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Provident Fund Amnesty Scheme

Provident Fund Amnesty Scheme

As the Oprah Winfrey quotes, “Cheers to a new year and another chance for us to get it right”, here comes the NEW YEAR BONANZA-another amnesty scheme and this time by EPFO.

Employees’ Provident Fund Organization (EPFO) has launched an amnesty scheme by the name of Employees’ Enrolment Campaign, 2017’.  The amnesty scheme is meant to allow employers, as the enabling notification reads, “to enroll employees who were required or entitled to become Provident Fund members but were not enrolled for any reason”.

Have a look at what the scheme offers:

Duration of scheme

The amnesty scheme has come into force on 1 January 2017 and will cease to operate on 31 March 2017.

Amnesty

The amnesty scheme is open to the employer who has failed to comply with the Provident Fund Scheme in relation to membership of specified employees and contributions thereto.

Specified employees are those who were required or entitled to become Provident Fund members for the period beginning 1 April 2009 and ending on 31 December 2016 but were not enrolled for any reason.

The amnesty scheme allows employers to enroll such employees.

Procedure

1. Declaration

In respect of above mentioned employees, the employer will need to make a declaration in specified Form to the Regional Provident Fund Commissioner in respect of membership of such employees. The employer is required to specify the date of eligibility in respect of each employee for membership in the declaration.

2. Remit the sums payable

Within 15 days from the date of furnishing the declaration as specified above, the employer will need to:

  • Remit employer’s contribution payable under the Provident Fund Scheme
  • Remit employee’s contribution only where the same is deducted from employee’s salary in the respective months.
  • Deposit interest @ 12% per annum for delayed deposit of contribution
  • Deposit reduced nominal damages (penalty) of INR 1 per annum for delayed deposit of contribution.

No administrative charges are payable in respect of contributions for past periods made under the amnesty scheme.

3. File return

After depositing the contributions, the employer is required to file a return in specified Form to the Regional Provident Fund Commissioner.

Comparison: Sums payable by employer for delayed contribution under the Provident Fund Scheme

Amounts payableIn the absence of amnesty schemeUnder the amnesty scheme
Employer’s contributionYesYes
Employee contribution- where deducted from employee salaryYesYes
Employee contribution- where not deducted from employee salaryYesNo
InterestYes @12 %Yes @12 %
DamagesYes, 5-25% of shortfall in contributionYes, INR 1 per annum
Administrative charges under the Provident Fund Scheme and Deposit Linked Insurance SchemeYesNo
ProsecutionImprisonment for a minimum of 6 months to up to 3 years, and a fine of Rs 5,000Clarity warranted

Circumstances when scheme benefit not available 

The benefit under amnesty scheme will not be available where:

  • Concerned employee is not alive as on January 1, 2017.
  • Any proceedings under Section 7A of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (“Provident Fund Act”) are ongoing against the employer.
  • Where the employer fails to deposit contribution, interest and damages as payable under the amnesty scheme.
  • Where the declaration has been made by misrepresentation or suppression of facts.

Clouded aspects

  • Whether the scheme applies to international workers?
  • Whether the benefit of scheme can be extended to cases where employees were rightfully made members of the PF Schemes but there are shortfalls in the contributions?
  • Whether employer will get immunity from prosecution provisions as well?

To view and download the relevant notification, click below:

Notification No F. No. S- 35012/13/2016 – SS – II dated 30 December, 2016

Post in your queries, if any.  We appreciate your association.

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