EPFO panel clears new SOP for exempted establishments, CBT to take call

EPFO's Exempted Establishment Committee has approved a consolidated SOP to streamline regulation of exempted establishments, replacing annual audits with risk-based reviews; CBT will review it next

The Employees’ Provident Fund Organisation’s (EPFO) Exempted Establishment Committee (EEC) has approved a new standard operating procedure (SOP) on exempted establishments, according to people aware of the development.

 

In a meeting held on February 20, the EEC approved the SOP, which aims to simplify and standardise the regulatory framework governing exempted establishments, the people said. The SOP will promote ‘ease of doing business’ (EoDB) and reduce procedural complexity by consolidating four existing SOPs and one manual into a single framework.

 

The SOP is yet to be approved by the EPFO’s apex decision-making body — the Central Board of Trustees (CBT). The 60th EEC has approved and recommended it for further approval by the CBT in its upcoming meeting on March 2.

 

As per the EEC’s approved proposal, the new SOP can be modified or updated for any future references to the Employees’ Provident Fund Scheme under the Code on Social Security, 2020 with approval of the Central Provident Fund Commissioner (CPFC), the people said.

 

Currently, a team of EPFO officers conducts an annual physical audit of exempted establishments. The new SOP would replace this with a risk-based audit of these establishments, the people said. This new online audit is expected to promote automated auditing and EoDB by reducing the compliance burden on establishments.

 

Exempted establishments are companies allowed to manage their own provident fund trusts instead of depositing contributions with the EPFO, as long as they provide benefits at least equal to those under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. While the employer manages the corpus through a board of trustees, EPFO continues to regulate and audit these trusts. The contribution rates remain the same as the statutory scheme, with only fund management shifting from EPFO to the employer-run trust.

 

The new SOP enables online surrender of exemption, the persons said. Past accumulations will be transferred through internet banking if an exemption is surrendered or cancelled. The EPFO expects this to bring efficiency in the system.

 

The SOP also introduces third-party audits by Chartered Accountant firms empanelled with the Comptroller and Auditor General of India (CAG). It will be reviewed regularly, and stakeholders can suggest changes at any time. The CPFC has the authority to resolve issues, ensuring the framework remains flexible and responsive.

 

Every exempted establishment will have an online portal for grievance resolution that will integrate with EPFO’s public grievance handling system, as per the new SOP.

 

The EEC is a non-statutory sub-committee of the CBT that makes recommendations on all policy matters relating to the exempted sector.

 

The new SOP maintains that exempted establishments must offer benefits at least equal to those provided by EPFO and follow its procedures. To safeguard members, balances in inoperative and non-KYC accounts must be transferred to EPFO with accrued interest.

 

In April 2025, a committee comprising three CBT members and officers of Exemption, Legal, Information Services and Investment Divisions was constituted. A workshop on exemption was conducted in December 2025, inviting CBT members, major exempted establishments and consultancy firms.