With a good intention to increase the savings and ensure social security benefit under the EPF scheme run by the Employees’ Provident Fund Organisation (EPFO) cleared for clubbing of allowances with basic pay for PF deductions under the EPFO scheme, but in other case it may reduce take-home pay of over 5 crore subscribers.

On November 30, the outgoing Central Provident Fund Commissioner R C Mishra brought out a notification to club all allowances which are regular in nature, with basic pay.

The notification had said: “All such allowances which are ordinarily, necessarily and uniformly paid to the employees are to be treated as the basic wages”. The notification was an effort to check the practice of splitting of wages by employers to reduce their provident fund obligations.

You may read the earlier article Now more money to go as PF contribution

However, the notification was put in abeyance following reports which criticised the move of the retirement fund body.

On limiting the period to 7 years for initiating inquiry against employers for lapses in maintaining EPFO accounts, the review committee has favoured keeping such inquiries open-ended if it is found that employers have not been depositing the PF contributions. “You can put time-limitation for such inquiries, but ensure that a worker’s lawful right is not denied in case employers are found violating norms.”

The norms, which were issued by Mr Mishra on his last day in office (November 30), seek to modify the provisions that often result in harassment of employers and establishments.

According to the circular, the inquiry against employers can only be initiated after, “actionable and verifiable information,” is placed for consideration before the compliance officers.

The EPFO would also not take action against employers who fail to deposit dues of unidentified workers into the PF accounts.

“There shall be no assessment without identifying individual members in whose account the fund is to be credited,” the circular had said. With regard to the time period for initiating inquiry, it said: “No inquiry or investigation shall ordinarily go beyond seven years, i.e., it shall cover the period of default not exceeding preceding seven years.”

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New EPFO scheme may reduce your take home; Good or Bad News!

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