Is It Fair for PF to Charge Interest Based on Realization Date Instead of Remittance Date?

There have been a couple of instances where the employer has remitted the PF contribution on the 18th and 20th of the month in the past period. The date of realization stamp on the challans by SBI is after the 21st of the month.

The PF department has raised a demand for interest and damages for 6 days in both cases. Please clarify whether this is right. Should not the date of remittance be taken into account rather than the date of realization?

The damages can be levied only when there is a default in payment of the contributions. In your case, there is no default, but there is only a delay, and hence no damages can be levied for it. Above all, the date on which the amounts are remitted shall be the determinative factor in computing the default or delay. You can accordingly make out your case before the P.F.

Regards,
B. Saikumar
Mumbai

Thank you for your valuable input, Mr. Saikumar. In my case, the inward date stamp (I presume I can call this the remittance date) of SBI says 18th and 20th, respectively. The cheque realized stamp (after the cheque has cleared from my bank and gone back to SBI) by SBI is 21st and 23rd, respectively. This is for the year 2009-10. The PF authorities have therefore claimed interest and penal damages for 6 and 8 days, respectively.

Regards,
K. S. Balakrishnan
Chennai

How can an employer be held responsible assuming the delay in realization is due to some technical problem in the bank? In my view, the date of remittance is determinative. Once the cheque is realized, it must be deemed to have been paid with effect from the date of remittance. As I remember, there will be a grace period as per the Income Tax Act. Please check up. However, the problem arises when the cheque is not realized. You can make your submissions accordingly.

Regards,
B. Saikumar
Mumbai