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How to Open Provident Fund Account

How to Open Provident Fund Account?

A provident fund account is mandatory in India. But no individual can open a Provident fund account in his or her name at will. The Provident Fund account is opened by the employer on behalf of the employee. Not only that both the employer and the employee deposits money in to that in equal proportion. There is absolutely no deviation to this in India.

In order to open a Provident Fund account the employer, would need the employee to sign a form in triplicate, with all his details and the name of the nominee to the account. A nominee is the person who would be the legal aire to the Provident Fund account and all the balances held or accumulated in it. The form is then send to the Provident Fund office where it is processed and a Provident Fund account number is generated for the employer and the employee to deposit funds into it every month as per the provisions of the Provident Fund Act 1952. The amount of contribution that goes into is also capped and it works as the employee has to pay the mandatory amount and might choose to go upto 100% of his basic salary. However the employer is obligated only till 10 – 12 % depending upon the salary components of the employee.

But there are companies who are exempted from the mandate of having to provide a Provident Fund to the employees. People working in such organizations for their own benefit might have an account either with the State bank of India or with a post office, an account that is of similar kind with the facilities provided being the same including the tax benefits given in those Public Provident Fund accounts. But the employer is not obligated to deposit any thing on behalf of the employee in such an account.