Facing a PF Inspection: How to Handle Missing Financial Records from 18 Years Ago?

We are a small company with 35 employees. We started coverage of our employees under PF as soon as our payrolls reached 20 employees 3 years ago. We have our first PF inspection, and the inspector wants to see the financial records/salary sheets of all the years since inception - 18 years ago. Is this required under PF laws? We don't have such old records, so how will we show them? Please advise.

Dear Ask,

Has the PF inspector given a written report to your company?

It is not necessary to show him records from 18 years ago, as per the law, we are only required to preserve records from the past 3 years.

If he does not agree with this, you can approach the PF Commissioner and inform him about the issue.

Thank you,
Bala Panmand

We are a small company with 35 employees. We started covering our employees under PF as soon as our payrolls reached 20 employees 3 years ago. We recently had our first PF inspection, and the inspector requested to review financial records and salary sheets from all the years since our inception, which is 18 years ago. Is this a requirement under PF laws? We do not have such old records, so how should we address this situation? Please advise.

Dear AKS,

Regarding your query about PF Inspection, the inspector can only check records from the past 5 years before the commencement of your PF. It is understood that maintaining records dating back 18 years would be impractical.

To prepare for the inspection, ensure you have the following documents on hand: three years of Salary Sheets, PF Monthly Return forms 5 & 10, Form 12A, yearly returns 3A and 6A, as well as the corresponding Balance sheets. These records will be crucial for comparing your data with the inspector's findings.

Thank you,
SHISH UNIYAL

As per the Income Tax Act, the relevant records to support the returns of income, like the cash book, ledger, and income and expenditure statement, are expected to be retained for 9 years from the date of such filing. If the I.T. department does not ask for records prior to 9 years, it is unjust for a PF inspector to ask for records before that.

You need to produce your PF records, such as Form 5/10, 12-A, monthly challan, and 3-A, 6-A, Form 2/11, etc., with the books of accounts for a maximum of 9 years. Maybe the inspector is trying to prepone the coverage. If you are firmly convinced that the employee strength (in the case of regular/casual/contractor employees in a clubbed fashion) does not exceed 19 at any time prior to your application, you need not worry at all.

In case of any harassment, directly write to the Central Provident Fund Commissioner, marking a cc to the Regional Provident Fund Commissioner.

Such acts are mostly done by inspectors with an expectation of illegal gratitude. We are here to comply with the provisions (in genuine cases only).

Hope for the best.