You are here: Home » Economy & Policy » News
Business Standard

EPFO relief for 650,000 employers: no penalty for late EPF deposits

Under existing rules, once companies file their returns, known as ECR, they must also subsequently submit the EPF payments of employees at one go. Not doing so attracts a penalty

Topics
EPFO subscribers | EPF withdrawal | Employees Provident Fund

Somesh Jha  |  New Delhi 

money, cash, private equity
At present, companies hiring at least 20 workers are required to make EPF contribution for its workers

In what may come as a relief to formal sector companies, the Employees’ Provident Fund Organisation (EPFO) on Friday decided not to penalise employers for delay in depositing provident fund (PF) dues during the lockdown. It also clarified that companies will get the benefit of a lower EPF contribution regime, as announced by finance minister

This is part of the economic package to tackle Covid-19.

“Considering the difficulty faced by establishments in timely deposit of contributions or administrative charges due for any period during lockdown, the EPFO has decided that such delays due to operational or economic reasons shall not be treated as default and penal damages should not be levied for such delay,” a press statement issued by the labour and employment ministry, said.


ALSO READ: Four in a lift, facing the wall: Office etiquette in Covid-19 times

The official statement noted that firms are distressed and unable to function normally and pay the statutory contributions in time due to a “prolonged lockdown announced by the government to control the spread of Covid-19.”

The government said the move will ease compliance norms for around 650,000 establishments that make EPF contribution of workers “and save them from liability on account of penal damages.” The move will give full flexibility to companies to delay EPF contribution of its workers as they face a liquidity crunch.

During an interaction with the PHD Chamber of Commerce and Industry on Friday morning, EPFO chief executive officer (CEO) Sunil Barthwal said a lower rate of total contribution of 20 per cent of wages, instead of 24 per cent, will “most probably apply from May.”

ALSO READ: Zomato lays off 500 employees, slashes salaries as CEO blames coronavirus

The EPFO CEO told employers to pass on the benefits of a cut in EPF contribution to workers.

“A cut of two per cent will help you and it is a part of your income that we are not going to take. So, it will provide you liquidity to that extent but the remaining two per cent should benefit workers,” he said. At present, firms hiring at least 20 people are required to make EPF contribution for its workers. While 12 per cent of wages goes as employer’s share, 12 per cent is deposited as the employee’s share. The government has reduced the rate of contribution to 10 per cent each for a period of three months. Barthwal said the EPFO will not be “intrusive” during the pandemic and the headquarters has directed field officers to go easy on companies, especially during the lockdown.

ALSO READ: FM's Day 3 stimulus: Agriculture, allied activities get Rs 1.5-trn package

“There will be no harassment at all,” he said.

He said 2.3 million employees have withdrawn Rs 8,000 crore of their EPF savings through a special withdrawal window given by the government to deal with the pandemic situation. Workers can withdraw 75 per cent of their savings or up to a maximum of three months’ of basic pay and dearness allowance from their PF account – whichever is lower.

On April 30, the EPFO had said, in a press statement, that filing of monthly electronic-cum-challan (ECR) has been separated from payment of the statutory contribution reported in the ECR.

ALSO READ: Coronavirus LIVE: Working with India to develop vaccine, says Trump

This means that companies need to only inform the EPFO about the number of employees for which they are going to pay the EPF contribution without the need for making the statutory contribution towards their EPF dues.

Right now, as soon as companies have filed their returns, known as ECR, they also have to submit EPF payments of employees at one go. Not doing so attracts a penalty.

First Published: Fri, May 15 2020. 18:10 IST
RECOMMENDED FOR YOU