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Pf contribution of employees

sivaram (Asst Mgr-Taxation) (6918 Points)

07 June 2017

Dear All

Salary of april month is paid on 2nd of May to employees As per PF act what is the due date of remittance of Employees Contribution?

please give correct clarity

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6 Replies

Sanjay S (Chartered Accountant) (1375 Points)
Replied 07 June 2017

The P.F Act does refer to due date when it mandates under Para 38 of the P.F Scheme 1952 that the employer's' and the employee's contribution shall be remitted within 15 days of the close of every month. Now the question is whether 'every month' refers to the month to which the wages pertain or to the month in which the wages shall be deducted.

The commencing words of Para 38 of the P.F.Scheme 1952 which read as " the employer shall before paying the member his wages in respect of 'any period or part period' .................." will abundantly clarify that though the wages are paid in May and contribution is deducted in May, the wages pertain to the period of April and the words "close of every month" thus refer to close of the month to which the wages pertain and NOT to the month in which the wages are paid and contribution is deducted.

Therefore the due date for payment of wages of April 2017 will expire within first 15 days of May 2017 and P.F Department would be right in demanding interest for the delay in payment of contribution, if any.

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Sanjay S (Chartered Accountant) (1375 Points)
Replied 07 June 2017

I was facing a Technical error while uploading my reply. Attaching reply as an image:

sivaram (Asst Mgr-Taxation) (6918 Points)
Replied 07 June 2017

For determining the “due date” for payment of Provident Fund contributions, clause (1) of Paragraph 38 of Employees’ Provident Fund Scheme, 1952 is relevant. It reads as follows:

“The employer shall, before paying the member his wages in respect of any period or part of period for which contribution are payable, deduct the employee’s contribution from his wages which together with his own contribution as well as an administrative charge of such percentage [of the pay (basic wages, dearness allowance, retaining allowance, if any, and cash value of food concessions admissible thereon) for the time being payable to the employees other than an excluded employee and in respect of which provident fund contributions are payable, as the Central Government may fix], he shall within fifteen days of the close of every month pay the same to the Fund by separate Bank drafts or cheques on account of contributions and administrative charge.”

The term ‘month’ has not been defined in the Scheme. Whether “fifteen days from the close of the month” appearing in Paragraph 38 of Employees’ Provident Fund Scheme as to whether:-

it should be reckoned from the month in which such contributions are received by the assessee from its employees; or

from the month in respect of which such contributions are received by the assessee, in cases where wages are paid in subsequent month(s).

This ambiguity has been resolved in favour of the assessee, i.e fifteen days are to be reckoned from the close of the month in which employees contributions are recovered i.e the month of payment of wages.

Reliance is placed on the following decisions:-

Fluid Air (India) Ltd. Vs. D.C.I.T. (1997) 63 ITD 182 (Mumbai)
Madras Radiators & Pressings Ltd. Vs. D.C.I.T (1996) 59 ITD 515 (Mad.)/ (1996) 56 TTJ (Mad.) 662

1 Like

sivaram (Asst Mgr-Taxation) (6918 Points)
Replied 07 June 2017

Sanjay can you please clarify underlined paragraph is fifteen days reckoned from april or in may from the payment of wages like to have clarity once again

Sanjay S (Chartered Accountant) (1375 Points)
Replied 07 June 2017

With reference to the decision quoted by you, the due date will be 15 days from the end of May 2017 (month of payment),ie., 15th June 2017.

However, in my place, we have been consistently following the interpretation "every month = Wage month".

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sivaram (Asst Mgr-Taxation) (6918 Points)
Replied 07 June 2017

Mr Sanjay Today we won the appeal based on the above just now but definitely I would like to have clarity as I was also under the impression 15 days is reckoned from april only Thanks mr sanjay for your valuable contribution on the same