Navigating PF Challenges: Can I Avoid Penalties for Past Non-Payments?

Hi, I took over the family business in 2007, which had three employees. After the renovation, the three old employees left, and I hired two new ones. Due to a lack of knowledge, I missed paying PF for the employees. The entire amount was paid to the employees. Is there any exemption I can be covered under to avoid non-payment of PF? Please advise.

The information provided by you is insufficient to address your query. Kindly provide the following information:

1. Date when the 3 former employees left the company and whether they were covered under PF.
2. The last PF remittance month and year.
3. Start date of employment for the 2 new employees along with their respective salaries.

Thank you.
Regards.

The old employees left in November 2007, and they were covered under PF. The last PF remittance was made in May 2007. There were some intermediate employees for a couple of months, followed by two permanent employees since March 2008.

You have not made the remittance from June 2007 to November 2007 for the employees who have left. You need to do it now.

Liability for PF Payment

You mentioned that there were intermediate employees for a couple of months and then two permanent employees since March 2008. Please note that you are liable to pay PF for an employee even if they are engaged for just one day. The only exception is if the employee is an 'excluded employee' as defined by the Act. It is your responsibility to prove that the employee falls under the 'excluded employee' category.

Record Maintenance

You need to maintain a record of the salary paid to all employees on a monthly basis, calculate your liability, and make the payment. The record of the salaries paid should match the figures in your balance sheets.

Online Registration

The PF department is now online. You need to register your establishment on the e-sewa portal. Only then can you generate the challans and make the remittance.

You may need assistance in this regard from someone like me. It seems you are from Mumbai. You can meet me with a prior appointment.

Regards.

Proving Employee Exclusion

How can I prove that employees are excluded?

Steps for Current Employees

What do I do for current employees?

Penalty Concerns

How much penalty am I incurring?

I am in UP.

As I mentioned earlier, you need someone like me to handle this task. I suggest you find a PF consultant locally who can assist you in all aspects.

Clarification on PF Contributions

Even if there are no employee contributions to PF during a particular month, you still need to pay Rs. 7/- for that month. Please note that there will be penalties or interest charges for late payments.

Research on Excluded Employees

Regarding excluded employees, I recommend researching on this site. You may come across my previous posts on this topic unless they have been removed by the site administrators.

I hope this information is helpful to you.

Best regards

Understanding PF Registration Requirements

The first point I would like to understand is: You have 3 employees. Then why are you registered under the PF Act? The minimum requirement is 20 employees. Did you have 20 or more employees at any time?

Business Takeover and Constitution

How did you take over the business? What is the constitution of the business?

Employee Salary Details

What is the starting salary of the new employees who have joined? (Basic + DA)

I am not sure why we were paying PF. My father says the advocate wanted to ensure a client for his permanent income by filing PF for us. Can we stop paying on the grounds that PF does not apply to our size of business? We are in movie exhibition. I took over because my father fell suddenly sick for a long time. I started to manage it all. The salary of new employees is around $7000 each.

Regards,

Understanding PF Obligations for Small Businesses

Once you start paying PF, you cannot stop. The only way out is to close the old firm (I assume it is proprietary) and start a new one in your name. Then you only pay PF when you have more than 20 employees in a single enterprise.

For your new employees, you are exempt from paying PF for them until September 2014 provided that:
- Each of them joined your company on a salary of more than ₹6500 per month (your salary structure must be only basic, don't break it up into allowances).
- Each of them did not have any existing PF account from former employment.
- They filled Form 11 when they joined (or get it done now with old dates).

However, you will still have to pay a minimum administrative fee, which is about ₹7 per month. You can do it with retrospective effect now. They are unlikely to impose a penalty on that as the amount is small. However, expect a visit from the department to inspect your books, and you need to have the documents to show you don't owe more money.

Once an establishment is covered under the provisions of EPF, either compulsorily or voluntarily, it will remain under it until it is permanently closed. As you have not paid contributions for a long period, damages equal to the defaulted amount and interest at 15% will be levied by the department.

Ceiling Limit and Exemptions

The ceiling limit until 31.08.2014 was Rs. 6,500 per month (only basic and DA), and currently, it is Rs. 15,000 per month. An employee earning above the ceiling limit is considered an exempted employee, provided that they were not an existing member of the scheme at the time of joining.

It is in your own interest to maintain proper records of salary/wage payments that match your balance sheet.

Regards,
P.K. Sharma

I am starting a new firm. The initial number of employees would be 10 to 15, and then it will increase to 30. My question is about the PF deduction of the employees.

As soon as the number of persons reaches 20, you will be liable for coverage and compliance under the EPF & MP Act, 1952.

Regards,

Hi,

I have new employees whose salary is now above $15,000. Do I still need to pay PF? How can I file a return with both employees zeroed out, i.e., no employees in my firm?