How Should I Respond to EPFO's Inquiry on Reduced EPF Contributions in 2015?

Dear Seniors, I received a notice from EPFO regarding the justification required from us as to why our member and EPF contributions decreased in 2015 compared to 2014. What appropriate answer should we provide to the department that is justified and will withdraw this show cause notice?

In actuality, all the decreased members resigned on their own, and the company did not force them to do so. Additionally, we can explain to the department the decrease in orders from the buyers.

Seeking your valuable advice.

Regards, Neeraj Sharma

Hi Neeraj. You can reply with the same reason and mention that the employees left on their own due to the existing business situation. We have not hired anyone as a replacement.

Dear Mr. Neeraj,

Please go through the attached circular of June '14 about the New Inspection Scheme. Since in your case the remittance has decreased, the optional inspection may be done as per the guidelines. You may reply stating the fact that the number of manpower has reduced during the period under comparison, which has resulted in the reduced PF/EPF remittance. They may verify all the records and conclude based on the facts.

Regards, Rajendra Zala

How can anyone not related to your company know or suggest why the management of your company reduced the members and the EPF? That information can only be known to the management if it is documented. If not, seek information from the relevant departments to determine the appropriate justification.

Regarding your proposed reply, "In actuality, all the decreased members resigned on their own, and the company did not force them to do so. Furthermore, we could explain to the department the decrease in orders from the buyers." Upon closer examination, both reasons appear contradictory. On one hand, you claim that the members resigned voluntarily, but your second proposed reply implies that the management itself reduced the members through retrenchment due to a decrease in demand for the company's products.

If the EPFO obtains and verifies the company's audited P&L statement, how do you intend to address this contradiction?

Please let me know if you need further clarification or assistance.

Thank you.

As earlier suggested, the appropriate reply lies only with the management of your company. Outsiders are not aware of any reasons for the reduction of employees or contributions.

Response to EPFO Notice Regarding Decrease in PF Contributions

PFO will become aware of any increase or decrease in PF contributions and the number of members from your ECR. They might have discovered this during an inspection, which could have been prompted by such a decrease in PF contributions and member numbers.

However, I am sure you would have provided all existing employees' details at the time of the ECR upload. This information should be reflected in Part C of your ECR, along with the reason in the last column where it is requested.

You can draft a reply to this notice from the PFO, stating that the reduction in PF contributions is due to a reduction in the number of members, which is a result of voluntary resignations. Due to sluggish market conditions and dull business, our company management has decided to hold off on recruiting for these vacancies. Hence, the PF contributions for 2015 have been lower than in 2014.

It's likely that the PFC might issue another notice seeking further clarification. You can respond along the same lines as discussed above.

Good luck,

A.B.

Simply describe the truth. If the employees left the organization due to any reason and no new appointment took place to replace them, you can attach the proof as well. Very simple.

Dear All,

I agree with the above answer, but in actuality, I went through my data of incoming and outgoing workers and found that the number of outgoing workers is higher compared to incoming workers.

Regards,
Neeraj Sharma