How Long Should We Keep EPF Records? Seeking Advice on Inspection Requirements

Guidance on EPF Inspection Record Keeping

Can anybody guide me on how long we should keep company accounts records for EPF Inspection? The EPF inspector comes to our office and gives a notice to show all account records like Cash Book, Ledger, Voucher, etc., since the date of the last inspection, which was on 09.01.02. Therefore, we have to show the records from the last 10 years.

Is there any provision to avoid showing records for such a long period? Any circular, etc., that addresses this issue? Please share with me if any.

Regards,
Tapas Ghosh
CM Flowmeters (India) Pvt. Ltd. / Kolkata

Record Keeping Requirements for EPF Inspection

There is no time limit in the PF Act to keep the records. As per the Income Tax Act, you need to keep 10 years of records. Therefore, you cannot avoid showing them the records.

Regards,
Manjay

I disagree with the Income Tax record limitation for 10 years. In accordance with the statutory provisions stipulated in the Income Tax Act of 1961, records are kept for five years. As far as the question of PF records is concerned, there is no specified tenure to keep the records. For inspection purposes, you can ask the inspecting authority about the reasons for conducting PF inspections. Currently, such inspections are carried out only for defaulting employers who have not deposited monthly contributions within the set time limit and where membership has drastically decreased. Regarding deposits for the past 10 years as a revenue matter, you are not obliged to produce books of accounts for a 10-year period; they cannot impose this requirement on you.

Regards,
R B Yadav
Advocate

Dear Sir,

Thank you for your response. You mentioned a provision in the Income Tax Act for keeping records for five years. Could you please provide us with the relevant circular reference and the effective date of this provision? We would like to present this to the inspector as the reason for not maintaining records beyond five years.

Regards,
Tapas Ghosh

You need to maintain the records for life long. It is possible that an employee has been working with your firm for the last 10 or 15 years. However, for inspection purposes, you only need to show records for the last 7 years. This is in accordance with the circular by EPFO. Currently, I do not have a copy of the same, but I will search for it and post it here. You can also search for the circular on citeHR as I have downloaded it from there.

Regards,
Vallabh

The inspection policy of the EPFO is available on their website; you can download it from there. As far as the question of income tax record-keeping is concerned, it is five years, and the copy of the notification can be found on the income tax website in the archive items. Furthermore, last year, the ESI Corporation also issued a notification to this effect, and the same is available on the website.

Thanks & Regards,
R B Yadav
Advocate

I would rather advise the production of whatever records you have from a particular period and provide in writing that:

1. No records prior to this period are in your possession, as they belong to an older period and are voluminous.
2. You are prepared to settle any liability if raised in the future due to complaints filed by former employees at any stage.
3. You may formally request a copy of any complaint currently held by the RPFC for your verification and response.

Regards,
Chandok AK
RPFC (Retd.)

Re: Your Query on Record Retention

You can keep the payment challans and other related payment records for a period of 7 years. Since you are in the electronic age, you can scan and store the documents in digital format. This will be especially beneficial in the long run during the settlement process, particularly in relation to Form-5, Form-10, Form-2, and your company's registered records.

I hope that the respected members will also agree with this approach.

Regards,
Ravi
Retd. Sr. HR & Comml. Exe.

Understanding Record Keeping Requirements for EPF Inspection

Company law requires you to maintain all accounting records for a period of 8 years from the end of the financial year. It requires accounting records but not the supporting working or computation beyond what is necessary for the identification of the transaction. Most companies follow the rule of keeping records for 8 years.

Most labor laws require you to keep records for 3 years (Payment of Wages Act, Minimum Wages Act, etc.).

So, in effect, if the inspector asks for the record, you can show him accounting records like payment vouchers and copies of challans. However, wage registers, etc., are going to be available for only 3 years. So, he can really only check for 3 years.

Why did you allow the matter to go to a show cause level? Why did you not show him current and 3 years' records when he came first? It would have been simpler unless you have things to hide. Now, I don't know how acrimonious you have made the situation. If possible, give him a reply to the show cause, offering to show records for 3 years and stating that you do not have older records. Further, speak to him and convince him that nothing wrong has been done and that he can check 3 years' records. If he finds any discrepancies, then he can always ask for other records. You can also find out what is wrong and why he is conducting an investigation.

Importance of Record-Keeping Policy

All members, in view of the laws for maintaining records, it is advisable to have a record-keeping policy prepared and approved by senior management to avoid ambiguity at a later stage. This will facilitate providing clarification to the authorities when needed.

Regards,

EPFO Inspection Policy: Record Keeping Guidelines

In view of the EPFO inspection policy, it is important to keep records for 7 years. However, ensure compliance with the provisions of other relevant laws as well.

Regards,
Varghese Mathew

I am glad this has come up for discussion. My organization is struggling with a PF audit that is not ending. They found no irregularities when they checked the last 5 years, so they have asked for the last 10 years—almost as if they want to find problems! And they have found one—our mistake was that we did not know that we are responsible for checking the PF contributions of outsourced staff as well. If the contractor is not paying PF, then we have to. We were supposed to check that the contractor is doing it, so we are busy trying to sort that out. I guess we will learn some things the hard way—every time a conscientious auditor comes our way!

Request for Expertise on PF Dues Complaint

Your expertise is highly solicited on the following inquiry regarding complaints from ex-employees in 2008 about short payment of PF dues. The company closed in 1995, and all legal dues were paid. The APFC is requesting records, which are not available with the closed company or the EPF office. A deposition by the EO states that employer contributions were not paid from 1982 to 1995.

Please be informed of the legal status.

Regards,
H.R. Deshpande

The above information is very informative. The EPFO is requesting to inspect records from 01-04-2004 onwards, whereas I only have records for the last 4-5 years. I am unable to find any notification, as suggested by other knowledgeable members above, regarding the 5-year cutoff. Could any of you kindly provide a link to any such notification?

Thanks in advance.

Regards,
Kanwar

Dear Dr. Chandokak,

While surfing the net, I came across your contact details as an expert in employment law and with specialized knowledge in Provident Fund matters. I would like to inquire if you could provide some insights regarding the summoning of records by PF Authorities under Section 7A. How many years back can an employer refuse to provide records?

Regards