Provident fund

This query is : Resolved

bhavya (Querist)
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24 September 2012 heyy..
Plz tell me regarding the contribution of PF on behalf of Employer..
As it is necessary to pay PF by 20th of next month..
But in case, if employer is deducting PF in FY 2011-12, but employer does nt paid that amount of PF monthly to govt.. and the whole amount of PF paid by employer after 31/03/2012.. What is the the treatment & what is the penalty regarding late payment??

Sumit Grover

Sumit Grover (Expert)
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24 September 2012 Section 36:
The deduction of employee's contribution to PF is allowed to employer if the same is deposited by the due date of that particular PF Act,(which is normally 20th of every month)

Section 43B:
The deduction of employer's contribution to PF is allowed in the same FY if such contribution is deposited(including late payments) till the due date of filing the ROI.

However, in csae of Aimil Ltd, delhi HC has passed a judgement stating that section 43B covers the deduction of employee's contribution as well.

The advantage of above mentioned judgement can be taken and accordingly both-employee's & employer's contribution to PF can be allowed to employer, provided they are deposited by due date of ROI(31-July-2012 or 30-Sep-2012, as the case may be).

bhavya

bhavya (Querist)
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25 September 2012 thnxx..
& 1 more ques what is the penalty for submittting late amount of PF to govt. by employer??

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Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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10 August 2024 If an employer fails to deposit Provident Fund (PF) contributions within the stipulated time, they can face penalties and interest charges as per the regulations set by the Employees' Provident Fund Organization (EPFO). Here’s a detailed breakdown:

### Penalty and Interest for Late Deposit of PF

1. **Interest on Delayed Payment:**
- **Rate:** The EPFO charges interest on delayed payments of PF contributions at a rate of 12% per annum, compounded monthly. This rate can be subject to changes based on EPFO’s regulations.

2. **Penalty:**
- **Penal Damages:** If the PF contributions are not deposited within the due date, the employer is liable to pay penal damages. The rate of penal damages is as follows:
- **1-2 months:** 5% of the amount of default
- **2-4 months:** 10% of the amount of default
- **4-6 months:** 15% of the amount of default
- **More than 6 months:** 25% of the amount of default

3. **Additional Penalties:**
- **Legal Action:** In cases of persistent default or non-compliance, EPFO can initiate legal action against the employer. This can include prosecution under the provisions of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952.

4. **Compounding of Offenses:**
- **Compounding Fees:** For offenses related to the delayed deposit of PF contributions, employers may be required to pay a compounding fee in addition to the penalty and interest.

### Compliance Recommendations:

- **Timely Payment:** Ensure that PF contributions are paid on or before the due date to avoid penalties and interest.
- **Regular Monitoring:** Implement internal controls to regularly monitor PF contributions and payments.
- **Consultation:** Seek advice from a professional or consult with EPFO for any clarification regarding penalties and compliance.

### References:

- **Employees' Provident Funds and Miscellaneous Provisions Act, 1952**
- **EPFO Circulars and Notifications**

Employers should always refer to the latest notifications and updates from EPFO and consult with professionals to ensure compliance with PF regulations and avoid penalties.