Need Help Understanding EPF: Can an Expert Clarify My Query?

I have one query related to EPF. Requesting a reply from an EPF expert.

Thanks.

My concern is that if any organization registered for EPF in March 2014 and got the registration number in March 2014, and then paid the challans of employees from December 2013 onwards, this results in delayed payment for December 2013, January 2013, and February 2013 challans.

As the registration was done in March 2014, there was no other option to stop the delayed payment of challans from December 2013 to February 2014. So, please update me if a penalty is applicable to the organization for these three challans, or if that can be waived off as practically that was no one's fault.

Do we need to pay a penalty or interest, or both, and how much? Request your advice.

Yes, Aditya, we received the code on March 14, but we paid from December 13. Do we need to pay a penalty as well as interest for the previous months? Please reply.

Dear, regarding the remittance you made from Dec'13 to Feb'14, your coverage is backdated. Consequently, it falls under belated dues remittance, and therefore, interest and damages are payable as per Section 14B of the Act.

Regards,
Pushkar Bisht

In that situation, you are liable to pay dues and penalties.

Also, please update me on how to calculate and pay that. I mean, how to generate a challan for that.

Thank you.

Yes, loss of interest and damages both compensate for the period of delay according to the rates given in the Act. You don't need to do anything regarding this concern; the PF authority shall directly send you a notice for the same if they identify it.

Regards,
Pushkar

It is the prime responsibility of the establishment to get the establishment covered in time as and when the act is applicable under Section 1(3) or 2A, as the case may be. In case the establishment was coverable from December 2013 and you applied for registration or obtained a code in March 2014, you are liable for the imposition of interest and damages under Sections 7Q and 14B, which are detected later by the department, and an opportunity is given to hear you before such action.

However, if you applied for coverage in time but the allotment of your employer's code is delayed by the department, you can raise the issue before the competent authority, i.e., RPFC, where the damages part can be waived off subject to the favorable facts of your case.

Regards,
P K Sharma

You need not pay the interest for that period because it is not your actual delay. In case they issue a notice to pay the interest, at that time you can inform the same in your reply. Actually, the PF inspector will inspect all these payments during his visit. Based on his inspection report, the PF authorities will issue a notice for the payment of interest on delayed payment. Now you need not worry about interest payment.

The days are now over when interest and damages were assessed after receiving the inspection reports from the Area Enforcement Officer of the EPFO. Now, all details are available online, and the department is emphasizing early action towards the realization of interest and damages, with the frequency of assessment also being shortened.

Regards,
P K Sharma

It is well understood from your posting that you were liable for coverage under the EPF & MP Act as early as December '13 itself. However, you only applied for coverage in March '14 and obtained the establishment code in April '14.

Employer Responsibilities Under EPF & MP Act

It is the responsibility of every employer to apply for coverage under the EPF & MP Act when the total employee strength exceeds 20. Therefore, the delayed payment for the previous period incurs applicable interest and penalties.

Regards.

Thanks for your valuable suggestions. Now, do we need to visit the EPFO to meet with the PF inspector about the payments? Delay in these pending payments will result in additional penalties.