How Can We Request a Waiver for EPF Penal Damages? Seeking Guidance on the Process

One of our clients has made a delay in the EPF contribution payments. Now, the client has received a notice from the EPF office insisting on making the penal damages and interest thereon. As per Section 14B, the Central Board has the power to waive off the penal damages. Please tell me the procedure to approach the Central Board of EPFO.

Proviso to Section 14B

The proviso to section 14B states:

"Provided further that the Central Board may reduce or waive the damages levied under this section in relation to an establishment which is a sick industrial company and in respect of which a scheme for rehabilitation has been sanctioned by the Board for Industrial and Financial Reconstruction established under section 4 of the Sick Industrial Companies (Special Provisions) Act, 1985, subject to such terms and conditions as may be specified in the Scheme."

This clearly indicates that the Central Board shall waive or reduce the damages only if the establishment concerned is a sick unit as declared by the Board for Industrial and Financial Reconstruction. As per scheme 32B of the Employees Provident Fund Schemes, a complete waiver is available if the establishment is a sick unit.

Terms and Conditions for Waiver

"The Central Board may reduce or waive the damages levied under section 14B of the Act in relation to an establishment specified in the second proviso to section 14B, subject to the following terms and conditions, namely:

(a) In case of a change of management, including transfer of the undertaking to workers' cooperative, and in case of merger or amalgamation of the sick industrial company with any other industrial company, a complete waiver of damages may be allowed.

(b) In cases where the Board for Industrial and Financial Reconstruction, for reasons to be recorded in its schemes, recommends, waiver of damages up to 100 percent may be allowed.

(c) In other cases, depending on merits, reduction of damages up to 50 percent may be allowed."

Thank you so much, Mr. Madhu TK, for your timely reply. Should we approach the jurisdictional office, requesting them to reduce the PD? If the jurisdictional officer refuses to reduce the PD, should we then approach the Central Board?

If you are a unit declared as sick, there will be a scheme of rehabilitation available by BIFR. You can submit these papers before the Assistant PF Commissioner at the time of your hearing (under 14B) on the scheduled day, and he will refer the same to the Central Board.