Earlier, the EPF act was not applicable in the states of Jammu & Kashmir. But, after the recent changes and the abrogation of Article 370, many states have changed things. As of now, the EPF scheme applies to the employees in Jammu & Kashmir. The rules for the eligibility of employees are different from that of other states in India.
Below are the rules or eligibility criteria for the employees in Jammu & Kashmir. These rules are designed as per the recent changes in the Act.
- The EPF scheme applies to both Jammu & Kashmir.
- If a factory or industry in Jammu & Kashmir employs more than 5 employees, they have to register for EPF. But, the factory should be recognized as per Schedule I for registration.
- Any other business or establishment that the Government has notified in Government Gazette is an establishment for the Act’s purposes.
- The EPFO will govern any company which has registered under the EPF Act. The EPFO will govern the company till it employs more than 5 employees.
Establishment To Cover All Departments
All the Jammu & Kashmir companies with more than 5 employees have to register under the EPF Act. The recent changes in the Act have added this rule. The companies in Jammu & Kashmir have to follow this rule.
The Jammu & Kashmir employees, who had registered under the J&K EPF Act 1961, will no longer get the benefits from this Act. These employees will now get the benefits of the EPF Act of 1952. A common EPF act is now declared, covering all country states and seeing all its employees equal.
Benefits Of The New Act
The recent changes in the Act have provided certain benefits for the employees. Below are the 5 main advantages that the people of J&K are going to get.
1. Reduction In Employee Cost
After the abrogation of Article 370, both Jammu & Kashmir will see a reduction in employee cost. The administrative charges for registering the employees under the new EPF Act are low compared to companies in other states.
The companies in J&K have to pay only 0.5% administration charges to the EPFO for 20 employees. If this amount is compared with other companies, it is quite less.
2. Pension Coverage
The previous J&K EPF Act did not have any facility for pension schemes. With the new Act, the employees of Jammu & Kashmir will now have a pension scheme feature in the EPF Act. Under the new Act, an employee, when attains the age of 58, will be eligible to get a pension after retirement. The employee can only get a pension if he/she has made a regular contribution to the EPF account for at least 10 years.
Due to such changes in the Act, Jammu & Kashmir employees can now have a secure post-retirement life. Not only that, in case the employee dies, the EPF money will be provided to the immediate family member only.
3. Higher Interest Rates
Under the Jammu & Kashmir EPF Act, the interest rates for the employees were 8%. But, now, as the rules have changed, the employees will get higher interest rates on their EPF account. In the last 2-3 years, EPFO has provided interest rates as high as 8.65% to the employees in Jammu & Kashmir. Higher interest rates will provide employees with higher returns. This amount will benefit the employee during the time of retirement.
4. Electronic Transactions
EPFO has decided to register the companies in Jammu & Kashmir through online media. This will help the companies in coping up with the changing times. Through this method, the employees can view their PF status on their mobile phones. This will save their time, as previously one had to go to the employer to check the PF status. With the help of the online portal, the employees would be able to handle their own accounts.
5. Higher Insurance
One of the major benefits that Jammu & Kashmir employees will get with the new Act is higher insurance. The new Act states that each employee will get insurance of a minimum of INR 250,000 and a maximum of INR 600,000. This life insurance will help the family of the employee in case the employee has a sudden death.
Contribution In The New EPF Act
The contribution towards the EPF account in Jammu & Kashmir remains the same. Both employers and employees have to contribute an equal amount of their monthly salary towards the EPF account. The amount would be 8.33% from both the parties, which the EPFO will transfer to the employee’s EPF account.
If an employee wishes to contribute a higher amount to his/her account, then he/she can do so. But, the contribution should not exceed ten and one-third percent of the employee’s basic wages.
The employer cannot reduce the employee’s daily wages, as stated in the new Act. Apart from that, an employee can withdraw money from the EPF account after attaining 54. At the age of 54, the employee can only withdraw 75% of the EPF amount. The remaining amount will be given to the employee at the time of retirement.
In case an employee is unemployed, he/she can withdraw money from the EPF account within a month of unemployment. One should keep in mind that they can only remove 75% of the amount within one month. If an employee remains unemployed for more than 2 months, then he/she can withdraw the whole amount from the account.
The new Act does not apply to companies registered under the J&K Co-operative societies Act, 1960. If a company has registered for any other Act, then it cannot register under the new Act. This new EPF Act is also not applicable to industries that have employed less than 5 employees.
If a company wishes to exempt from the EPFO, they can do so. For becoming exempt from EPFO, the company has to provide its employees with a savings scheme. This savings scheme should provide employees with similar benefits. But, before doing so, an organization needs to inform the Government. The Government will then look through the savings scheme and then make a decision. In such cases, the opinion of the employees is also considered. The employees should know about the benefits that the private savings account will provide.
1. How is the J&K EPF Act different from the EPF act of 1952?
The J&K EPF act states that any company with more than 5 employees must register under the EPF Act. The EPF Act for the rest of the country states that a company with more than 20 employees has to register under the Act.
2. What are the changes which have been made in the EPF act for Jammu & Kashmir?
There have been several changes made in the EPF act for Jammu & Kashmir. One of the most important changes is that it has been made mandatory for the organizations to register with the EPF to provide the employees with pension schemes and other benefits.
3. What is the administration charges for the employers in Jammu & Kashmir as per the new EPF Act?
The administration charges for 20 employees is 0.5% as per the new Act. This administration charge for employees is four times less than normal charges.
4. Will the EPFO be able to cover all the employees in Jammu & Kashmir?
EPFO has made plans to cover all the employees in Jammu & Kashmir under the EPF Act to get the benefits from the EPF scheme.
With the recent changes in the EPF Act, the employees in Jammu & Kashmir have received lots of benefits. The EPFO is even planning to provide the EPF scheme’s benefits to all the employees in Jammu & Kashmir. Though it is a slow process, EPFO has already taken the necessary steps.