⇔ What to do if an employee is onboarded late in EPF beyond their joining date? What process do they need to follow for onboarding them ?
When an employer makes a delayed Employees’ Provident Fund (EPF) contribution, they must deposit not only the due contribution but also the applicable penalty (damages) and interest. These payments are made through separate challans as per EPFO procedures. Here’s the detailed process:
Process for Depositing Penalty and Interest Along with Delayed EPF Contribution
1. Calculate Delayed Contribution, Interest, and Penalty
• The delayed contribution is the original amount of employer and employee EPF dues that were not deposited on time.
• Interest under Section 7Q: Simple interest at 12% per annum is charged on the delayed contribution amount for each day of delay until payment.
• Penalty (Damages) under Section 14B: A penalty is levied as a percentage of the arrears depending on the delay duration. Current penalties are typically 1% per month of delay (capped annually at 12%), replacing earlier graded rates.
2. Generate Relevant Challans on EPFO Portal
• Log in to the EPFO Unified Portal using your ECR credentials.
• Upload the ECR file to declare wages and contribution details.
• After ECR validation, generate the contribution challan for the due PF amounts.
• For penalty and interest payments:
• Navigate to the section for damages and interest deposit (often labeled as “Section 14B Damages” and “Section 7Q Interest” challans).
• Enter the applicable amounts based on EPFO demand or self-calculated dues.
• Print or download the challans, each with a Temporary Return Reference Number (TRRN).
3. Payment of Challans
• Pay each challan — whether for contribution, penalty, or interest — via online net banking or at designated bank branches.
• On successful payment, EPFO provides electronic receipts and updates contribution records.
4. Compliance and Follow-Up
• Retain proof of payment and reconciliations in your records.
• Non-payment may attract further penalties and legal action.
• In case of EPFO demand notices for damages/interest, follow the portal process to generate and pay the required challans.