Introduction
The Employees’ Provident Fund Organization (EPFO), under the Ministry of Labour & Employment, Government of India, has issued a Standard Operating Procedure (SOP) for the Grant of Exemption. This SOP outlines the process, responsibilities, and requirements for establishments seeking exemption from certain provisions of the Employees’ Provident Fund & Miscellaneous Provisions Act, 1952. In this article, we will delve into the details of this SOP, providing a comprehensive understanding of how the grant of exemption works.
Detailed Analysis
1. Purpose of the SOP
The primary purpose of this SOP is to define the procedure through which establishments can apply for and obtain exemptions under Section 17 of the EPF Act. It ensures that the benefits provided to employees under the proposed exemption are not less favorable than those offered under the EPF Scheme, 1952.
2. Scope of the SOP
This SOP standardizes the administrative procedures for granting exemptions. It specifies the required documents, formats, channels, and timelines for various exemption scenarios. Additionally, it establishes mechanisms for monitoring, feedback, and stakeholder engagement.
3. Definitions
The SOP provides definitions for key terms used throughout the document, ensuring clarity and consistency in its interpretation. Some important definitions include “Act,” “appropriate Government,” “ACC,” and “Exempted Establishment.”
4. Responsibilities
The SOP outlines the responsibilities of various stakeholders involved in the exemption process, including the establishment, regional office, zonal office, and head office. These responsibilities are crucial for ensuring a smooth and timely exemption process.
5. Specific Procedure
The SOP details the specific procedures to be followed by establishments, regional offices, zonal offices, and the head office. It covers the application process, scrutiny of applications, evaluation of proposals, and communication of recommendations.
6. Forms/Templates to be Used
Various forms and templates are provided in the SOP to streamline the documentation process. These forms include Form GE-1 (Application for Grant of Exemption), Form GE-2 (Information to be furnished by ROs to ZO), Form GE-3 (Information to be furnished by ZOs to HO), Form GE-4 (Communication of the views of the CBT), and Form GE-5 (Monitoring formats).
7. Matrix of Timelines, Roles, and Responsibilities
A timeline matrix is included, specifying the timeframes for different stages of the exemption process. It also clarifies the roles and responsibilities at each stage, ensuring accountability.
8. Monitoring Mechanism
The SOP outlines a monitoring mechanism at various levels, including the head office, zonal office, and regional office. This mechanism includes regular reviews to track progress and compliance.
9. Modifications/Amendments
The SOP acknowledges that future modifications may be necessary, and it mentions that any changes will be made in line with relevant codes.
10. Internal and External References
References to internal circulars and external legal references are provided for additional context and guidance.
11. Miscellaneous
This section covers additional details related to the transfer of past accumulations in cases of exemption or exclusion.
12. Change History
The SOP includes information on its version history, significant changes, effective date, and any prior SOP versions.
Conclusion
The EPFO’s Standard Operating Procedure (SOP) for the Grant of Exemption is a comprehensive guide that outlines the process and requirements for establishments seeking exemptions under the EPF Act. By adhering to this SOP, establishments can ensure a smooth and timely exemption process, benefitting both employers and employees. Stay informed and follow the procedures outlined in this SOP for a successful exemption application. For further details, please refer to the official EPFO website at www.epfindia.gov.in.
EPFO, Head Office
Ministry of Labour & Employment, Government of India
14, Bhikaiji Lama Place,
New Delhi 10066
Website: www.epfindia.gov.in
No. E-111/10(119)2022/SOP-Grant/3635 Dated: 22.08.2023
To,
All ACC(HQ)/ACC (Zones)
All RPFC-I/RPFC-11/APFC In-charge of Field Offices
Subject: Standard Operation Procedure (SUP) for Grant of Exemption – regarding
Madam/Sir.
With reference to the statutory provisions contained in Section 17(1) of the EPF Act, the exemption for a class of employees is regulated by Section 17(2) of the Act & the enabling provision enshrined in Para 27A of the EPF Scheme, 1952; the SOP for Grant of Exemption describes the process through which the proposals of exemptions are to be examined and forwarded with recommendations by the field offices to Head Office, EPFO. The Head Office examines and obtains recommendation of its committees and the Central Board to communicate for the consideration of the appropriate Government.
This SOP is in supersession of all the previous instructions and circulars issued till date. The list of circulars and instructions to be superseded is annexed herewith as Annexure -1.
The ACC(HQ)/ACC (Zones) to ensure compliance of this SOP in their respective office and in the regional offices under jurisdiction.
All RPFC-I/RPFC-11/APFC In-charge of Field Offices are to ensure the compliance in respective offices. In addition, this SOP may be shared to the establishments applying for the grant of exemption under their jurisdiction.
[This issues with approval of ACC-HQ (Exemption)]
Yours faithfully,
(P Veerabhadra S my)
ACC (Exemption)
Enclosed :
1. Approved SOP for Grant of Exemption
2. Annexure-I containing all the previous circulars/instructions superseded.
STANDARD OPERATING PROCEDURE GRANT OF EPF EXEMPTION
Bhavishya Nidhi Bhawan,
14, Bhikaji Cama Place,
New Delhi – 110 066.
Table of Contents
1. INTRODUCTION
2. PURPOSE
3. SCOPE
4. DEFINITIONS
5. RESPONSIBILITIES
a. Establishment
b. Regional Office (RO)
c. Zonal Office (ZO)
d. Head Office (HO)
6. SPECIFIC PROCEDURE
a. Establishment:
b. Regional Office (RO)
c. Zonal Office (ZO)
d. Head Office (HO)
7. FORMS/TEMPLATES TO BE USE:
8. MATRIX OF TIMELINES, ROLES AND RESPONSIBILITIES
9. MONITORING MECHANISM
10. MODIFICATIONS/AMENDMENTS
11. INTERNAL AND EXTERNAL REFERENCES
a. Internal
b. External
12. MISCELLANEOUS
13. CHANGE HISTORY
FORM GE-1
FORM GE-2
FORM GE-3
FORM GE-4
FORM GE-5
ANNEXURE – I
1. INTRODUCTION
Establishments that seek to maintain their own Provident Fund Trusts apply for grant of exemption under Section 17 of the EPF & MP Act, 1952 (Act). While exemption for the establishment as a whole is regulated by Section 17(1) of the EPF Act, the exemption for a class of employees is regulated by Section 17(2) of the Act; the enabling provision enshrined in Para 27A of the EPF Scheme, 1952. This Standard Operating Procedure (SOP) defines the documents, the proper channel, role, responsibilities and procedures for a time bound processing of the grant of exemption cases.
2. PURPOSE
This Standard Operating Procedure describes the process through which the proposals of exemptions are to be examined and forwarded with recommendations by the field offices to Head Office, EPFO. The Head Office examines and obtains recommendation of its committees and the Central Board to communicate for the consideration of the appropriate Government.
3. SCOPE
This SOP provides for:
(a) Standardisation of the administrative procedures for Grant of Exemption.
(b) Prescribes the documents, the formats, the channel, and timelines for various scenarios of Grant of Exemption.
(c) Defines mechanism for monitoring, feedback, and stakeholder engagement.
4. DEFINITIONS
For the purpose of this SOP, unless it otherwise requires,
i. “Act” means The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952.
ii. “appropriate Government” means, the appropriate Government as defined in Section 2(a) of the Act.
iii. “ACC” means the Additional Central Provident Fund Commissioner or the Additional Central Provident Fund Commissioner (HQ) of the Zone.
iv. “BOT” means the Board of Trustees constituted as per the provisions under Para 79C of the EPF Scheme, 1952.
v. “CBT ” means, the Central Board as provided under Section 5A of the Act.
vi. “Condition(s)” means conditions of exemption as indicated in the “Appendix A” of Para 27AA of the Scheme.
vii. “Draft Agenda” refers to the prescribed format meant for the Regional Offices to forward its recommendations or rejections for grant of exemption to Zonal Offices and Head Office for consideration of the EEC.
viii. “Exempted Establishments’ Committee” (EEC) means a non-statutory committee of the CBT constituted for deliberation on Exemption related issues.
ix. “Employer” means the Employer as defined in Section 2(e) of the Act.
x. “Exemption” means an exemption within the meaning of Section 17 (1) and 17 (2) of the Act.
xi“ Exempted Establishment” means an establishment in respect of which an exemption has been granted under section 17 from the operation of all or any of the provisions of EPFC Scheme whether such exemption has been granted to the establishment as such or to any person or class of persons employed therein.
xii. “Regional Provident Fund Commissioner (RPFC)” is the RPFC-In-Charge of the Region in whose jurisdiction the establishment is covered under the Act.
xiii. “Relaxation” means a Relaxation granted under Para 79 of the Scheme.
xiv. “Scheme” means the Employees’ Provident Fund Scheme, 1952 framed under Section 5.
5. RESPONSIBILITIES
a. Establishment:
i. To formulate the Trust rules in adherence to the conditions of Exemption.
ii. To apply in a standard format with due signatures and necessary details, undertakings and certified copies of the requisite documents.
iii. a) To apply for exemption in accordance with prescribed guidelines to the appropriate Government.
b) To prepare the comparative statement of benefits in the prescribed proforma.
iv. To reply to the queries raised by RPFC when the process of scrutiny of application is underway.
b. Regional Office (RO):
i. To receive the application in an online mode. However, till the system is
fully automated they may receive the application in a physical mode.
ii. To scrutinize the application for Grant of exemption.
iii. To facilitate submission of a complete application as provided in this SOP.
iv. To certify the comparison of benefits under the PF Trust rules of the establishments with those under the EPF Scheme, 1952 in the prescribed proforma signed by the RPFC clearly indicating that the employees are in enjoyment of other PF benefits which on the whole are not less favourable to the employees than the benefits under the EPF & MP Act, 1952 or any Scheme in relation to the employees in any other establishment of a similar character.
v. To forward the application and the requisite documents along with a draft agenda as indicated in Para 4(vii) of this SOP to the Zonal Office.
c. Zonal Office (ZO):
i. To evaluate and certify the fitness of the proposal.
ii. To forward the proposal to the Head Office with their recommendations and draft agenda.
iii To exercise the powers of relaxation under Para 79 of the EPF Scheme, 1952.
d. Head Office (HO):
i. To evaluate the fitness of the proposal.
ii. To prepare the agenda for consideration of EEC.
iii. To convene the meeting of EEC and obtain its opinion for the CBT.
iv. To place the opinion of the EEC before the CBT and obtain its recommendations.
v. To forward the recommendations of the CBT to the appropriate Government and follow it up for finalization.
vi. To facilitate transfer of any past accumulation dues to the exempted Trust fund in a time bound manner.
6. SPECIFIC PROCEDURE
a. Establishment: Before the establishment applies for exemption, it should undertake due diligence at its level to see that all the conditions mentioned in the Form GE-1 are complied with. The establishment shall make an application in Form GE-1 with the following documents:
i. Two copies of the PF Trust Rules duly signed by all the Trustees indicating their respective designations in the Trust.
ii. While making application, the establishment shall take due caution whenever request for exemption is made for a “class of employees” in accordance with the provisions of Section 17(2) of the Act read with Para 27A of the Scheme. In such cases the draft Trust Rules of the establishment shall also include and define the “class of employees” for which exemption is being sought. This is an essential pre-requisite under Para 27A of the EPF Scheme.
iii. Certificates of undertakings (in the prescribed formats) to be furnished by the employer and the Trustees to abide by the Condition No. 22 and Condition No. 23 of Appendix ‘A’ to Para 27AA of the EPF Scheme, 1952.
iv. A comparative table of benefits under the PF Trust Rules of the establishment with those under the EPF Scheme, 1952 in the prescribed proforma signed by the employer clearly certifying that the employees are in enjoyment of other PF benefits which on the whole are not less favourable to the employees than the benefits under the EPF & MP Act, 1952 or any scheme in relation to the employees in any other establishment of a similar character.
v. The details of the departments, branches and units of the applicant establishment and concurrence of all such employer’s units to participate in common Trust.
vi. Complete names, designations and addresses (including permanent addresses) of all the members of the Board of Trustees.
b. Regional Office (RO):
i. RO shall examine the application to ensure that the proposed benefits are not less favourable in comparison to the EPF Scheme. RO shall also examine whether the conditions of the exemption as indicated in Para 4(vi) of the SOP are fulfilled.
ii. RO shall receive the applications for grant of exemption under section 17(1)/Section 17(2) of the EPF & MP Act, 1952 as per Form GE-1.
iii. RO shall process the application in e-office and give it a code as GE/RO(Delhi west)/case no 1/year/appropriate Government Name.
iv. RO shall examine the completeness of Form GE-1. If the application is incomplete, RO will facilitate the establishment to complete the same in a given time period.
v. RO shall provide to the establishment in writing the list of pending documents and any other clarifications required from the establishment. It shall give 02 weeks’ time to the establishment for rectification and resubmission of the application.
vi. If no reply is received from the establishment within the specified period as indicated above, it shall be deemed that the establishment has nothing to submit in the matter and RPFC should proceed to secure compliance as an un-exempted establishment subsequent to a notice of 02 weeks.
vii. Thereafter, the application shall be scrutinized and forwarded to the Zonal Office in Form GE-2 by the RPFC. The case scenarios are as follows:
a. If application is not found fit as per the conditions of exemption, then a communication for rejection of the application shall be made to the ZO. Further, any incomplete application along with the reasons furnished by the establishment for its inability to fulfil certain requirements, should form a part of such communication.
b. If application is found fit, then RPFC shall forward its recommendation for grant of exemption in Form GE-2 along with the requisite documents.
viii. RPFC shall also forward the sixteen-points checklist for grant of exemption duly filled up as per the directions of the Ministry of Labour and Employment.
ix. In a nutshell, RPFC shall scrutinize and forward its communication either for an approval or rejection of the proposal for exemption along with the draft agenda as indicated in Para 4(g) of this SOP. All such applications shall be finalized at RO level and forwarded to ZO within 10 weeks of receipt.
x. The application proposal shall be forwarded to the ACC of the Zone through e-office by the RPFC.
c. Zonal Office (ZO):
i. ZO after receipt of the proposal from the RO shall evaluate the overall soundness and certify the fitness of the proposal along with recommendation for grant of exemption or rejection of the exemption proposal, as the case may be, for placing before the EEC & CBT.
ii. ZO shall forward the proposal complete in all respect in draft agenda format that can be placed before the EEC & CBT, along with a certificate of recommendation. The proposal shall come through the e-file along with the supporting documents to the Exemption Division, Head Office within a period of 15 days from the date of receipt of the proposal from the concerned RO.
iii. ACC of the Zone may issue a relaxation order under Para 79 of the Scheme as indicated in Para 4(xiii) of this SOP.
d. Head Office (HO):
i. The ACC Exemption Division, Head Office, shall evaluate the proposal of Grant of Exemption and with due approval of CPFC, place the findings as an agenda item before the Exempted Establishments Committee (EEC). The EEC after due deliberation shall formulate its views on the agenda which shall be placed before the CBT to enable it to formulate its views.
ii. ACC (Exemption) shall arrange to forward the views of CBT to the appropriate Government in Form GE-4.
iii. As far as possible, the proposal received from ZO shall be presented in the ensuing EEC within 1 month of its receipt.
7. FORMS/TEMPLATES TO BE USE:
i. FORM GE-1: Application for Grant of Exemption to be made by the establishment along with the documents.
ii. FORM GE-2: Information to be furnished by ROs to ZO
iii. FORM GE-3: Information to be furnished by ZOs to HO
iv. FORM GE-4: Communication of the views of the CBT on the application proposal for exemption to the appropriate Government.
v. FORM GE-5: Monitoring formats.
8. MATRIX OF TIMELINES, ROLES AND RESPONSIBILITIES
| Time | T-0 weeks | T-0 + 02 weeks(T-1) |
T-1 + 02 weeks(T-2) |
T-2 + 06 weeks(T-3) |
T-3 + 02 weeks(T-4) |
T-4 + 04 weeks |
| Role
|
Receipt of Applicatio n
|
Basic Scrutiny and communicat ion to the establishme nt about the deficiencies, if any | Issuing letter to the establishme nt in case of on-receipt/ deficiencies in the application of the establishme nt. | Forwarding the proposal to the Zonal Office | Forwarding the proposal to the Head Office | To forward the proposal to appropriate Government along with the views of CBT. |
| Respon sibility | Regional Office | Regional Office | Regional Office | Regional Office | Zonal Office | Exemption Division, Head Office. |
9. MONITORING MECHANISM
(a) At HO level: Monthly review by ACC Exemption with all ACCs. Quarterly review by CPFC.
(b) At ZO level: Fortnightly review by ACC. Further the Zonal Office shall forward an RO wise quarterly report in respect of their respective zone. The format of the report for Regional Office and Zonal Office is indicated in Form GE-5. However, the IS division shall develop an online reporting module after computerisation of the grant of exemption procedure as early as possible. Till such time, the Form GE-5 may be incorporated in the respective quarterly MIS report to be sent by the Zonal offices.
(c) At RO level: Fortnightly review by RPFC.
10. MODIFICATIONS/AMENDMENTS
First document hence no modification proposed. Future modifications as per SS Code.
11. INTERNAL AND EXTERNAL REFERENCES
a. Internal
Circulars annexed as Annexure – I at page nos. 37-38.
b. External
i. P. No: 1874 of 2004- Delta Ltd., & Anr. Vs RPFC & Anr. (Calcutta High Court)
ii. Rule 4 (ea) of 4th Schedule Part A of Income Tax Act 1961 added through the Finance Bill 2006.
12. MISCELLANEOUS
Transfer of Past Accumulation in case of grant of exemption or exclusion:
The CBT, in its 163rd meeting held on 19.08.2003 decided that after the grant of exemption or in any other eventuality necessitating transfer of past accumulations to an establishment or Trust, or excluded establishments, 100% of past accumulations be transferred in cash in all cases. Securities will not be transferred by Head Office in exclusion cases too.
13. CHANGE HISTORY
(a) Where the SOP is the initial version:
i. SOP No: 4: Version 1
ii. Effective Date: —
iii. Significant Changes: — Not applicable
iv. Previous SOP no.: – Not applicable
(b) Where replacing a previous SOP: Nil as the present SOP is still at draft stage.
Notes
1“appropriate Government” means— (i) in relation to an establishment belonging to, or under the control of, theCentral Government or in relation to an establishment connected with a railway company, a major port, a mine or an oilfield or a controlled industry, or in relation to an establishment having departments or branches in more than one State, the Central Government; (ii) in relation to any other establishment, the State Government
2 “employer” means— (i) in relation to an establishment which is a factory, the owner or occupier of the factory, including the agent of such owner or occupier, the legal representative of a deceased owner or occupier and, where a person has been named as a manager of the factory under clause (f) of sub-section (1) of section 7 of the Factories Act, 1948 (63 of 1948), the person so named; and (ii) in relation to any other establishment, the person who, or the authority which, has the ultimate control over the affairs of the establishment, and where the said affairs are entrusted to a manager, managing director or managing agent, such manager, managing director or managing agent
3 “employee” means any person who is employed for wages in any kind of work, manual or otherwise, in or in connection with the work of an establishment, and who gets his wages directly or indirectly from the employer, and includes any person— (i) employed by or through a contractor in or in connection with the work of the establishment; (ii) engaged as an apprentice, not being an apprentice engaged under the Apprentices Act,
1961 (52 of 1961), or under the standing orders of the establishment
