EPFO lowers penal charges on employers defaulting on PF, pension and insurance deposits
penal charges on employers who default on depositing the provident fund, pension and insurance contribution of their employees with the retirement fund body while making the penal charges uniform irrespective of the duration of default.
As per the notification issued by the ministry of labour on employment on Saturday, damages from the employer will be recovered at the rate of 1% of the arrear of contribution per month or 12% per annum across three schemes vis the Employees’ Pension Scheme (EPS), the Employees’ Provident Fund (EPF) Scheme and the Employees’ Deposit Linked Insurance Scheme (EDLI) under EPFO. The highest charges so far was 25% per annum.
The new provisions will be effective from the date of notification.
Until now, the penal charges were calculated at the rate of 5% per annum for default period of less than two months, 10% for default period of two months and above but less than four months, 15% for four months and above but less than six months and 25% for six months and above.
This will reduce the penal liability on employers who default for a longer period while no significant change in rates for employers who default for a period less than four months.
Currently employers are mandated to file returns with EPFO on or before 15th of every month for the previous month and any delay beyond that is considered as default.
Out of the 12% of the employers’ share, 8.33% goes to the pension account of the employee under EPS, 3.67% goes to the provident fund account under EPF scheme and an additional
