The Ministry of Labor and Employment has recently amended the Employees’ Provident Funds Scheme, 1952, to revise the damages imposed on employers for delayed contributions. Effective 14th Jun 2024, employers will be charged a 1% penalty on the arrear of contributions for each month or part thereof that payment is delayed. This applies to all types of contributions, including those related to fund transfers and charges under the Employees’ Provident Funds Act, 1952.
Previously, the penalty rate varied based on the duration of the delay. The new fixed rate of 1% per month is equivalent to a 12% annual penalty. This change is also reflected in amendments to the Employees’ Pension Scheme, 1995, and the Employees’ Deposit Linked Insurance Scheme, 1976. Delays occurring before June 14th, 2024 will still be subject to the old penalty system.