Helpless employees

They cannot refuse EPF payment under social security legislation, yet stand to lose the 80C benefit if their company hasn't registered with EPFO

K K Jalan, Central Provident Fund (PF) Commissioner, has a good reason to be upset. For almost eight years, the PF department has extended deadlines for corporate houses to seek an income tax exemption certificate from the Labour Ministry or Employee Provident Fund Organisation (EPFO).

“However, many trusts have not come to the EPFO even in the past eight years. The Finance Ministry, on its part, has been extending the deadline through the Finance Act. However, as the Finance Act was not amended this time, the extension will expire on March 31, 2014,” Jalan explains.

The impact of this lapse in extension will be felt by employees of over 100 companies, as they may be denied tax exemption on their EPF contribution in the next financial year under Section 80C. In addition, if someone retires from a company, which does not have the tax exemption status, they may have pay tax on the corpus.

Jalan suggests that employees should ensure that trusts run by their employers are registered and contribute to it. only then. But employees may not even have this option. According to the social security legislation, employees who qualify under the EPFO norms have to compulsorily contribute towards EPF, says Santrupt Mishra, head of HR at Aditya Birla Group.

You can deny contribution to only that portion which you are making voluntarily that is, over and above the basic minimum amount. Otherwise, there is no mechanism to address this problem if one is faced with it, say industry experts. The good news, according to the PF department, is that most big PF trusts are already registered with EPFO.



Says TeamLease’s Manish Sabharwal: “The income tax laws do not differentiate between an exempted and an un-exempted PF trust. In fact, it even recognises “excluded trusts” – ones for employees who earn more than Rs 6,500 a month.

In August 2013, EPFO had asked around 300 exempted private sector PF trusts to send their pending tax exemption proposals by November. But many companies which deduct contribution towards PF do not deposit these.


The EPFO says that if a company is found non-compliant with the PF deposition, it will not only have to pay the dues but also an interest penalty, depending on the number of days of the delayed payment. If the delay is for less than two months, then the interest payable will be five per cent yearly over and above the amount payable for the number of days of delay.

For non-deposition of PF, employees can file a complaint with either Regional PF Commissioner or a criminal case against the employer with the police or to the chief vigilance officer of the Labour Ministry. You need to produce a copy of your salary slip to show the deduction which does not being reflected in the account balance.