Exemption from Employees' Provident Fund & Miscellaneous Provisions Act

The Employees' Provident Fund & Miscellaneous Provisions Act, 1952 provides for grant of exemption from the operation of the Act and as well as the schemes under the Act (such as Employees' Provident Fund Scheme, 1952, Employees' Deposit Linked Insurance Schemes, 1976). The types of exemptions provided under the Act may be broadly classified as under:

(a) Exemption from the Act (Including the Schemes) :

Exemption is allowed under Section 16(2) of the Act by the Central Government. Exemption from the Act is allowed only to a class of establishments after considering the financial or other circumstances of the class of establishments for a specified period only. The classes of establishments for which this type of exemption currently in force are:

a. Establishments registered under the Societies Registration Act, 1860, run mainly on grants-in-aid received from the Central Government or the State Government;
b. Establishments which are employing only ex-servicemen who are in receipt of pension benefits or
c. Voluntary organisations engaged in leprosy eradication programmes.

(b) Exemption from the operation of the Scheme(s)

This is only an exemption from the operation of a specified scheme and not from the Act itself. Apart from granting exemption to an establishment from the operation of a particular scheme, the Act also provides for grant of exemption to an individual employee and also to a class of employees. Basically, exemption is only granted when the employee/ class of employees is/are entitled to benefits in the nature of Provident Fund, gratuity or old age pension and such benefits separately or jointly are on the whole not less favourable than the benefits provided under the Act and Scheme.

Hence, you are advised against discontinuing ESI and PF, unless you fall in the above mentioned categories.

Ms. Aparajita

(Tradeindia Expert)

Vakil Search

Vakil Search
Chennai, India