In a notification issued by the Labour Ministry on Saturday, it was said that the penalty imposed on employers for three schemes, Employees’ Pension Scheme (EPS), Employees’ Provident Fund (EPF) Scheme and Employees’ Deposit Linked Insurance Scheme (EDLI), has been reduced.
The Employees’ Provident Fund Organization (EPFO) has reduced the penal charge on employers who default or delay in depositing their employees’ Provident Fund, pension and insurance contributions. Earlier, this charge on employers was the highest at 25 per cent per annum. But now it has been reduced to 1 per cent of the outstanding amount per month or 12 per cent annually. This is a big relief for employers from the EPFO.
In a notification issued by the Labour Ministry on Saturday, it was said that the penalty will be recovered from the employer at the rate of 1 per cent of the outstanding contribution per month or 12 per cent per annum in three schemes – Employees’ Pension Scheme (EPS), Employees’ Provident Fund (EPF) Scheme and Employees’ Deposit Linked Insurance Scheme (EDLI) under the EPFO.
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How much was the penalty till now?
Talking about the penalty, till now the penalty was 5% per annum for a default of up to two months, 10% for more than two and less than four months. Apart from this, there was a penalty of 15% for more than 4 months and less than 6 months. On the other hand, a penalty of up to 25% per annum was imposed for a default of 6 months or more. Now the new penalty rule will be applicable from the date of notification.
What will be the impact on the employer?
According to this new rule, now the employer will have to pay less penalty. Also, in case of default of 2 months or 4 months, the penalty amount will have to be paid at the rate of 1% every month. This means that the penalty amount for the employer has been reduced by more than double.
Let us tell you that according to the rules, currently it is mandatory for the employer to file the return of the previous month with EPFO on or before the 15th of every month. If this is not done, then any kind of delay after this will be considered as default and penalty will be applicable.
