Employees’ Provident Funds Scheme, 2026 · Paragraph 12
Paragraph 12: Exemption of employee or class of employees
Reviewed by Finin2min Editorial Desk · Last reviewed 21 August 2026
Governs entitlement, computation or processing under exemption of employee or class of employees. Eligibility depends on the facts and service/member data specified in the paragraph rather than the page title alone.
Chapter IV — Exemption and transitionExemption and trust governanceG.S.R. 525(E)Source checked 21 Aug 2026
Finin2min 2-minute summary
Governs entitlement, computation or processing under exemption of employee or class of employees. Eligibility depends on the facts and service/member data specified in the paragraph rather than the page title alone.
Code linkage: Sections Context-specific. Timing: See paragraph page
Full notified provision text
12. Exemption of employee or class of employees. — (1) Upon receipt of an application in Form-I from the employee, the appropriate Government may, by notification and subject to such conditions as may be specified in the order, exempt from the operation of all or any of the provisions of this Scheme:
Provided that such exemption shall be granted where the employee is entitled to benefits under the rules of the establishment which separately or jointly are substantially similar or superior to the benefits provided under the Code and this Scheme.
Provided further that an employee exempted under sub-paragraph (1) may, by an application to the Commissioner, make a declaration that he shall become a member of the Fund;
Provided further that no employee shall be granted exemption or permitted to opt out of such exemption more than once on the same account.
(2) Where exemption is granted, the employer shall–
(i) maintain accounts;
(ii) submit returns in electronic format in Form-II:
(iii) provide facilities for inspection;
(iv) pay inspection charges; and
(v) invest provident fund collections in the manner directed by the Central Government.
(3) No exemption for a class of employees shall be granted unless consent of the majority of such employees is submitted by the establishment.
Official Gazette PDF · G.S.R. 703(E) corrigendum
Clause / sub-paragraph explanation
(1)
(1) Upon receipt of an application in Form-I from the employee, the appropriate Government may, by notification and subject to such conditions as may be specified in the order, exempt from the operation of all or any of the provisions of this Scheme:
Provided that such exemption shall be granted where the employee is entitled to benefits under the rules of the establishment which separately or jointly are substantially similar or superior to the benefits provided under the Code and this Scheme.
Provided further that an employee exempted under sub-paragraph
Explanation: Read this unit as a condition/permission/definition within the paragraph; apply it together with any proviso, exception and defined term that follows. The operative words above control.
(1)
(1) may, by an application to the Commissioner, make a declaration that he shall become a member of the Fund;
Provided further that no employee shall be granted exemption or permitted to opt out of such exemption more than once on the same account.
Explanation: Read this unit as a condition/permission/definition within the paragraph; apply it together with any proviso, exception and defined term that follows. The operative words above control.
(2)
(2) Where exemption is granted, the employer shall–
Explanation: Read this unit as a condition/permission/definition within the paragraph; apply it together with any proviso, exception and defined term that follows. The operative words above control.
(ii)
(ii) submit returns in electronic format in Form-II:
Explanation: Read this unit as a condition/permission/definition within the paragraph; apply it together with any proviso, exception and defined term that follows. The operative words above control.
(iii)
(iii) provide facilities for inspection;
Explanation: Read this unit as a condition/permission/definition within the paragraph; apply it together with any proviso, exception and defined term that follows. The operative words above control.
(iv)
(iv) pay inspection charges; and
Explanation: Read this unit as a condition/permission/definition within the paragraph; apply it together with any proviso, exception and defined term that follows. The operative words above control.
(v)
(v) invest provident fund collections in the manner directed by the Central Government.
Explanation: Read this unit as a condition/permission/definition within the paragraph; apply it together with any proviso, exception and defined term that follows. The operative words above control.
(3)
(3) No exemption for a class of employees shall be granted unless consent of the majority of such employees is submitted by the establishment.
Explanation: Read this unit as a condition/permission/definition within the paragraph; apply it together with any proviso, exception and defined term that follows. The operative words above control.
Numbers, limits and timelines found in this provision
No standalone numeric threshold was extracted; apply the qualitative conditions in the provision.
Worked practical example
An exempted establishment should not assume exemption is permanent. It should test the continuing conditions, trustee/fund requirements and filing obligations in this paragraph before relying on the exemption for a current period.
Compliance checklist
- Confirm the establishment/member is within the provision's scope.
- Apply definitions and provisos before using a contribution/benefit figure.
- Check the 4 August 2026 corrigendum and subsequent Gazette instruments.
- Use current EPFO portal/form instructions where the Scheme requires electronic action.
- Retain calculation, acknowledgement, approval/order and supporting data.
Q&A
What does Paragraph 12 of the Employees’ Provident Funds Scheme, 2026 cover?
Governs entitlement, computation or processing under exemption of employee or class of employees. Eligibility depends on the facts and service/member data specified in the paragraph rather than the page title alone.
What is the practical compliance focus of Exemption of employee or class of employees?
Start with the exact trigger and conditions in Paragraph 12; verify coverage/eligibility, identify the responsible actor, then retain the filing, payment, calculation or decision evidence relevant to exemption and trust governance.
Does the 4 August 2026 corrigendum affect this paragraph?
No specific correction to this provision was identified, but G.S.R. 703(E) should still be checked where the Gazette page/line is material.
Which Code provisions should be read with Paragraph 12?
The provision register maps this paragraph to Code on Social Security sections Context-specific. Other provisions may also apply depending on the facts.
What records should be kept for Exemption of employee or class of employees?
Keep the source employee/establishment data, approvals, contribution/benefit computation, portal acknowledgement, order/correspondence and the version of the Gazette/circular relied on, as applicable.
Primary sources & related intelligence