The Employees Provident Fund Organization (EPFO) is responsible for managing the contributions made to the PF account of employed individuals in India. Both employees and employers contribute to this account, with the employer’s contribution being mandatory. The EPFO transfers interest only to those accounts in which timely EPF contributions have been made. In February 2022, the Supreme Court of India issued an order stating that if a company fails to transfer money to an employee’s PF account on time, resulting in a loss of interest for the employee, the company will have to compensate them.
Read More: EPFO Rules: Know pension eligibility if you take a break in middle of the job
As per Section 14B and 7Q of the Employees Provident Fund Act, a company must compensate the loss suffered by an employee due to delayed contribution to their EPFO account. The compensation amount will depend on how late the contribution was made and can be up to 100 percent of the contribution.
The company must deposit this fine in the employee’s account as arrears and pay interest at the rate of 12 percent on the outstanding amount. The fine amount varies as follows: 5 percent for delays of up to 2 months, 10 percent for delays of 2-4 months, 15 percent for delays of 4-6 months, and 25 percent for delays of more than 6 months.
Read More: PPF: Know the big profitable benefit of investing in PPF before 5th of every month
A portion of an employee’s salary, equivalent to 12 percent of their basic salary, is deposited in the PF account, and the employer matches this contribution. Of the employer’s contribution, 8.33 percent is deposited in the Employees’ Pension Scheme, while the remaining 3.67 percent is deposited in the EPFO account. The money deposited in the PF account can be withdrawn in case of an emergency, such as a medical emergency, the marriage of a child, or construction of a house. The total deposit amount can be withdrawn as a lump sum after retirement.
