What are EPF Contribution Rules?

According to the EPF Contribution Rules or say Employees Provident Fund (EPF) rules, 12 percent of the salary including basic and dear allowances needs to be deposited into the provident fund account. Also, the employers have to make a similar contribution from which 8.33 percent will go to the Employees Pension Scheme (EPS) and the remaining amount will go to the provident fund (PF) account.

The employer must contribute a share of his and the employees to the employees’ PF account every month.

Moreover, an employee can check whether his employer is making the mandatory contribution to his PF account by logging into their account on the EPFO portal. Also, the EPFO sends an alert SMS to employees whenever an employer contributes.

However, an employer must make a monthly contribution to employee’s PF account but what if the former fails to do so? Let’s check out what an employee can do for this situation.

According to the legal experts, employees can file a complaint to the EPFO, regarding the non-deposit of the PF contribution.

Suyash Srivastava, Partner at DSK Legal said that employees can file a complaint to the EPFO regarding the non-contribution to the PF account which may lead to an inspection by the authority. Subsequently, Regulatory inquiry may occur in which employers may be required to pay their contribution as well as the contribution of employees.

He further added that sometimes contributions are deducted but not deposited; such non-compliances are viewed very strictly and may result in warrants for criminal action.

For such employers, EPFO can cite penal provisions of the EPF Act and also file a police complaint under section 406/409 of the Indian Penal Code (IPC), said to the experts.

Principal and Founder of ABA Law Office, Anushka Arora said that if any default is found in the employers’ contribution, Employees Provident Fund Organization (EPFO) can call on penal provisions of The Employees’ Provident Funds And Miscellaneous Provisions Act, 1952 (“Act”) to compensate the dues from the employer. They can also file a complaint to the police under section 406/409 of IPC for action against such employers.

Furthermore, she said that Section – 14B of the above said Act gives the power to recover damages. If an employer makes a default in the contribution payment to the Fund, then a reasonable opportunity should be given to the employer of being heard.

As per the Experts, Employers need to contribute to the PF account within 15 days of the month end for which salary has been paid. For instance, if the employer has paid the salary for September on 1 October 2022 then he must deposit the employee and employer contributions to the PF account by 15 October.

The Union Budget 2021 had made amends in the income tax rules to make sure that employers make timely contributions. Experts say employers cannot claim the deduction if they fail to make EPF contributions on time.

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