Q.3 Explain how the necessary contributions are collected under the employees old age benefits act.
Ans: CONTRIBUTION [Section 9]
(a) Meaning [Section 2(b)]
Contributions are required to be paid every month by the Employer to the Institution in respect of every person in his insurable employment at the rate of 5% of his wages in the prescribed manner. Employees drawing wages in excess of Rs. 3000/- are excluded from the scheme of the above Act. Moreover no contribution shall be payable in respect of an insured person who is in the receipt of pension under the above Act or has attained the age of sixty years, or fifty-five years in the case of a woman.
With effect from July 1986, contribution shall be payable on quarterly basis by the Federal Government to the Institution in respect of every insured person at the rate of. 5% of his wages. The restrictions mentioned above in respect of contributions are also applicable of the Government contribution.
Any official of the Institution has the following powers:
1. Require an employer to furnish to him such information as he may consider necessary; or
2. At any reasonable time, enter any establishment or other premises occupied by such employer and require any person found Incharge thereof to produce and allow him to examine such accounts books and other documents relating to the employment of persons and payment of wages, or to furnish to him such information, as he may consider necessary; or
3. Examine, with respect to any matter relevant to the purposes aforesaid, the employer, his agent or any person found in such establishment or other premises or any other person whom the said official has reasonable cause to believe to be or to have been an insured person.
(b) Kates and Assessment [Section 9]
The employer is required to pay to the Institution every month contribution in respect of every person in his insurable employment at the rate of 5% of his wages. Where an insured person does not receive any wages for any period, the Institution shall determine amount of wages for this purpose. The employer from the wages of the employee shall deduct no portion of the contribution. However, no contribution shall be payable in the following cases:
(a) So much of an insured person’s wages as is in excess of Rs. 3,000.
(b) In respect of an insured person who is in receipt of pension under Old-age Act or has attained 60 years or 55 years in case of a woman.
(c) Where an employer opts for self assessment scheme, no contribution shall be payable on so much of an insured person’s wages as in excess of five thousand rupees.
(c) Government contribution [Section 9A]
The Federal Government shall pay to the institution every quarter 5%of wages of every insured person. However, no contribution shall be payable on so much of an insured person’s wages as is in excess of Rs. 3,000, or in respect of an insured person who is in receipt of pension in the Old-Age Act or has attained the age of 60 years or 55 years in case of a woman.
(d) Determination of Contribution [Section 12(3)]
The Institution may determine the contribution payable by an employer on the basis of such evidence as is found satisfactory, if the employer fills to:
1. Maintain records, 2. Submit returns as required by regulations,
3. Comply with the provisions of Section 12(1), and
4. The employer makes it difficult to ascertain the identity of persons required to be insured or the amount of contribution payable.
(e) Increase of Contribution [Section 13]
If any employer fails to pay, on due date, the contribution payable by him, the amount so payable shall be increased by the prescribed percentage which in no case shall exceed 50% of the amount due.
The contribution shall be recoverable as arrears of land revenue.
(f) Refund of Contribution [Section 15]
An employer shall be entitled to the refund of any contribution paid to the Institution under erroneous belief that it was payable, and shall also be entitled to refund of any excess amount paid.