Background
As per Para 38(1) of the EPF Scheme, Para 3 of the EPS Scheme, and Para 8(1) of the EDLI scheme framed under the Employees Provident Fund and Miscellaneous Provisions Act, it is mandatory to make payment of PF Contributions on a monthly basis by the 15th of the following month. However, a grace period of 5 days was provided to make the payment of the contribution, i.e., by the 20th of the following month for administrative convenience.
Amendment
With reference to the above circular (attached), the EPFO has withdrawn the grace period of 5 days, and payment of PF contribution has been made mandatory before the 15th of the following month, effective from the wage month of January 2016.
Reasoning
In the present scenario, employers compute EPF liabilities electronically and also file the return. The remittances are also deposited online. This has reduced the process and time taken in the calculation of PF dues and their remittance in the bank.
As the process has become easier and the time taken to process the monthly PF return is reduced, it has been decided to withdraw the concession of a five-day grace period for depositing contributions and other dues.
Effective Date
It is effective from the wage month of January 2016. So, the PF contribution for the month of January 2016 should be paid before 15th February 2016.
Please note that the PF contribution for December 2015 can be paid by 20th January 2016.
Consequences for Delay
Any delay in payment of PF contribution beyond the due date will attract penal provisions as follows:
Under the Employees Provident Fund and Miscellaneous Provisions Act, 1952:
1. Sec 7Q: Delay in payment of PF results in interest at 1.25% per month.
2. Sec 14B: Delay also results in a penalty that can extend up to 100% of liability in the following manner. For a delay between 0 to 2 months, it is 5% of the liability pro-rata, between 2 to 4 months - 10%, 4 to 6 months it is 15%, and beyond six months to one year it is 25%. The calculation is pro-rata depending on the number of days. A delay of 4 years or more results in a penalty of 100% of arrears.
Under the Income Tax Act - Sec 36(1)(va):
1. Deduction with regards to payment of the Employee Share of Provident Fund is permissible only if it is paid within the due date as prescribed in the Act.
2. As a result of the amendment, the deposit of contribution after the 15th of the following month will result in disallowance of expenditure to the extent of the Employee Share. Earlier, payment until the 20th of the following month was allowed for claiming deduction.
Disclaimer: We do not take any financial or other liability for any obligation that may arise to anyone as a result of this document and the content therein. We advise that experts be consulted.
From India, Pune
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27As per Para 38(1) of the EPF Scheme, Para 3 of the EPS Scheme, and Para 8(1) of the EDLI scheme framed under the Employees Provident Fund and Miscellaneous Provisions Act, it is mandatory to make payment of PF Contributions on a monthly basis by the 15th of the following month. However, a grace period of 5 days was provided to make the payment of the contribution, i.e., by the 20th of the following month for administrative convenience.
Amendment
With reference to the above circular (attached), the EPFO has withdrawn the grace period of 5 days, and payment of PF contribution has been made mandatory before the 15th of the following month, effective from the wage month of January 2016.
Reasoning
In the present scenario, employers compute EPF liabilities electronically and also file the return. The remittances are also deposited online. This has reduced the process and time taken in the calculation of PF dues and their remittance in the bank.
As the process has become easier and the time taken to process the monthly PF return is reduced, it has been decided to withdraw the concession of a five-day grace period for depositing contributions and other dues.
Effective Date
It is effective from the wage month of January 2016. So, the PF contribution for the month of January 2016 should be paid before 15th February 2016.
Please note that the PF contribution for December 2015 can be paid by 20th January 2016.
Consequences for Delay
Any delay in payment of PF contribution beyond the due date will attract penal provisions as follows:
Under the Employees Provident Fund and Miscellaneous Provisions Act, 1952:
1. Sec 7Q: Delay in payment of PF results in interest at 1.25% per month.
2. Sec 14B: Delay also results in a penalty that can extend up to 100% of liability in the following manner. For a delay between 0 to 2 months, it is 5% of the liability pro-rata, between 2 to 4 months - 10%, 4 to 6 months it is 15%, and beyond six months to one year it is 25%. The calculation is pro-rata depending on the number of days. A delay of 4 years or more results in a penalty of 100% of arrears.
Under the Income Tax Act - Sec 36(1)(va):
1. Deduction with regards to payment of the Employee Share of Provident Fund is permissible only if it is paid within the due date as prescribed in the Act.
2. As a result of the amendment, the deposit of contribution after the 15th of the following month will result in disallowance of expenditure to the extent of the Employee Share. Earlier, payment until the 20th of the following month was allowed for claiming deduction.
Disclaimer: We do not take any financial or other liability for any obligation that may arise to anyone as a result of this document and the content therein. We advise that experts be consulted.
From India, Pune
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Thank you, Sir!
Which date is considered by PF authority - Bank Transfer Date or PF confirmation date? We are facing issues every month with the bank (bank server failures, delayed money transfer by the bank to PF, and after 4 days the bank informs us that the transaction failed). Please advise.
With regards,
Shitala Singh
HRM
Noida
From India, Delhi
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Which date is considered by PF authority - Bank Transfer Date or PF confirmation date? We are facing issues every month with the bank (bank server failures, delayed money transfer by the bank to PF, and after 4 days the bank informs us that the transaction failed). Please advise.
With regards,
Shitala Singh
HRM
Noida
From India, Delhi
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Here is good news for all employers: the Employee Provident Fund Organization has allowed a 5-day grace period to pay EPF contributions for the month of December 2016. You can find more details at [this link](http://www.hrcabin.com/5-days-grace-period-allowed-pay-epf-contribution/). The grace period expires on 20th January 2017.
From India, Visakhapatnam
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From India, Visakhapatnam
Acknowledge(0)Amend(0)CiteHR is an AI-augmented HR knowledge and collaboration platform, enabling HR professionals to solve real-world challenges, validate decisions, and stay ahead through collective intelligence and machine-enhanced guidance. Join Our Platform.
PF IMP NOTES - GRACE PERIOD.pdf
Kerala HC on due date of PF & grace period 10.1.12.doc