Calculation Of EPF Accumulations After 7-A Orders Under EPF Act 1952

Regional Provident Fund Commissioner under Section 7-A ordered on 26/09/2011 that I shall be a member of EPF from November 1985. My establishment firstly deducted my CPF from May 1994 and was illegally depositing it in a savings bank account of a nationalized bank.

Please guide me on the following:
1. How much time will it take for my accounts to be opened by the PF Office?
2. What will be the procedure for this process?
3. What documentary formalities need to be completed by the PF department?
4. What efforts do I need to make to complete this process?
5. How will PF accumulation be calculated?
6. What will be the status of the employee share for the period during which my EPF was not deducted?

Please guide me on any other important aspects. An early reply will really help me.

If you have been working with the establishment since November 1985, you are covered since then. That is why the PF Organisation has ordered so. A 7A order is issued after verifying the records submitted by the company. When you say that your PF has been deducted since May 1994, I can understand that the company has started deducting PF only since May 1994. But instead of depositing in PF, they deposited in SB account with a bank, and that is illegal and that need not be money owned by or due to you.

Now coming to the 7A enquiry order, the order itself should have mentioned what will be the amount payable by the company towards contribution. The contribution will be worked out from November 1984 at the rate of 12% of your salary, which can be subjected to a ceiling of Rs 6500 (that means a maximum contribution of Rs 780 per month) and 3.67% of the employer's contribution towards PF and 8.33% of the employer's contribution towards the Pension Fund. In addition, there will be charges like administration charges and EDLI, which are payable only by the employer.

Now let me answer your questions.

1. Once the order is issued, your PF account is opened because it will not involve any procedure. The only thing is that your employer should remit the amount due as per the 7A order.

2. The procedure is to ensure that your PF registration cum nomination form (Form 2) is sent to PF by the employer, if not sent earlier. I am sure the employer would not have sent it. Had it been sent, they would not have deposited the amounts in the SB account.

3. The PF department may have their own formalities about which we need not worry. Once they get the forms above mentioned and amounts, they will credit the amounts in your account.

4. In order to make the process fast, you have to compel the company HR department.

5. PF accumulation will be as per amounts deducted and deposited plus interest. Take the month-wise figure and work it out. Leave the interest part so that you will get an idea. As stated earlier, the total sum payable will be there in the 7A order itself.

6. The PF share of the employee which was not deducted should also be payable by the employer. It is not due to any fault on the part of the employee that the amounts were not deducted. Therefore, if an employee is to be covered from an earlier date, the employee's share should also be borne by the employer.

Regards,

Madhu.T.K

Dear Madhu Sir,

Thank you for the very detailed and valuable information.

The order was passed on 26/09/2011. PF authorities took no action, but when I started requesting them for action, Asst. PF Commissioner wrote to the establishment on 22/02/2012.

He wrote: "You are requested to submit the yearwise Form 3-A/6-A in respect of employees whose membership has been decided by worthy RPFC vide order dated 26/09/2011 within 15 days of receipt of this letter. So that annual accounts may be updated."

The establishment says they will prepare 3-A/6-A from May 1994 only and not for the previous period. Please guide, is it okay?

In the RTI manual of EPF INDIA, it is written:

"To ensure prompt action in collecting the Form 12A through Enforcement Officer, after 15 days of issue of 7A orders, a letter to the banker should be sent under Sec. 8F wherever due."

Is Form 12-A very important and needs immediate attention? Please guide further because the establishment will definitely try to do something wrong to avoid financial liability in contribution as well as in interest and penalty.

Can you please provide me some judgments for the "The PF share of employees which was not deducted should also be payable by the employer."

Thanks and regards,

Please help.

Thanks once again.

Dear Madhu sir,

Is there any clause in PF that one of our new employees is not joining PF membership? What should we advise him?

Dear Sir,

Please check. It may be the General Provident Fund they are depositing in the bank. Regarding EPF, your company has to obtain a Code No. and remit regularly in the bank through P.F. Challans every month. Please consult your area P.F. Enforcement Officer; he will guide and assist you.

D. Gurumurthy HR/IR Consultant

When the order passed by the EPF Organisation states that the establishment should pay the amount and submit Form 3A (individual account of amounts remitted) and Form 6A (annual return of contribution) from 1984, how can the company insist on doing it only from 1994? If they have any objections, they should file a review petition under Section 7B. In the absence of any ongoing review, the demand by the PF will be considered valid. In addition to the amount specified in the order, the employer is liable to pay interest as per Section 7Q and damages as per Section 14B of the Act.

Section 8F deals with the recovery of amounts due from an employer. Form 12A is a monthly return that the employer is expected to file every month, consolidating the total wages paid or payable during the month, total contribution due in the month, and contributions paid during the month, etc. If the establishment has not been filing Form 12A for the preceding months, they are required to calculate the total sums due. In an individual case, such as yours, Form 3A is important.

There are cases where it was decided that when the employer failed to comply with the provisions of the Act and employees were subsequently covered with a retrospective date, the amounts payable by the employees were made payable by the employer. I will look into this further later.

Regarding the issue between EPFO and your employer, it will take its course to settle. Therefore, please be patient and keep us updated on the progress of the case.

Regards,

Madhu.T.K

Dear Sir,

Thank you for your valuable guidance once again. I am truly obliged.

Sir, was there a change in the rate of contribution from 10% to 12% due to an amendment on 22/09/1997? Or was it originally 12% and then reduced to 10% for certain classes/categories?

Can we calculate contributions in 3-A by ourselves and submit a copy to the EPF Department to prevent any miscalculations by the establishment? This way, the EPF Department can also verify our claim.

Please advise, and I will continue to provide updates on the progress in the case.

Thanks and regards

The rate of contribution was last changed in 1995, I presume. The 10% rate is still there but is applicable to industries that are declared as sick units.

3A is to be prepared by the company and sent to EPF. Since the 7A order contains the figures, no amounts less than what are given in the order will be acceptable to the EPFO.

Regards,
Madhu.T.K

Dear Sir,

Thank you for the valuable guidance. Our 7-A orders do not mention the amount. They only mention the date of applicability. If you would like, I can email you a copy of the Order. Please provide me with your Email ID at rakeshtrikha@yahoo.com.

Thank you once again for taking so much trouble.

Regards,
Rakesh Trikha

Dear Sir,

Please refer to the previous conversation. APFC issued two notices to the establishment, but the establishment has not submitted 3-A/6-A and is always seeking time. Please guide on what to do.

APFC says more time will be given to them, and he will issue a prosecution notice. What is that Prosecution notice? Will it help us to get our EPF account opened?

It is very important to mention here that 7-A orders were passed on 26/09/2011, i.e., more than six and a half months ago, and I am not able to get my EPF account number and no nomination forms, i.e., 2-A, have been filled till date. Please guide further on this matter.

Thanks and regards,
Rakesh