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CMA Intermediate · Business Laws and Ethics · Employees Provident Fund and Miscellaneous Provisions Act, 1952

As per section 6C(2) of the EPF Act, 1952, the employer's payment into the Deposit-linked Insurance Fund in respect of each employee must not exceed what limit?

The employer pays into the Deposit-linked Insurance Fund an amount not exceeding one per cent of the aggregate of basic wages, dearness allowance and retaining allowance, if any, payable to the employee, as notified by the Central Government. Dearness and retaining allowances are included in the base.

  1. AOne per cent of the aggregate of basic wages, dearness allowance and retaining allowance (if any), as the Central Government specifiesCorrect
  2. BTwelve per cent of basic wages only
  3. COne-fourth of the employee's contribution to the Provident Fund
  4. DOne per cent of basic wages excluding dearness allowance and retaining allowance

Explanation

Section 6C(2) caps the employer's payment at not more than one per cent of the aggregate of basic wages, dearness allowance and retaining allowance (if any), as the Central Government specifies by notification. The last option wrongly excludes dearness and retaining allowance. The one-fourth limit relates to administrative expenses under 6C(4)(a), not this payment.

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