycle, Spinal support, Cervical Collar, Crutches, Surgical Boots, Hip Prosthesis, intra-Ocular Lens, and any other aids or appliances prescribed by the Specialist. Apart from this, Spectacles, Artificial Dentures, and Artificial Eyes are available to the IPs only. The expenses incurred for purchasing artificial limbs and aids are met from the shareable pool of expenditure on medical care.

II. Sickness Benefits

Sickness Benefit is a benefit in the form of cash compensation payable to the IPs during periods of certified sickness. 70% of average daily wages are payable to the IP up to a maximum of 91 days in a year on condition that the insured person has contributed for 78 days in a contributory period of 6 months.

1. Extended Sickness Benefit

Continuous insurable employment for two years with 156 days contribution in four consecutive periods is required to avail of this benefit if suffering from 34 specified long-term diseases.

The benefit is available for 309 days which may be extended up to two years on medical advice up to 60 years of age and can be availed during a period of three years. Rate: 80% of the average daily wages.

2. Enhanced Sickness Benefit

Payment of contribution for 78 days in the corresponding contribution period of six months

This benefit is payable to IPs undergoing sterilization for family planning. Full wages are paid for 7 days for Vasectomy and 14 days for Tubectomy, and are extendable on medical advice. The rate of payment is 100% of the daily average wages.

III. Maternity Benefit

Payment of contribution of 70 days in two preceding contribution periods (one year).

Benefit: Up to 26 weeks in case of normal delivery and up to 6 weeks in case of miscarriage, that is extendable by 4 weeks on medical advice. For insured women with two or more surviving children Maternity Benefit will be for 12 weeks. Rate: 100% of the average daily wages.

IV. Disablement Benefit

1. Temporary Disablement Benefit

From day one of entering insurable employment irrespective of having paid any contribution and payable for employment injury cases only.

Benefit: As long as temporary disablement lasts. Rate: 90% of the average daily wages.

2. Occupational Diseases

The Occupational Diseases is defined in the third schedule of ESI Act, 1948 and as confirmed by the Special Medical Board are treated as Employment injury.

Benefit: As long as temporary disablement lasts. Rate: 90% of the average daily wages.

3. Permanent Disability Benefit

Same as in the case of temporary disablement but after Medical Board decision.

Benefit: For whole life. Rate: 90% of the average daily wages if permanent disability is total. In case of partial disablement proportionate to the loss of earning capacity.

V. Dependent Benefit

If the IP is deceased and the cause of death is due to employment injury or occupational hazard, then the benefit is paid to the dependents of the deceased IP.

To the widow for life or until her re-marriage. To children till the age of 25 years. To dependent parents for life.

Rate: 90% of the average daily wages shareable in fixed proportion.

VI. Other Benefits

1. Funeral Expenses

From day one of entering insurable employment and if eligible for any benefit as an insured person. Rate: Actual expenses subject to a maximum of ₹ 15,000 (w.e.f. 01-03-2019).

2. Confinement Expenses

Confinement expense is paid to a woman IP or an IP in respect of his wife in case the confinement occurs in a place where necessary medical facilities under the ESI scheme are not available.

Benefits: Up to two confinements only. Rate: ₹ 5,000 per case.

In addition to the above, Vocational Rehabilitation benefit is provided to permanently disabled IPs for undergoing Vocational Rehabilitation training at the VT Centres. IPs are also eligible to receive Physical Rehabilitation benefits in case of physical disablement due to employment injury.

3. Unemployment Allowance

The IP also benefits from 2 schemes introduced by the Government:

1. Rajiv Gandhi Shramik Kalyan Yojana

This scheme was launched on 01-09-2005. In case of involuntary loss of employment due to closure of the establishment, retrenchment of due to permanent disablement due to non-employment injury and the contribution in respect of him have been paid/payable in for a maximum of 2 years prior to the loss of employment.

Benefit: maximum twenty four months during the lifetime. Rate: 50% of the average daily wages for first 12 months and thereafter 25% of average daily wages up to 24 months.

2. Atal Beemit Vyakti Kalyan Yojana

The ESI Corporation has introduced the Atal Beemit Vyakti Kalyan Yojana (ABVKY) with effect from 01-07-2018 as a welfare measure for employees who have been rendered unemployed.

Benefit: Subject to the eligibility conditions, in the form of cash compensation up to 25% of the average daily wages up to 90 days, once in a lifetime, to be claimed after 3 months from unemployment in one or more spells.

4. Vocational Training

Vocational Training is provided in case of physical disablement due to employment injury.

Benefits: As long as vocational training lasts. Rate: Actual fee charged or ₹ 123 a day or whichever is higher.

5. Physical Training

Physical Training is provided in case of physical disablement due to employment injury.

Benefits: As long as a person is admitted in an artificial limb Centre. Rate: 100% of the average daily wages.

6. Skill Upgradation Training

Skill Upgradation Training is provided in case of physical disablement due to employment injury.

Benefits: For a short duration maximum up to 12 months.

7. Quota for MBBS/BDS Admission

The children of Insured Person/Insured Woman who satisfy the eligibility conditions as per the guidelines issued by ESIC Headquarters from time to tome published in the website www.esic.nic.in will be eligible for admission under IP quota in Medical Institutions.

Benefits: MBBS/BDS seats are reserved for wards (children) of IP in ESIC Medical/Dental Colleges. The candidate should attend the NEET Examination and should find a place in the rank list.

Conclusion

The benefits provided to employees through the ESI scheme have enabled employees to withstand the financial pressures due to medical emergencies and injuries caused in the course of employment. Both the IPs and their family members have benefitted greatly from these schemes and they stand testimony to the various welfare measures introduced for the welfare of employees.

GetifyHR, one of the premier outsourcers of Payroll Processing and HR Management has been assisting clients across the country in all aspects of payroll processing and statutory compliance issues. We have been able to also assist employees to receive all their benefits so that they could tide over very serious crises in their life by way of hospitalization due to medical emergencies and injuries suffered during employment. This has enabled management to enjoy a greater rapport with the employees and has helped to promote positive growth.

What is Professional Tax, Rates, Due Date, Compliance

Professional Tax is a direct tax levied by the state government on individuals who earn a living through employment or as professionals like doctors, lawyers, chartered accountants, any business, freelancers, HUF, and other professionals. The Professional Tax rates and the methods of tax collection differ from state to state and some states do not impose this tax.

The state governments are empowered to frame these laws pertaining to Profession tax under Article 276 of the Constitution of India which deals with tax on profession, employment, and callings.

Professional Tax is levied by the Commercial Taxes Department of each State. The tax is levied based on the income earned through profession, business, or employment. In other words, it’s a tax ₹that is to be paid by each individual who earns income. As mentioned earlier, the tax amount collected differs from state to state and each state or union territory follows its slab system to collect the tax. However, there is a ceiling on the amount of tax that can be collected in a year.

When Professional Tax was imposed in the year 1949 the maximum amount to be collected was ₹ 250 per year. In the year 1988, this was raised to ₹ 2500, and till today it remains unchanged.

What are the different professional tax rates?

The slab structure existing in 2 major districts is briefed hereunder to illustrate the Professional tax rates.

Professional tax slabs in Coimbatore

Salary Slab	Tax Amount
Upto Rs.21,000	NIL
Rs. 21,001 to 30,000	Rs. 171
Rs. 30,001 to 45,000	Rs. 428
Rs. 45,001 to 60,000	Rs. 856
Rs. 60,001 to 75,000	Rs. 1250
Above Rs.75,000	Rs. 1250

Professional tax slabs in Chennai

Salary Slab	Tax Amount
Upto Rs.21,000	NIL
Rs. 21,001 to 30,000	Rs. 135
Rs. 30,001 to 45,000	Rs. 315
Rs. 45,001 to 60,000	Rs. 690
Rs. 60,001 to 75,000	Rs. 1025
Above Rs.75,000	Rs. 1250

States and Union Territories where Professional Tax is applicable

The following are the states and union territories where Professional Tax is applicable:

Andhra Pradesh
Assam
Bihar
Chattisgarh
Gujarat
Jharkhand
Kerala
Karnataka
Maharashtra
Megalaya
Madhya Pradesh
Manipur
Mizoram
Nagaland
Odisha
Puducherry
Punjab
Sikkim
Tamilnadu
Telangana
Tripura
West Bengal

States and Union Territories where Professional Tax is not applicable

The following are the states and union territories where Professional Tax is not applicable:

Arunachal Pradesh
Andaman and Nicobar Islands
Chandigarh
Delhi
Daman & Diu
Dadar and Nagar Haveli
Goa
Himachal Pradesh
Haryana
Jammu & Kashmir
Ladakh
Lakshadweep
Rajasthan
Uttar Pradesh
Uttarakhand

Who collects Professional Tax?

The Commercial Tax Department of the respective state is responsible to collect Professional Tax.

Whose responsibility is it to pay Professional Tax?

Based on whether the taxpayer is a salaried employee, a professional, a trader, or a freelancer the method of paying Professional Tax varies.

If the taxpayer is a salaried employee, then it is the responsibility of the employer to deduct the tax complement and remit the tax to the government.
If the taxpayer is a professional like a doctor, a chartered accountant, an engineer, a lawyer, or some other professional, the individual has to register with the department and pay the relevant tax as and when it is due.
Individuals who are carrying out freelancing activities are required to register with the department and pay tax accordingly.
Any individual who is carrying on a trade (Corporate, partnership firms, sole proprietorship, etc.) is also required to register and obtain a Professional Tax registration certificate to be able to pay the relevant tax. In addition, the employer has to obtain a professional tax enrolment certificate to be able to deduct the tax from his employees and pay the government. Where the offices are located in different locations, separate registration has to be obtained.

Who is exempted from paying Professional tax?

The Professional Tax Rules expect every individual who earns a regular income to pay the tax to the government as and when due. However, there are certain exemptions to these rules. The list below gives details of the categories of people who are exempted from paying Professional Tax.

Members of the three services, the Army, Air Force, and Navy.
An individual who suffers from mental or physical disability. The disability could be blindness, deafness, or any other disability.
Parent of children who suffer from mental or physical disability.
Hospitals run on charity that is located in places that are below the taluk level.
Workers who are temporarily employed in a factory.
Individuals running educational institutions.
A foreigner who has been employed by the State.
Any individual whose age is above 65 years.
Women who are solely engaged as agents under the Mahila Pradhan Kshetriya Bahat Yogana (MPKBY) of the Government of India.

Penalties for non-compliance with Professional Tax rules and non-payment of tax

The penalty for non-compliance and non-payment of tax is determined by the Professional Tax regulation of each state. Businesses that fail to register with the authorities or default in payment or fail to file the returns by the scheduled date are penalized with fines, late fees, or interest. For example, Karnataka imposes a fine of 1.25% per month on any unpaid tae, whereas, West Bengal imposes an annual fee of 12% on a registered employer who fails to pay the tax dues. In Maharastra, the penalty of ₹ 5 per day is imposed for late registration. For late payment of tax, 1.25% monthly interest is charged and for non-payment, a 10% penalty is imposed. For late submission of returns, the penalty is in the range of ₹ 1000 to ₹ 2000.

Conclusion

Professional Tax is a mandatory tax levied on every individual who earns a living. This may be a very onerous tax and with the frequent changes in the rules and regulations, it is advisable to consult with professionals to be fully compliant.

GetifyHR has immense experience in handling Professional Tax and all other Statutory Compliance issues. With our high-performance, technology-oriented, cloud-based outsourcing Payroll and HR Management module, we have been able to reduce the burden of our valued clients in handling the payroll. All statutory compliance issues including Professional tax matters have been skilfully handled thus guaranteeing the smooth running of the entire payroll and management process.

What are the roles and responsibilities of the HR Generalist?

The Human Resources department assists companies to hire and retain talent, empower them with new skills, and receive consistent payments commensurate to the job. Each role in the HR department might have different roles and responsibilities. In the HR hierarchy, if an HR professional performed a variety of duties, then he may be called a HR Generalist. In this article, we discuss the roles and responsibilities of an HR Generalist.

What is an HR Generalist?

The HR Generalist is a position in the HR department that is supportive of an HR manager and a few HR Specialists. It is an entry-level position that provides hands-on assistance for handling daily tasks.

The Role of an HR Generalist!

The HR Generalist works with the HR manager or HR Specialists to organize training programs for employees, and recruiting procedures including interviewing and shortlisting candidates, administering salary payments, and benefits, handling leave and attendance, and enforcing company policy and procedures.

The HR department relies on the HR Generalist to handle human resource operations on a day-to-day basis. This requires the generalist to have diverse abilities to handle administrative and strategic responsibilities in the HR department. The HR Generalist is the focal point of contact for employees’ queries and other HR-related activities. The job of the HR Generalist is to ensure that all HR operations run smoothly and effectively so that the entire organization gets maximum value.

This requires the HR Generalist to wear multiple hats in a day. At one period of time, they would be engaging with the employees clearing their doubts and misconceptions, and at other times they would be with the top management discussing strategies or with the HR Manager onboarding new employees into the organization.

Responsibilities of an HR Generalist

People Management

An HR Generalist has to support the top management in decision-making activities related to the employees. This would involve applying HR best practices and devising strategies in line with the company goals and objectives. These activities will ensure steady company growth and will also support employee well-being.

Managing HR-related processes

The HR Generalist has to manage the HR-related processes such as employee relations, performance, recruitment of new employees, fixing compensations and benefits, succession planning, and training and development. They are responsible to support the HR Specialists in the above-mentioned processes.

Handling employee grievances and discipline

Managing employee relationships is an important task of the HR Generalist. The HR Generalist has to manage employee grievances and maintain discipline. Providing advice on employment legislation and keeping the company up-to-date on all the employment rules and regulations. Furthermore, they are entrusted with the job of maintaining cordial relations with all stakeholders, both internal and external.

Leveraging employee-related analytics

An HR Generalist has to leverage employee-related analytics and reporting techniques to understand the indicators of employee management. With this data, they should be able to provide solutions to employee-related issues. Using these analytics they should be able to understand the right time to hire and identify employee attrition rates.

Support the Recruitment process

The HR Generalist should support in talent acquisition and recruitment process by identifying the required candidates, connecting them with the HR Manager, conducting interviews, and shortlisting the candidates. This activity is followed by conducting reference checks, issuing offer letters, and onboarding the selected candidates.

Arranging Training and Development processes

In consultation with the HR Manager and HR Specialists, they have to arrange and participate in training and development sessions to empower the employees and strengthen the employee management process.

Skills, Competencies, and Qualifications of an HR Generalist

An HR Generalist requires certain specific skills, competencies, and qualifications to succeed in the job. What are they?

Sound knowledge of business processes

An HR Generalist requires the ability to develop clear HR policies and procedures that are synchronous with the objectives and goals of the organization. They should be capable of identifying and interpreting business trends and practices and applying the same in their day-to-day activities. In addition to this, they should be able to devise strategies for the business with the needs of both internal and external customers in mind. This will enhance customer satisfaction and personalize the customer experience.

Ability to analyze data

Being able to critically analyze data is an important skill. An HR Generalist should be skillful in using HR metrics, scorecards, KPIs, and dashboards and be able to take informed decisions. They should be able to create business value through the effective use of this data.

Mentorship and support

An HR Generalist should possess the skill to make the employee feel at home. They should provide mentorship and support to the employees and help resolve issues that crop up from time to time. The goal is to develop an inclusive work culture that is aligned with the values of the organization.

Managing Labour Relations

Managing Labour relations is a much sought-after competence by the employer. A prospective HR Generalist candidate should possess a strong technical grasp of labour laws and regulations and be able to maintain a cordial relationship with the employee bodies such as trade unions. They should also be capable of adhering to the company’s labour policies, procedures, and programs and take insightful decisions.

Optimizing the workplace

An optimized workplace contributes to significant improvement in employee productivity and performance. An HR Generalist should be aware of the ways to improve workplace efficiency. They should also be able to identify and understand the needs of the employees at the workplace and enhance the employee experience.

Soft Skills

Apart from technical knowledge, an HR Generalist should also possess soft skills to ensure success. Communication skills, interpersonal skills, listening skills, teamwork, conflict management skills and the confidence and resilience to handle issues are key to success. These soft skills enable HR professionals to optimize their technical skills and deliver positive results. This will not only enhance productivity as an HR but will also make a positive impact on the employees.

Qualification

Most organizations require candidates who have at least a Bachelor’s degree in Human Resources Management or a related subject. However, candidates with Master’s degree are preferred in certain organizations. The HR Generalist post is not an entry-level role, and candidates are required to have relevant experience which normally is 2-5 years.

If a candidate needs to stand out in the crowd then an HR Generalist Certification is recommended. However, any candidate with the required qualification, experience, skill, and competence mentioned here above will make a mark in the industry.

Conclusion

The HR Generalist role involves multiple abilities. On the one hand, they have to ensure the smooth running of the business operations and on the other, they have to manage employees and create a harmonious workplace. In other words, an HR Generalist is a professional with expertise in multiple areas of Human Resources.

GetifyHR, one of the premier outsourcers of Payroll processing and HR Management has been providing its services to a large number of clients across the country. With our highly innovative, cloud-based package we have been able to provide excellent services to our clients in preparing accurate payslips, maintaining employee leave and attendance, and keeping the company fully compliant with all the Statutory Compliance rules and regulations. We can be of real assistance to HR Generalist by providing the most accurate MIS reports through our highly sophisticated package.

Understanding Salary Breakup, structure, and salary components

Salary is the fixed amount of money paid to an employee by the employer in return for services rendered by the employee. The employer and or his/her HR teams have to put in their minds and arrive at the salary to be paid to each employee. They need to have a clear grasp of the working conditions, their importance, and the contributions towards social welfare schemes, taxation, allowance, and such other components.

How is salary structure determined?

For the employer and his/her HR teams, deciding on the right salary can be a very tedious task. A lot of factors have to be considered to determine the right salary for an employee. These factors are:

1. Educational Qualification and Experience

Educational Qualifications and Experience play an important role in not only the selection process but also in determining the salary structure for an employee. The higher the Educational qualification and experience the higher the pay.

2. The Industry

The industry is also an important determinant in fixing the salary. Two individuals employed in two different industries but with the same designation may draw different salaries. The reason for this is that one industry is much larger than the other and the job function may be more critical to a particular industry.

3. The Location of Employment

The location of employment is important because based on the location, the cost of living varies and this will naturally have an effect on the salary structure. The compensation in an urban location would be higher than the compensation in a rural location. However, due to the surge in work-from-home or remote work, the compensation may be more aligned with role-based rather than to location-based.

4. Skill sets that are in demand

Skill sets that are in demand are a key determinant in deciding the compensation to an employee. Any skill set that has a wider role within an organization commands higher value and this translates to higher compensation.

What are the common components of the Salary Structure?

Cost To Company (CTC)
Gross Pay
Net Pay

I. What is Cost To Company (CTC)?

Cost to Company (CTC) is the annual expenditure that a company incurs on an employee. This would depend on the salary and other variable components. CTC is calculated by adding the components like Basic salary, and the additional statutory benefits that employees receive such as EPF, ESIC, HRA, Travel Allowance, Food allowance, Gratuity, Bonus, etc. In other words, CTC is the cost of hiring and sustaining an employee in the company. However, the CTC amount is not the actual amount that an employee takes home at the end of each month.

CTC = Gross salary + Benefits

Components of Benefits

Employer EPF
EPF Administrative Charges
EPF EDLI Charges
Employer ESI
Gratuity
Food Coupon
Mediclaim Premium

1. Employer EPF

The Employees’ Provident Fund is an employee welfare scheme administered by the Employees Provident Fund Organization (EPFO). Under the scheme, both the employees and the employers contribute towards the Fund every month. This is a platform that provides an opportunity for employees to save a part of their salary as a long-term investment. The employer contributes 12% of the basic salary every month towards the Fund. An equal contribution is made to the fund from the employees’ side also. From the employer contribution, 3.67% goes towards EPF, and a portion is contributed towards ESI and related funds.

2. EPF Administrative Charges

The EPF Administrative charges are made from the contributions from the employer’s end towards EPF. From the contribution of 12%, 0.50% is contributed towards EPF administrative charges with effect from June 2018.

3. EPF EDLI Charges

The Employees Deposit Linked Insurance (EDLI) scheme is a part of the EPF and EPS schemes. All employees who subscribe to the PF scheme are automatically enrolled in this scheme. The employee contribution towards this fund is 0.50% (subject to a maximum of ₹ 75.

4. Employer ESI

Employees State Insurance (ESI) is an insurance scheme administered by the Employees’ State Insurance Corporation (ESIC). From the employers contribution of 12% of salary, 3.75 % is contributed towards the ESI Fund. The scheme is applicable for all employees whose salary is ₹ 21,000 or less.

5. Gratuity

Gratuity is a benefit received by the employee from the employer for the services rendered by the employee at the time of leaving the job or on retirement. To be eligible to receive gratuity, an employee has to be in service for 5 or more years. The amount is deducted by the employer every year and hence will get deducted from the CTC.

The Formula for calculating Gratuity is as follows:

Gratuity = n x b x 15/26

Where n = number of years of service, b = basic salary + DA,

When companies adopted CTC concept, every cost was converted into percentage. Thus 15 days wages is approximately equal to 4.81% and this is indicated in the CTC sheet. The ratio 15/26 is fixed and its value is 0.577 for the year and when calculated for a month is 0.577/12 x 100 which works out to 4.81.

6. Food Coupon

Food Coupons are food vouchers provided by companies to their employees to purchase food items and non-alcoholic beverages from designated shops. The food coupons are tax-exempt vouchers up to a limit of ₹ 50 and are mostly used by salespeople and other employees who work in the field.

7. Mediclaim Premium

Mediclaim is a basic type of health insurance designed to provide policyholders with financial support during medical emergencies for self and family. They cover the cost of treatment when an employee is hospitalized. In Mediclaim the coverage amount is limited and based on the plan that is opted for. The Insurance company reimburses the expenses incurred by the policyholders for treatment. The premium has to be regularly paid to avail the benefits of Mediclaim

II. Gross Salary

Gross Salary is the amount calculated before the deduction of taxes or any other deductions. Gross salary includes the Basic salary, dividends or bonus, and overtime amounts.

Gross Salary = Fixed Earnings + Variable Earnings

Every allowance will be subject to taxation, which will have an impact on the company. The company would pay the tax out of the employee’s wage.

Components of Earnings

Fixed Earnings
Variable Earnings

I. Fixed Earnings

Basic Salary
Dearness Allowance (DA)
House Rent Allowance (HRA)
Leave Travel Allowance (LTA)
Conveyance Allowance (CA)
Medical Allowance

1. Basic Salary:

Basic Salary is the primary component of the salary structure and forms the largest component of the CTC. It is the fixed part of the salary package and constitutes between 40-50 percent of the CTC. As per the “New Code of Wages” that is to be implemented by the government, the minimum basic component should be 50% of the salary.

Basic salary is fully taxable, therefore, keeping it too high will not only increase the tax liability of your employee but will also increase the contribution towards EPF and ESI.

On the contrary, by keeping it too low, you may increase the risk of not following the Minimum Wages norms set by the respective state governments.

2. Dearness Allowance (DA):

Dearness Allowance can be defined as the cost of living adjustment allowance which the government offers to public sector employees as well as pensioners in the public sector.

DA is the component of the salary applicable across India. Since DA is related to the cost of living, it has been linked to the Consumer Price Index. Hence, the DA varies based on location implying that it is different for employees working in the urban sector, semi-urban sector, and rural sector.

3. House Rent Allowance (HRA):

House Rent Allowance is a benefit for employees who live away from their place of work and need to live in rented accommodation. The HRA depends on the cost of living in that particular location. The amount that can be claimed as a tax deduction under HRA cannot be more than 50% of your Basic salary in a Metro or 40% of your Basic salary in a non-metro.

4. Leave Travel Allowance (LTA):

Leave Travel Allowance is a benefit provided to employees to travel within the country. LTA is normally reimbursed to employees after they undertake their travel. An employee can claim tax benefits on the Fare expenses incurred by his-her family during the travel. The tax benefit applies to only Fare expenses and no stay or food expenses are covered.

Only travel within India is considered for the benefit. The benefit applies only to dependent family members of the employee.

5. Conveyance Allowance:

An employee is liable to receive travel expenses for travel from residence to workplace and back. The to and fro expenses are reimbursed as conveyance allowance. With the introduction of standard deductions, the exemption on Conveyance Allowance has been removed effectively from April 2018.

6. Medical Allowance:

Medical allowance is a fixed allowance that is paid to employees, regardless of whether they have submitted the bills to claim these expenses or not. These are offered every month with the view to promoting staff health and supporting their medical expenses incurred in a financial year. Similar to Conveyance Allowance, the exemption on Medical allowance has been removed with effect from April 2018.

The employee can also claim Medical Reimbursement, which is a tax-free component reimbursed by the employer as the employee’s portion of medical costs

II. Variable Earnings

Gratuity
Bonus
Incentives
OT
Extra Days

1. Gratuity:

Gratuity is a part of the salary that is received by the employee from the employer for the services rendered by the employee at the time of leaving the job or on retirement.

To be eligible to receive gratuity, an employee has to be in service for 5 or more years. The amount is deducted by the employer every year and hence will get deducted from the CTC.

2. Bonus:

A bonus is an amount provided to an employee as a lump sum once a year based on the individual performance of the employee or the overall performance of the company. The Bonus percentage ranges from 8.33% to 20% of the Basic salary and is based on the decision arrived at between the Unions and the management.

3. Incentives:

An Incentive is a reward that an employer gives to employees for achieving better results for the company as a whole. The incentives can be in the form of monetary compensation that is given in addition to salary. Incentives can also be in the form of a gift, a free product, paid time off or an additional share of stock

4. Over time (OT):

Overtime is the extra hours that an employee works beyond the scheduled hours of work. It is also the pay that an employee receives for working those extra hours.

III. Net Salary or Take-home-salary

Net salary or the actual salary that you take home is the salary after deduction of tax (TDS) and other deductions as per the company’s policy.

Net Salary = Gross Pay – Deductions

Deductions

Employees Provident Fund
Employees ESI
Tax Deducted at Source (TDS)
Professional Tax
Labour Welfare Fund
Loan or Salary Advance

1. Employees’ Provident Fund (EPF)

The Employees’ Provident Fund Orgnization administers the Employees Provident Fund scheme. Under the scheme, both the employees and the employers contribute towards the Fund every month. This is a platform that provides an opportunity for employees to save a part of their salary as a long-term investment. The employee contributes 12% of the basic salary every month towards the Fund. The entire contribution goes towards EPF. The amount accumulated in the fund can be withdrawn in an emergency or upon retirement.

2. Employees’ ESI

Employees State Insurance (ESI) is an insurance scheme administered by the Employees’ State Insurance Corporation (ESIC). From the employees’ contribution of 12% of salary, 0.75 % is contributed towards the ESI Fund. The scheme provides for during medical emergencies to the employee or his/her dependents. The scheme is applicable for all employees whose salary is ₹ 21,000 or less.

3. Tax Deducted at Source (TDS)

For salaried employees Income tax is deducted and remitted to the IT Department. This is known as Tax Deducted at Source (TDS) and the same is deducted every month from the salaries of the employees. The employer deducts and remits the amount to the department.

4. Professional Tax

Professional Tax is the tax levied by the state government on salaried employees and professionals like doctors, lawyers, and chartered accountants. The amount fixed for Professional Tax varies from state to state. The employer deducts this amount from the salaries and remits to the concerned department.

5. Labour Welfare Fund

Labour Welfare Fund is a contribution made by salaried employees for the benefit of the labor class. The fund amount that is deducted varies from state to state where they are applicable. Both the employee and the employer make contributions toward the fund. The employer’s contribution is twice that of the contribution of the employee. The payments are normally made every 6 months.

6. Loan or Salary Advance

Loan or Salary Advance is paying an employee a portion of his/her salary in advance to meet a medical emergency or other unforeseen emergencies. A portion of the salary that is due is paid in advance and the same is recovered in installments from the salary dues of the subsequent months. These loans are usually interest free.

Conclusion

For both the employee working in an organization and for the employer it is very important to clearly understand the salary structure. A proper understanding of the Salary Breakup and the Salary Structure will help you to clearly understand where your money is invested. This will help you to plan your financials better.

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With a high-performance Payroll module developed on the Cloud, we have been helping clients across the country to run a flawless payroll process at the same time keeping the company fully compliant with all the statutory rules and regulations. Supported by an experienced professional team we will be able to guide our clients to design a salary structure that is perfect for the conditions available at the workplace, one that will keep both the employer and employee fully satisfied. Contact us today for a wholesome solution to all your payroll and statutory compliance needs.

How to prepare a checklist to assist businesses to step into the New Financial Year?

The closing of the financial year and the opening of the new financial year are significant timelines for the growth of an organization. The financial year ending is a great opportunity to look within and to analyse and assess the performance of the business, a time to take stock and make your plans for the new financial year to come.

These activities, taking stock, analysing, and planning can be overwhelming tasks at times, but they are the key to running a successful business venture. This is also the time to re-assess your goals and to take corrective measures to enable the achievement of these goals in the forthcoming financial year. The best way to achieve this is by closely scrutinizing your finances and reassessing your financial practices. This is the time to prepare your checklist for the new financial year. This will help you to streamline your workflow and give you the head start to make the new financial year a successful one.

Financial year-end Checklist for businesses!

Prepare Key financial statements/documents
Conduct statutory Audit
Renew all the licenses and registrations
Reassess your goals and prepare for the future
Review your business and marketing plans
Consider financing options for expansion
Assess employee performance
Self-evaluate

1. Prepare key Financial statements/documents

Apart from paying the Advance Tax, the key financial statements must be accurately prepared to ascertain the financial position of the company. The key financial statements are the Balance Sheet, the Profit and Loss A/c, and the Cash Flow statement. These financial statements provide the details of the Assets and Liabilities of the company, the Profit or Loss, and the Cash flow position of the company.

Overall they allow you to calculate the current ratios, debts, and profit ratios for that particular year.

2. Conduct Statutory Audit

A statutory Audit is a must for any business that is registered as a Private Limited Company. All the Books of the Company have to be audited before the financial year-end. However, for businesses that are registered as a partnership firm or LLP having a turnover that is below 40 lakhs then, a Statutory audit is not required.

3. Renewal of Licences and Registrations

Every business owner is required to keep track of all the licenses or Registrations that they have taken for the conduct of their business. Normally, these licenses/registrations are to be renewed every year, especially before the end of the financial year. This activity has to be taken care of by the end of the financial year.

4. Reassess your Goals and prepare for the future

The goals that you have set for the business have to be first analysed. List out the goals and try to assess whether you have met those goals. If not, analyse and find out the reasons that you could not achieve your goals. Identify the areas that you have failed. Reassess the goals in light of your strengths and weaknesses. A SWOT (Strengths, Weaknesses, Opposition, and Threat) assessment will greatly assist you in providing better insights and allow you to make critical changes in your business goals and activities. These insights will help you to plan for the year to come.

5. Reassess your Business and Marketing plans

The end of the financial year is the ideal time to reassess your Business and marketing plans. This will enable you to review your short and long terms goals and make changes accordingly. It will enable you to review your sales and marketing budgets and get proper insights into better business strategies. This activity will also enable the business to review the market potential and the competition and would also throw light on new business opportunities.

6. Consider additional finance option

If business expansion is one of the changes you envisage or if you need higher cash flow for the new financial year, then it would be worthwhile to consider additional finance options. The additional finance could be for development projects or adding to the company’s assets like purchasing a vehicle, machinery, or other types of equipment.

You can consult with your Bank for business loans, an overdraft, or a business credit card. The choice would depend on your circumstances. If there is an option to avail of a government grant you can proceed with that option. Crowd funding is also an option that you can explore as it is very commonly used nowadays to promote business, especially for start-ups.

7. Assess Employee Performance

Employees are a vital cog in any business organization. Keeping the morale of the employees high is important and maintaining their loyalty is vital for growth. For this, you need to review your compensation and benefits structure and make sure they are in line with the industry and your business values. The compensation and the benefits that you offer have to be competitive enough if you are to hold on to your efficient employees and improve employee retention.

Companies that maintain such promotional paths reap significant gains in the loyalty and longevity of their employees. If you are looking to foster job satisfaction and loyalty among the employees you have to not only provide incentives but also be ready with a strong growth path that would empower the employees and boost their morale. This apart, planning a vacation with the employees, especially during the lean periods is another way to maintain job satisfaction among the employees.

8. Self-evaluation and improving leadership

The earlier nine points in the checklist dealt with the performance of the company and its employees.

This checklist is incomplete if it does not have a point about evaluating the leadership and the leadership team. Every company should take time to reflect on its own leadership and the leadership team.

Objectively evaluate the performance during the year that is going to end. Find out the areas where there were shortcomings. Identify the areas that you think need improvement. This could be in the areas of time management, communication with employees, work culture, employee performance review, your understanding of business financials, business acumen, and your knowledge of the industry.

With this information, you will be able to implement a self-improvement plan for the new financial year. This will enable you to schedule time for yourself to not only learn and improve your business leadership skills but also encourage your leadership team to improve performance for their growth and the company’s growth.

Conclusion

Preparing a checklist for the new financial year is a must for any business. This will help you to objectively reassess the performance of the company and provide insights to make necessary changes wherever required to promote greater growth. This activity will help you to prepare better for the forthcoming financial year and guide you to improve your all-around performance.

This is also the time for certain companies, especially those that have challenges in preparing accurate payroll and handling all Statutory compliance issues, to introspect and decide whether they need to get expert assistance in handling their Payroll and HR management. GetifyHR has been a leader in outsourcing Payroll and HR management and has the expertise and technology to handle this critical task with a great degree of accuracy and sophistication. Well, we will be able to handle the financial year-end pressures and ensure a smooth transition to the new financial year with the least bit of stress. Stay 100% compliant with GetifyHR!

The EPFO Higher Pension Scheme: Guidelines, Forms, Calculation, Formula, Eligibility, Benefits

The Employees Provident Fund Organization (EPFO) launched the Employees Pension Scheme (EPS) in the year 1995. Through this scheme EPFO members are entitled to a pension after retirement. The employee’s contribution of 12% of salary was fully utilised towards EPF, whereas from the employer’s contribution 8.33% goes to EPS and 3.67% to the EPF.

Initially, the pensionable salary was capped at ₹ 5000 and was subsequently raised to ₹ 6500. In March 1996, a provision was added to para 11(3) of the EPS-95 act giving the option to the employee and employer to contribute at the actual salary (above the cap of ₹ 6,500) to the EPS. However, the members were given 6 months to file a joint option form for higher pension contribution to the EPS.

On 01-09-2014, the Government amended the EPS-95 through the Employees Pension (Amendment) Scheme, 2014 in which the maximum pensionable salary was raised to ₹ 15,000. However, the provision to para 11(3) that allowed the option of joint filing by the employee and employer for higher contribution to the EPS has been omitted.

Employees who joined the EPS after 01-09-2014 can only make the contribution at 8.33% of the maximum pensionable salary of ₹ 15,000, even though they drew a higher salary. Employees who joined before 01-09-2014 could, however, contribute to EPS on the actual salary as against the cap of ₹ 15,000 if they filed a new joint option with the EPFO within 6 months, i.e., 28-02-2015.

Pension Contribution on Higher Salary under EPS

The Employees Pension (Amendment) Scheme 2014 regarding pension contribution on higher salary became contentious as many employees are not fully aware of these options. EPFO also rejected the joint option filed by many employees and where the employers contributed 8.33% towards EPS on employees’ actual salaries without filing joint option, the pensionable salary was taken as ₹ 15,000 for pension calculation.

This prompted many employees to file cases in various High Courts and the matter was finally taken up by the Supreme Court. The decision of the Supreme Court is briefly tabulated hereunder:

Employee Status	Whether Joint option exercised	Whether eligible to claim 8.33% pension contribution on higher salary	Mode for claiming higher pension.
Employee in service as on 01-09-2014	Yes. Joint option rejected by the EPFO	YES	By filing an application for higher pension
Employee who retired before 01-09-2014	No. Contribution to EPS above its cap of ₹ 5000 / 6500	YES	By exercising the option before 03-05-2023
Employee who retired before 01-09-2014	Yes. Joint option rejected by EPFO	YES	By filing both, a joint option and an application for higher pension
Employee who retired before 01-09-2014	No. Did not exercise joint option.	NO	Not applicable

The Supreme Court ruled that employees who were part of the EPS but have not exercised the joint option can do so before 03-05-2023. For such employees, the higher EPS contribution will be calculated from the date of joining.

Eligibility for EPS Higher Pension

The eligibility criteria and application process for claiming higher pension has been set out in the circular issued by EPFO in December 2022. The following are the eligibility criteria:

All member employees who retired before 01-09-2014
All member employees who exercised the joint option under para 11(3) of EPS-95.
The employees and employers who contributed towards EPS on salaries exceeding the wage ceiling of ₹ 5000 or ₹ 6500
In case the EPFO has declined the exercise of such option.

However, the circular has not provision to provide a higher pension option for employees who were members of the EPF before 01-09-2014 but are still working or who retired after 2014. The Supreme Court judgement however, ruled that such employees are eligible to claim a higher pension.

In response, the EPFO issued another circular in February 2023 providing higher pension eligibility or employees in service or who retired after 2014. The eligibility criteria to file a joint option for getting a higher pension as per the new circular are given below:

All employees who were members before 01-09-2014 and continue to be members after that date.
The employees and employers who contributed to EPS on salaries exceeding the wage ceiling of ₹ 5000 or ₹ 6500
The employees and employers who were members of EPS-95 and did not exercise the joint option provided under the deleted para 11(3) of the EPS and the Amendment of 2014.

The employees who were members of EPS-95 and exercised the joint option under the deleted para 11(3) of the EPS but did not file new joint option after the amendment of 2014 are not eligible to claim a higher pension. The EPS contribution of such employees will be 8.33% on the maximum amount of ₹ 15,000, irrespective of their actual salaries.

The Process of applying for Higher Pension in EPS

The application for joint option or claim for higher pension is specified by the concerned Regional Provident Fund Commissioner (RPFC). The EPFO has released a URL for applying online. Four steps are involved in this process.

Step 1: The employee has to visit the EPFO Unified Member Portal. The Universal Account Number (UAN) has to be used for this purpose.

Step 2: Click on the application Form for “Joint Option” option.

Step 3: This step is to validate your option. If you retired before 2014 then click on “Validation of Joint Option for employees who retired before 01-09-2014 and exercised joint option”.

If you retired after 2014, then click on “Exercise of Joint Option for employees who were in service prior to 01-09-2014 and continued to be in service on 01-09-2014 but could not exercise the joint option”.

Step 4: Fill in all the relevant details and submit the form.

The EPFO will digitally register each application and a receipt number will be allotted to the applicant. The application is then forwarded to the respective employer for verification. The verified files with the e-sign/digital signature will go for further processing. The RPFC will convert all the applications received into e-files.

The application will be examined and forwarded to the section account officer/supervisor by the dealing assistant. The concerned section account officer/supervisor will mark all discrepancies and forward to the Asst. Provident Fund Commissioner (APFC/RPFC-II).

The APFC/RPFC-II will examine the application and convey the decision regarding higher pension to the applicant via email, post or SMS.

Submission of Higher Pension Option Form

All eligible employees who become members of EPS-95 but are retired/working after 2014 can apply and submit the joint option forms online or with the concerned Regional Provident Fund Officer within 03-05-2023 to receive higher pension.

Guidelines for receiving Higher Pension through EPS

The following are the guidelines to be followed for receiving higher pension:

All joint option forms or higher pension claim applications should be accompanied by a disclaimer or declaration.
The employee has to give full consent in the joint option/application for a share adjustment from EPF to EPS and for a re-deposit of the amount.
The employee has to give an undertaking to the trustee for a share transfer of funds from exempted PF Trust to the EPS fund. The undertaking will be effective for the deposit of due contribution and interest thereon up to the payment date within the specified time.
The employees’ share of contribution will be deposited with interest at the rate declared under para 60 or the EPF scheme, 1952 for employees of unexempted establishments.

Documents to be submitted with Higher Pension claim application

Proof of joint option verified by the employer filed under para 26(6) of the EPF scheme.
Proof of joint option verified by the employer filed under para 11(3) of the Act.
Proof of remittance of EPS contribution in the PF Account exceeding the capped wage limit of ₹ 5,000 or ₹ 6,500.
The written refusal of APFC or EPFO to such remittance or request.

Documents to be submitted for joint option application

Proof of remittance of EPS contribution in the PF Account exceeding the capped wage limit of ₹ 5,000 or ₹ 6,500.
Proof of joint option verified by the employer filed under para 26(6) of the EPF scheme.

EPS Higher Pension Calculation

The formula for calculating the EPS higher pension is as follows:

Monthly Pension amount = Pensionable Salary x Pensionable Service/70

Pensionable Salary is the average salary drawn over the last 60 months.

Pensionable Service is the number of years contributions were made to the EPS account.

In case an employee renders more than 20 years of service before retirement at 58 years, then a weightage of 2 years is added to the service period. However, the maximum pensionable service is limited to 35 years.

Calculation on cap of ₹ 15,000 for a pensionable service of 25 years:

Salary	EPF Contribution	EPS @ 8.33% of ₹ 15,000	EPF Contribution
50,000	6,000	1,250	4,750

Calculation on Actual salary for a Pensionable Service of 25 years:

Salary	EPF Contribution	EPS @ 8.33% of ₹ 50,000	EPF Contribution
50,000	6,000	4,165	1,835

Monthly Pension when you do not file a Joint Option:

Age when joined EPF	Retirement Age	Pensionable Salary	Pensionable Service	Pension Amount due
30	58	15,000	28	15,000 x 30 (28+2)/70 = 6428

Monthly Pension when you file a Joint Option:

Age when joined EPF	Retirement Age	Pensionable Salary	Pensionable Service	Pension Amount due
30	58	50,000	28	50,000 x 30 (28+2)/70 = 21,428

Employees’ Pension Scheme and the types of Pension available

The Employees’ Pension Scheme (EPS) is a social security scheme administered by the Employees’ Provident Fund Organization (EPFO). Launched in the year 1995, the scheme provides for employees working in the organized sector pension after their retirement at the age of 58 years. The benefits of the scheme can be availed by employees who have put in service for at least 10 years and this does not have to be continuous service. The scheme allows both existing and new EPF members to avail the benefit.

The pension fund is created from the contribution made by the employees and employers towards EPF.

Both the employees and the employer contribute 12 percent each of the basic salary towards the fund of which the entire share from the employees is contributed towards EPF, whereas, 8.33 percent of the employer share is contributed towards EPS, and the balance of 3.67 percent is contributed towards EPF every month. The government of India contributes 1.16% of your average salary (Basic Wages) towards this fund.

EPS eligibility criteria

To be eligible to avail of the benefits under the Employees’ Pension scheme, the employee should be a member of EPFO. Apart from this, the following conditions apply.

The employee should have completed 10 years of active service (need not be continuous service) along with an active contribution towards the pension fund for the same number of years. If an Employee is still in service and hasn’t completed 10 years, EPS amount cannot be withdrawn.
Should have reached the age of 58 years.
Should have attained 50 years of age to withdraw EPS pension at the lower rate.
Can delay the withdrawal of pension by 2 years i.e., till he reaches 60 years, to be eligible to get pension under EPS at the additional rate of 4% annually.
If a member becomes totally and permanently disabled he is entitled to a pension irrespective of whether the member has served the pensionable service period or not.

How to calculate Pension under EPS?

To calculate the pension we have to understand two terms, and they are Pensionable salary and Pensionable service.

Pensionable Salary

Pensionable salary is the average salary in the last 60 months before exiting the scheme. During the 60 months, if there are non-contributory periods, these periods will not be considered and the benefit of the days of non-contribution would be given to the employee.

Pensionable Service

The actual duration of employment is the pensionable service of the individual. Service periods under different employers are all added together at the time of calculating the pensionable service periods.

The minimum pensionable service period is 6 months and, therefore, the service period is considered on a 6-monthly basis. For an individual who has put in service of say, 9 years and 2 months, the pensionable service is considered as 9 years. Likewise, if the service duration is 9 years and 10 months then the pensionable service is considered 10 years.

The Calculation

The Pension amount due to an employee depends on the pensionable salary of the member and the pensionable service. The Pension amount is calculated on the following formula:

Monthly Pension due to a member = Pensionable Salary x Pensionable Service/70

The maximum pensionable salary as per EPS is limited to ₹ 15,000 per month. Considering that the employer contributes 8.33% of the salary in the employees’ EPS account, the amount deposited into the account every month is

₹ 15,000 x 8.33/100 = ₹ 1250

Monthly Pension due to a member = Pensionable Salary x Pensionable Service/70. For a person who has put in 20 years of service the pension will be:

₹ 15,000 x 20/70 = 4285

What are the Benefits of EPS?

All eligible members of EPF can avail of pension benefits in accordance with their age from when they decide to withdraw their pension. The pension amount will vary in different cases.

Pension at the time of Retirement.

An employee becomes eligible for pension benefits once he/she retires at the age of 58 years. During this period of service the member should have been in service for 10 years (this need not be continuous). A certificate is generated that can be used to withdraw monthly pensions by filling out Form 10D.
Pension on leaving service prior to becoming eligible for monthly pension

This benefit is available to an individual who has not put in 10 years of service before attaining the age of 58 years. The member can withdraw the entire sum on attaining 58 years by filling out Form 10C.

Total Disability Pension

A member who suffers total and permanent disability is entitled to receive a monthly pension irrespective of the fact that he has not fulfilled the pensionable service period. The employer has to contribute to his EPS account for at least one month to be eligible for the pension.

The pension has to be paid from the date of permanent disability and is payable for a lifetime. The member has to undergo a thorough medical examination to identify whether he is unfit for the job that he was performing before becoming disabled.

Pension for the Family after the death of the member

The family of the member becomes eligible for pension benefits in the following cases

– In case of the death of the member while in service and the employer has deposited funds into the EPS account for at least one month

– In case the member dies before attaining 58 years but has put in 10 years of service.

– In case of the death of a member after the commencement of the monthly pension.

Different Types of Pensions under EPS

EPS offers different types of pensions. They include pensions for women, children, and orphans and these provide additional income to the family member of the subscriber.

Widow Pension

Widow Pension or Vridha Pension as it is also known is applicable to the widow of the member eligible for pension. The pension amount will be payable until the death of the widow or until her remarriage. In cases where there is more than one widow, the pension amount will be payable to the eldest widow. The minimum pension amount is ₹ 1,000 and the ceiling for the pensionable salary has been increased to ₹ 15,000 from the earlier ₹ 6,500. Hence higher pensions will now be available.

Child Pension

In the event of the death of a member, a monthly child pension is applicable for the surviving children in the family in addition to the monthly widow pension. Child pension will be paid till the child attains the age of 25 years. The amount payable is 25% of the widow’s pension and will be paid to a maximum of two children.

Orphan Pension

In case the member dies and does not have a surviving widow, then the children are entitled to receive a pension under the scheme. The benefit will be available to two surviving children and they will get 75% of the value of the monthly widow pension.

Reduced Pension

Under the EPS scheme, a member can withdraw early pension if he or she has not attained 58 years but has reached 50 years on condition that they have actively contributed towards EPF for 10 years or more. The value of the pension is slashed by 4% for every year the age is less than 58 years. On attaining 58 years the pension will be paid at the actual rate.

Pension Forms that are to be submitted to avail of benefits

A member or family member eligible to receive the pension has to submit the following forms to avail of the pension benefits.

FORM 10C

Form 10C is for claiming a withdrawal/Scheme Certificate. The form can be used by:

Any member who has left the employment before completion of 10 years of service.
Any member who has attained 58 years before completion of 10 years of service irrespective of whether the member is in service or has left service.
A member who has completed 10 years of service on leaving service but has not attained the age of 50 years on the date of applying or
If a member has attained the age of 50 years or more but less than 58 years and is not willing for a reduced pension.
The family members or legal heirs or nominee of a deceased member who had died after attaining 58 years of age but had not completed the eligibility criteria of 10 years of service.

FORM 10D

Form 10D is the normal form that a member needs to fill to withdraw pension under the following conditions:

Retirement Pension by a member on attaining 58 years of age, whether in service or not.
By a member who leaves service after the age of 50 years but below 58 years and opts for a Reduced Pension.
To claim Disablement Pension by a member on leaving service due to total and permanent disablement.
For claiming widow and child pension by the family (spouse and children) on the death of the member.
For claiming Orphan Pension by surviving son/daughter on the death or remarriage of the spouse of the deceased member.
For claiming Nominee Pension by nominee declared by the member through his/her Form 2(R) in case the member had no family (spouse and children).
For claiming Dependent Pension by the dependent father or mother of the deceased member who died without a family (spouse and children) and failed to nominate a person for claiming the pension.

Points to remember about EPS

The employee does not contribute towards the fund. The employer makes all contributions towards EPF.
From the 12% contributed by the employer, 8.33% goes towards EPS.
The employees’ pay is made of Basic wages, retaining allowance, and admissible cash value of food concessions.
The employer has to contribute within 15 days of the close of every month.
The employer should meet all the applicable costs involved.
The principal employer is responsible for making contributions for all employees working for him directly or under a contractor.
The minimum service period to be eligible for availing pension benefits is 10 years.
In case an employee has completed less than 10 years of service but has served for more than 6 months, you can withdraw the EPS amount on being unemployed for more than two months.
The scheme has fixed 58 years as the age for retirement.
On reaching the age of 58 a member ceases to be a member of the Pension Fund.
An employee who starts availing reduced pension at the age of 50 ceases to be a member of the Pension Fund.

Conclusion

The Employees Pension Scheme has been a great boon for employees especially post-retirement. Like all other social security schemes, it has provided a lifeline to employees who have retired or who have opted for pension before reaching the retirement age of 58 years. Where the EPS member has died during service or post-retirement it has extended this benefit to the family members, namely the spouse, and children.

Overall, the scheme has brought cheer to a great many families whose bread-winner had either retired or had become fully disabled due to an accident or disease.

GetifyHR, one of the leading Payroll and HR management outsourcers in the region have assisted numerous clients spread across the country in handling not only the Payroll and HR activities but also have supported the employees to get their due benefits from the various government agencies that are promoting schemes to support them. An association with GetifyHR will not only ease the pressures in the workplace and promote growth but will also provide support to the employees in multiple ways.