India Inc can enrol employees under EPF amnesty scheme

MUMBAI: Companies which have not enrolled their employees as members under the Employee Provident Fund (EPF) scheme will now get a chance to do so, against payment of a minimal damage fee of Re 1 per year of default.

Additionally, if the employee wasn't enrolled earlier and his/her share of contribution was not deducted from salary, the employer company had to pay this sum also in addition to the past defaults of its own contribution. Now under the amnesty scheme, only the employer's contribution has to be deposited.

The objective of the amnesty is to ensure enrolment of employees and spread the benefit of the EPF scheme.Companies having 20 or more employees are required to mandatorily enrol those employees under the

EPF scheme

who have a salary of up to Rs 15,000 per month.The EPF scheme is optional for those drawing a higher salary . However, once an employee opts for the scheme, he or she cannot opt out.

Both the employer and employee are required to contribute 12% per month towards EPF against the employee's basic salary plus dearness allowance. However, under the amnesty , interest at the rate of 12% on the amount due for delayed deposit of the contribution will be payable for the period of delay .This amnesty scheme, which comes into force from January 1, is open until March-end.“The main purpose of the amnesty is to expand coverage of the EPF scheme," said a government official.

Arrears in payment of EPF dues is rampant. More than a lakh employers had not deposited PF contributions and the arrears outstanding as of March 31, 2015 was nearly Rs 3,000 crore. “More damaging is that there is an equally large number of companies (especially micro, small & medium enterprises, or MSMs), say in the garment or auto ancillary sector, who do not enrol their employees at all,“ adds the government official.

Sonu Iyer

, partner and leader people advisory services at EY India, explains, “Companies that had not enrolled employees under the EPF scheme for the period beginning April 1, 2009 to December 31, 2016 can take advantage of the amnesty scheme by making a declaration to the regional employee provident fund office.“

“The employer will be required to deposit the required sum, which denotes its share of contribution, employee's share of contribution only if deducted from employee's salary but not deposited, interest and a nominal damage charge within 15 days of making the declaration.The biggest

largesse

under the amnesty is that the company doesn't have to make good the share of the employee's contribution,“ adds Iyer.

After depositing the sums, adetailed return has to be filed with the Regional Provident Fund Commissioner. Employers are eligible to participate in the amnesty only if proceedings under section 7A (inquiries) have not already commenced against them.

However, it is not clear whether the amnesty scheme will cover cases where employees had been enrolled in the EPF scheme but where there was a shortfall in depositing contributions.