Sec.

5 empowers that Central Government to frame, by notification in the

Official Gazette, a Scheme to be called the Employees Provident Fund Scheme,
for the establishment of provident funds under the Act for employees or any class
of employees. It may also specify the establishment or class or establishment to
which the said Scheme shall apply.
Establishment of Fund. As soon as may be after the framing of the
Employees Provident Fund Scheme, there shall be establishment Employees
Provident Fund in Accordance with the provisions of the Act and the Employees
Provident Fund Scheme [Sec. 5 (1)]. The fund shall vest in, and be administered
by, the Central Board constituted under Sec. 5-A.
Any of the provision of the Employees Provident Fund Scheme shall take
effect either prospectively or retrospectively on such date as may be specified in
this behalf in the Scheme [Sec. 5(2)]. The scheme may provide for all or any of the
matters specified in Schedule II.
The Employees Provident Fund Scheme applies to all factories and other
establishments to which the Act applies or is applied under Sec. 1 (3), 1 (4) and
Sec. 3. The applicability of the Scheme is subject to the provisions in the Act in
Sec. 16 (exempting from its purview certain establishment) and in Sec. 17 (giving
power to the appropriate Government to exempt certain establishments).
Contributions (Sec. 6). The principal duty is laid upon the employer to put
the Employees Provident Fund and Family Pension Schemes into operation and to
make contributions of both their and employees share to the Funds and to deduct
from the wages of the employees their share.
Statutory rate of contribution. The statutory rate of contribution both from
members of the Provident Fund and the employer originally was 6-1/4 per cent of
basis wages, dearness allowance including the cash value of any food concession
allowed to the employees and retaining allowance (if any). By an amendment of
the Act the statutory rate was raised to 8-1/3 per cent on January 1, 1963 in respect
of certain establishment or class of establishments which the Central Government
after making the necessary inquiry, by notification in the Official Gazette,
specified.

Now the rate of contribution to Provident Fund in all industries and

establishments has been increased from 8. 33 per to 10 per cent with effect from 1 st
March 1997, for both employers and employees, in scheduled industries, the rate of
contribution will be raised to 12 per cent.
The provisions of Sec. 6 are as follows:
The employers contribution to the Employees Provident Fund shall be 10
per cent of the basis wages, dearness allowance and retaining allowance (if any),
for the time being payable to each of the employees. The employees may have
been employed by him directly or by or through a contractor. The employees
contribution shall be equal to the contribution payable by the employer in respect
of him. If any employee so desires, his contribution may be an amount exceeding
10 per cent of his basis wages, dearness allowance and retaining allowance (if
any), subject to the condition that the employer shall not be under an obligation to
pay any contribution over and above his contribution payable under Sec. 6
Substitution of 12 per cent for 10 per cent in Sec. 6. In its application to
any establishment or class or establishments which the Central Government after
making such inquiry as it deems fit, may by notification in the Official
Gazette specify, Sec. 6 shall be subject to the modification that for the words 10
per cent, at both the places where they occur, the words 12 per cent shall be
substituted.
Dearness allowance. Dearness allowance is deemed to include also the cash
value of any food concession allowed to the employee.
Retaining allowance. Retaining allowance means an allowance payable for
the time being to an employee of any factory or other establishment during any
period in which the establishment is not working, for retaining his service.
The Act comes into operation by its own vigour and its operation is not
depended on any decision being taken by the authorities under the Act. The
employers are under a legal obligation to deposit their share of contributions to the
Employees Provident Fund within the time prescribed, the moment The
Employees Provident Fund Scheme became applicable to them, as no intimation
of notice of any kind in that respect was necessary to be issued by the authorities.

Calculation. The contributions shall be calculated on the basis of wages and

dearness allowance (including the cash value of any food concession) and retaining
allowance (if any), actually drawn during the whole month whether paid on daily,
weekly, fortnightly or monthly basis . Where the amount of any contribution
payable under the Act involves a fraction of a rupee, the Employees Provident
Fund Scheme may provide for the rounding off of such fraction to the nearest
rupee, half of a rupee or quarter of a rupee.