New Delhi: Employees’ Provident Fund Organisation (EPFO) has proposed an amnesty for employers who have failed to get workers to sign up for the tax-exempt employee’s provident fund (EPF) scheme that aims to bring more workers under the social security net.
According to the ‘Enrolment and Establishment coverage campaign, 2017,’ proposed by EPFO at its apex body meeting in Bengaluru on Monday, employers can get workers signed up now with a nominal penalty of Re1 per year of delay. The penalty otherwise applicable is 5-25% of the shortfall in contribution, depending on the period of delay.
The move gives an opportunity to all principal employers such as large state-run and private companies that hire contractors for specific projects to ensure that workers who are indirectly employed also get social security benefits.
Any worker who should have joined the scheme between 1 April 2009 and the end of this year, is eligible to join EPF now during a three-month window starting 1 January 2017, said an EPFO statement. In such cases, the employer has to pay his contribution with interest and the prescribed nominal damage of Re1 per year of delay.
Under normal circumstances, employers who default on their obligation to make EPF contributions are liable to be jailed for up to three years.
According to Sonu Iyer, tax partner and people advisory services leader, EY, failure to make PF contributions attracts imprisonment for a minimum of six months to up to three years, and a fine of Rs5,000.
The EPFO statement on the amnesty scheme was silent on prosecution but implied that only the prescribed nominal damage is applicable for employers who avail of the scheme.
“This campaign will be suitably staffed and resourced so that employers who come forth to extend social security to their employees receive all possible assistance from EPFO. The action will meet the twin objectives of increasing the enrolment, extending social security benefits to all workers and reducing litigation,” said the EPFO statement.
According to Amarpal Chadha, tax partner, EY, the amnesty proposal has to be approved by the government to come into force.