look news india
The date of October 15 is very important for salaried employees and employers (companies) across the country. Under the statutory rules of the Employees’ Provident Fund Organization (EPFO), it is legally mandatory to deposit Provident Fund (PF), Pension (EPS) and Insurance (EDLI) contributions of the previous salary month as well as file electronic challan-cum-return (ECR) by 15th of every month. The last date for depositing the PF contribution deducted from the salary for the month of September and the employer’s mandatory share on the government portal has been fixed as October 15. If any institution, establishment or company fails to file ECR and pay the challan by this stipulated date, heavy interest and penal damages are imposed on the company management under the stringent provisions of EPFO.
ECR i.e. ‘Electronic Challan-cum-Return’ is a digital document, through which the company certifies how much PF it has deducted from the salary of which employee and how much contribution it has added from its side. According to the provisions of the EPF Act 1952, this amount should be transferred to the EPFO account by the 15th of the next month after the end of any wage month. By October 15, companies not only have to upload ECR data, but it is also mandatory to generate TRRN (Temporary Return Reference Number) by making successful payment of the challan through the bank. If there is a delay in this process, there may be technical interruptions on the portal and in case of default, legal action is initiated against the company.
EPFO has clarified that every single day’s delay after the October 15 deadline will put a huge financial burden on the company:
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12% Annual Interest under Section 7Q: If a company deposits the contribution after the 15th, interest at the rate of 12% per annum is charged on the outstanding amount from the day following the due date till the day of actual payment under Section 7Q of the EPF Act.
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Penal Damages under Section 14B: In addition to interest, EPFO imposes a hefty penalty ranging from 5% to 25% depending on the period of delay. An additional penalty of 5% is charged if payment is delayed up to 2 months, 10% for 2 to 4 months delay, 15% for 4 to 6 months delay, and 25% for more than 6 months delay.
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Loss of Tax Exemption (Income Tax Disallowance): According to Section 43B and Section 36(1)(va) of the Income Tax Act, if the employee’s PF contribution is not deposited by the stipulated deadline (15th), the company cannot claim tax exemption on that expenditure, leading to an unexpected jump in the tax liability of the company.
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Criminal Prosecution: Not deducting PF from the employee’s salary and depositing it in EPFO is considered a criminal breach of trust under Indian law, in which there is a provision to file a case against the directors of the company.
This negligence of companies has a direct and serious impact on the financial future and security of the employees:
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Loss of monthly interest: The interest declared by EPFO at the end of the financial year (e.g. 8.25%) is calculated on the monthly running balance in the employee’s account. If the company does not deposit the money on time, the interest credit for that month gets stuck or is reduced in the employee’s passbook.
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Interruption in Passbook Updates and Claims: Unless the company files ECR for the month of September, the balance for the month of September will not be reflected in the employee’s online passbook. If during this time the employee applies for withdrawal of advance from PF, claims for illness or transfer of PF after changing job, the claim may be rejected due to incomplete records.
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Pension and EDLI Insurance Coverage: Only after the ECR is filed, the employee’s EPS pension service record and the free life insurance cover of up to Rs 7 lakh available under EDLI remains active. Delay in contribution may lead to administrative hurdles in getting the insurance claim to the dependents in case of emergency.
Employers are advised to complete the process well in time to avoid last minute server load and portal crash:
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Login to the Unified Employer Portal of EPFO with your Establishment ID and password.
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Go to ‘Payment’ tab and select ‘ECR / Return Filing’ option.
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Upload the text file (TXT Format) prepared on the basis of payroll data for the month of September.
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Generate TRRN and Challan after data verification by the system.
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Make sure to pay the challan through net banking before 11:59 pm on 15th October and save the receipt.
Employees are advised to check their EPFO passbook after 15th October. For this, employees can login to EPFO member portal or UMANG app through their 12 digit Universal Account Number (UAN) and password. Only when the deduction for the month of September and the company’s share credit are visible in the passbook, it is ensured that the employer has completed the compliance on time. If the amount is not seen deducted, employees can immediately contact their HR or finance department.