Seeking Help: How to Calculate PF Penal Damages and Understand Related Charges?

Dear Seniors, Please clear my query regarding PF.

1. How to Calculate Penal Damage During Filing Challan

Is it calculated based on total wages or the challan amount? What will be the penal damage if the PF Challan amount is 1,20,000?

2. Are Admin Charges Also Applicable for Penal Damage?

3. What is a Miscellaneous Payment, and How is it Calculated?

4. What are the PF Inspection Charges if the Establishment is Exempted from PF?

It's my heartiest request to all my seniors to participate in this discussion. I will be grateful to you.

Dear Lokesh Sharma,

Panel damages are calculated and issued through an order by EPFO. Based on that order, you have to remit the said amount, which depends on the delay in payment made. It is calculated on the total challan amount already paid.

No, it is a lump sum amount that is inclusive of all. From this amount, the interest is added to individual accounts.

This may be used to pay arrears on omitted wages, etc.

You have to pay 0.005% in account no. 22 for EDLI exempted (50% of the normal 0.01%).

Regards,
S. Sethupathy, Excellent HR Services.

For penal damages, there are no administrative charges. This is as per the assessment conducted by the PF Enforcement Officer.

We hire jeeps from contractors for a two-year period. The contractor remits PF contributions to our organization's PF account through ECR, and their payment will be released after the submission of the PF paid challan signed by the bank. In this regard, we observe that the contractor pays a salary exceeding the minimum wage to their driver in reality but shows only half of that in the PF challan, as the driver refuses to contribute his share. Is this correct under practical scenario?

Filing Annual Returns in the ECR System

In the ECR system, how do we file annual returns? Who is responsible for filing the returns? In the case of contractors who have a PF code, is the principal employer still bound by obligations under the PF Act? Can a contractor with just two drivers obtain an independent PF code? If so, what are the costs and procedures for that?

Please advise.

Regards,
Ramananda Rao
Executive Engineer

PF Contribution and Contractor Obligations

The contractor should deduct the PF amount from the employee as the PF contribution is mandatory. Both employee and employer contributions should be remitted to the PF authorities.

Contractors should file annual returns on their own.

In case of default payment, the principal employer is bound to fulfill the obligations of the PF Act.

Regarding Penal Damages and 7Q in PF Act

• Less than 2 months – 17%
• More than 2 months and less than 4 months – 22%
• More than 4 months and less than 6 months – 27%
• More than 6 months and less than 3 years – 37%

The penalty shall not exceed the amount of arrears.