Source- (No. WSU/9(1)2013/settlement) dated 8th Jan 2016.
Background
As per Para 38(1) of the EPF Scheme, Para 3 of EPS Scheme and Para 8(1) if EDLI scheme framed under 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, the grace period of 5 days was provided to make payment of the contribution- i.e. by the 20th of the following month for administrative convenience.
Amendment
With reference to the above circular (attached), EPFO has withdrawn the grace period of 5 days and payment of PF contribution has been made mandatory before 15th of following month w.e.f. wage month Jan 2016.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 calculation of PF dues and its remittance in the bank.
As the process has become easier and time taken to process monthly PF return is reduced, it has been decided to withdraw concession of five days grace period for depositing contribution and other dues.
Effective Date
It is effective from wage month Jan 2016. So PF contribution for the month of Jan 2016 should be paid before 15th February 2016.
Please note that the PF contribution for Dec 2015 can be paid by 20th Jan 2016
Consequences for Delay
Any delay in payment of PF contribution beyond the due date, will attract penal provisions as follows –
Under Employees Provident Fund and Miscellaneous Provisions Act, 1952
1. Sec 7Q : Delay in payment of PF results in Interest @ 1.25% per month
2. Sec 14B : Delay also results in penalty which can extend upto 100% of liability in the following manner. For delay between 0 to 2 months, it is 5% of the liability pro-rate, 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 no of days. Delay of 4 years or more results in penalty of 100% of arrears
Under Income Tax Act - Sec 36(1)(va)
1. Deduction with regards to payment of 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, deposit of contribution after 15th of the following month will result in disallowance of expenditure to the extent of Employee Share. Earlier, payment till 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 any one as a result of this document and the content therein. We advise that the experts be consulted.
From India, Pune
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27Background
As per Para 38(1) of the EPF Scheme, Para 3 of EPS Scheme and Para 8(1) if EDLI scheme framed under 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, the grace period of 5 days was provided to make payment of the contribution- i.e. by the 20th of the following month for administrative convenience.
Amendment
With reference to the above circular (attached), EPFO has withdrawn the grace period of 5 days and payment of PF contribution has been made mandatory before 15th of following month w.e.f. wage month Jan 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 calculation of PF dues and its remittance in the bank.
As the process has become easier and time taken to process monthly PF return is reduced, it has been decided to withdraw concession of five days grace period for depositing contribution and other dues.
Effective Date
It is effective from wage month Jan 2016. So PF contribution for the month of Jan 2016 should be paid before 15th February 2016.
Please note that the PF contribution for Dec 2015 can be paid by 20th Jan 2016
Consequences for Delay
Any delay in payment of PF contribution beyond the due date, will attract penal provisions as follows –
Under Employees Provident Fund and Miscellaneous Provisions Act, 1952
1. Sec 7Q : Delay in payment of PF results in Interest @ 1.25% per month
2. Sec 14B : Delay also results in penalty which can extend upto 100% of liability in the following manner. For delay between 0 to 2 months, it is 5% of the liability pro-rate, 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 no of days. Delay of 4 years or more results in penalty of 100% of arrears
Under Income Tax Act - Sec 36(1)(va)
1. Deduction with regards to payment of 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, deposit of contribution after 15th of the following month will result in disallowance of expenditure to the extent of Employee Share. Earlier, payment till 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 any one as a result of this document and the content therein. We advise that the 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, Hyderabad
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From India, Hyderabad
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If employee is willing to discontinue please let me know, can employee discontinue during the accounting FY Apr to Mar or PF department FY i.e. Mar to Feb. Regards Natraj
From India, Bengaluru
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From India, Bengaluru
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PF Grace period.pdf