If you are a Provident Fund ie PF subscriber, then there is important news for you. If your employer does not make his contribution to the Employee Provident Fund (EPF) on time, he may have to pay a fine.
If you are a Provident Fund ie PF subscriber, then there is important news for you. If your employer does not make his contribution to the Employee Provident Fund (EPF) on time, he may have to pay a fine. The Supreme Court had said in an order in February 2022 that if there is a delay in the Employee Provident Fund (EPF) contribution of the employee, the employer will have to cover that loss.
How much fine will have to be paid?
Do note that employers who default on PF contribution will have to pay interest under Section 7Q and damages under Section 14B of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 on the outstanding amount.
- For a delay of 0 to 2 months, interest will have to be paid at the rate of 5 percent per annum.
- If there is a delay of 2 to 4 months, money will have to be paid at the rate of 10 percent annually.
- If there is a delay of 4 to 6 months, the penalty will have to be paid at the rate of 15 percent annually.
- If there is a delay of more than 6 months, payment has to be made at the rate of 25 per cent per annum.
The loss is restricted up to 100% of the arrears amount. Employees Provident Fund Organization (EPFO) has given this information. Do note that an interest rate of 12 per cent per annum per annum will have to be paid on the outstanding amount for the entire period of delay.
According to the latest tweet by EPFO, those employers who default on contribution will have to pay interest on damages on the outstanding amount.
What is the rule of contribution of employee and employer?
Under the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952, both the employee and the employer are required to contribute towards the EPF account at the rate of 12% of the employee’s basic salary.
The full contribution of the employee is received in the EPF account. In contrast, 8.33 per cent of the employer’s contribution of 12 per cent goes to the Employees’ Pension Scheme. Whereas, the remaining 3.67 percent is put into the EPF account.
Apart from this, let us tell you that in a recent circular of EPFO, its regional offices were told that if someone has received pension without exercising any option under EPS, then he should revise the pension entitlement.
