New Delhi: The government has launched a drive to make sure that businesses running private trusts to manage provident fund (PF) of their employees comply with online PF return filing requirement, or face consequences.
The move comes after a recent review revealed that 700 businesses have defaulted in filing online PF returns for the month of July. These firms have been asked to explain reasons for their default by 5 October.
“Appropriate action should be taken against the defaulting establishments as per law," said the Employees Provident Fund Organisation (EPFO) in a circular on 29 September. The proposed action includes cancellation of the permission to maintain private trusts.
The move is expected to ensure that businesses facing economic hardship do not compromise on their statutory obligations relating to social security of their staff. Online PF return filing will enable the authorities to keep a watch over timely deposit of provident fund contributions into the trust.
Businesses, which do not avail of the government’s employees provident fund scheme are allowed to maintain private trusts to manage the retirement savings of their staff as per an exemption scheme under the watch of the EPFO. There are about 8.4 million workers under nearly 3000 private trusts.
The government wants to make sure that businesses do not cut corners on the social security of their staff when the going gets tough.
The move on online PF return filing comes at a time when India’s GDP growth has slowed to 5.7% in the June quarter from 6.1% in the preceding three months and many large companies have rationalized their workforce. Some large corporate loan defaulters have also recently been taken to bankruptcy proceedings by lenders.
“The Central Provident Fund Commissioner has issued directions to all the field offices to ensure filing of the online returns by all the exempted establishments and take appropriate action against the defaulting establishments as per law, including cancellation of exemption," according to an EPFO statement also issued on 29 September.
The Central Provident Fund Commissioner has also directed firms to ensure that remittances to employee accounts are communicated to them through text messages or emails within two days.
Online PF return filing was made compulsory in 2014 but a new return form was introduced on 27 May this year. “The new online return form for employers maintaining Private Provident Fund Trusts was introduced to streamline the monitoring and supervision of the performance of such trusts under the Provident Fund law," said Sonu Iyer, tax partner at EY India, a consulting firm.