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SOCIAL SECURITY
READING MATERIAL
The topics included are key functional areas in Compliance and Recovery
and gives a fairly detailed description of the duties and responsibilities of officers
at the middle and senior level. The topics on “Compliance 2001”, “CCTS”,
Provisions relating to Levy of Damages and Exemption are of utmost
importance.
This booklet is not a substitute for the Act and Scheme or the Manuals but is
intended only as a reference guide to retrieve useful information in times of need
so that, field officers can discharge their functions and duties more effectively
and systematically. This handbook is a sincere attempt on the part of Zonal
Training Institute, EPFO, Chennai to compile all relevant issues and the latest
Instructions are appended at the end of the book. However, this handbook is not
a substitute to the statute or manuals.
2. The valuable guidance and suggestions received from many serving and
retired officers and officials of EPFO and their expertise in the field offices
made this book a valuable reference book. It is hoped that the users will be
benefited by this hand book for their efficient performance of the training.
2
CONTENTS – PART II
1
INSPECTOR
Appointment of Inspectors:
There are two kinds of Inspectors, one appointed by notification under Section 13 of
the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 merely to exercise
certain powers mentioned in that section. The others are officers of the Employees’ Provident
Fund Organisation or outside thereof who could be appointed as Inspectors for exercise of
powers referred to above. The former is appointed under Employees’ Provident Funds (Staff
and Conditions of Service) Regulations, 1962 and fall under the distinct cadre of Enforcement
Officers. The Central Provident Fund Commissioner, Regional Provident Fund
Commissioners, Assistant Provident Fund Commissioners and Enforcement Officers are
notified as Inspectors under Section 13 of the Act. A notification regarding appointment of
Provident Fund Officer and Enforcement Officer to be “Inspector” under Section 13(1) of the
Act is issued.
5. To supply various prescribed forms to the employers on their request and educate them
about their proper completion and punctual submission to the Regional/Sub-Regional
Office;
6. to report to the Regional Provident Fund Commissioner, evasion, abuse, violation,
defect or abnormality noted in the implementation of the Employees’ Provident Funds
and Miscellaneous Provisions Act, 1952 and Schemes framed thereunder;
7. To serve the warrant on the defaulting employer in recovery cases and attach and sell
the property of the defaulting employer and to assist the Recovery Officer.
8. To attend to prosecution cases;
9. To conduct the prosecution cases as Assistant Public Prosecutors. All the Enforcement
Officers are notified as Assistant Public Prosecutors.
10. To ensure that the establishment exempted under Section 17(1) / 17(1C) / 2(A) of the
Act / the establishment, where its individual/class of employees exempted under
paragraph 27 / 27A of Employees’ Provident Fund Scheme, 1952 or paragraph 28 of
Employees’ Deposit Linked Insurance Scheme, 1976 as the case may be, is complying
with the relevant provisions of the Act/Scheme and also the conditions governing the
grant of exemption stipulated by the appropriate Government or Central Provident
Fund Commissioner or Regional Provident Fund Commissioner, as the case may be.
11. To serve summons/warrants on the accused in respect of prosecution cases launched,
to enable quick results in larger interests of the Organisation; and
12. To obtain the requisite documents or particulars or verification of facts, etc., that are
required by Regional Office/ Sub-Regional Office for rendering effective service by
keeping liaison between the establishment and the office. He shall arrange to obtain
and forward the final settlement claims and pension claims of retiring employees two
months in advance of their retirement. The Regional Provident Fund Commissioner in-
charge of the Region shall fix a target for each Enforcement Officer in the matter of
applicability of the Act to the establishments and enrolment of members, for each year
and the progress will be monitored on monthly basis through the respective Regional
Provident Fund Commissioners. the Enforcement Officers should ensure compliance of
the target fixed;
13. To verify and certify the past accumulations dues transferable by the establishment
on account of application of the Scheme either due to coverage or on cancellation of
exemption.
14. To carry out such other functions as may be assigned to him/her by the competent
authority.
documents which have bearing on the employment of persons and payment of wages in
the establishment;
(c) to examine with respect to any matter relevant to the aforesaid purpose the employer or
any contractor from whom any amount is recoverable under Section 8A or his agent or
servant or any other person found in-charge of the establishment or any premises
connected therewith or whom the Inspector has reasonable cause to believe to be the
employee of the establishment;
(d) to make copies of or take extracts from any book, register or other documents,
maintained in relation to the establishment and, where he has reason to believe that any
offence under this Act has been committed by the employer, seize with such assistance
as he may think fit, such book, register or other document or portion thereof as he may
consider relevant to that offence;
(e) to exercise such other powers as the Schemes may provide.
While carrying out the search it is absolutely essential that at least two
independent witnesses are present. Sub-section (4) of Section 100 says that the officer
carrying out the search shall call upon 2 or more responsible inhabitants of the locality
in which place the establishment is situated or any other locality, if no such inhabitant
is available or willing to give witness for search. The emphasis is on the neutrality and
respectability of the witnesses. Such witnesses should be unprejudiced and independent
and able to inspire the confidence of the Court if such a case is put up for trial. Trial, of
course, applies mostly to cases investigated by police and Income Tax authorities, etc.
It is desirable that these independent witnesses should be requisitioned from other
Government department like ESIC, Office of Labour Commissioner, Factory
Inspectorate, etc., wherever available. Such witnesses will be mostly unprejudiced,
respectable and independent.
7
Before carrying out the search the Inspector should disclose his identity and that
of the witnesses to the employer or occupant of the premises, as the case may be. He
should then call upon the occupier to immediately produce the relevant documents or
records. If he fails to do so the search of the premises can be carried out in order to
trace the documents or records in question. It is essential that the occupant of the
premises should remain present can be allowed to watch the search. After the search is
over, a “panchanama” should be drawn on the spot incorporating therein the time of
the commencement of the search, the time when it was over, the particulars of the
documents, records found or seized, description of the place from where it was found
or seized, and other details of the search. The seized documents, records or things
should be suitably marked for identification. Generally, the signatures of the witnesses
with date are obtained on the documents, records or things seized. The panchanama
should be signed by the witnesses and the officer carrying out the search on the spot. A
copy thereof should be delivered to the occupant of the premises and his signature
obtained on the copy retained by the Inspector. Even if no documents are found, ‘nil’
panchanama should be drawn. If during the course of the search some other
objectionable material like foreign currency, significant amount of unaccountable cash,
unlicensed arms, etc., is found the appropriate authority should be informed
immediately. If the employer or the occupier of the premises where search is to be
carried out does not allow the Inspector and search party to enter the premises, resort
can be taken to the provisions of Section 47(2) of Code of Criminal Procedure, 1973.
Under this provision, if, even after disclosure of identity, authority, purpose and the
demand of admittance duly made, the ingress cannot be obtained, it shell be lawful to
break open any out or inner door or window of any house or place where search is to be
taken. But, if such a place is in the actual occupancy of a female, who as per custom, is
purdanshin, the officer carrying out the search shall, before entering such apartment,
afford her every reasonable opportunity to withdraw and may then break open the
apartment and enter it. Provision has also been made in Section 47(3) of Code of
Criminal Procedure, 1973 to take care of the situation where the officer who has legally
entered to carry out the search is detained or locked inside. In such an event he has the
power to break open the door, window, etc., in order to liberate himself and the search
party.
It is obvious that the situation described above, viz., seeking ingress by making
open the doors or lock or seeking to come out when locked inside will very rarely arise.
The Inspector should be tactful to avoid such situations. If such a situation is likely to
arise the assistance of local police must be taken before proceeding for search.
As regards the seizure it is clear that this power is available only in respect of
the books, register or other documents or portion thereof as are relevant in respect of
any offence under the Act which the Inspector has reason to believe to have been
committed by the establishment. It is necessary to prepare a seizure memo, on the spot,
in respect of the seized documents. The seizure has also to be done before two
independent and respectable witnesses. The seizure memo should contain the details of
date, place and time of seizure, the signature, name of the persons from whom seized,
the description of articles seized, the signature and name of the person from whom
seized, the names of witnesses and their signatures, designation and full address and
signature of the officer carrying out the seizure. The seized documents should also be
marked for identification and signed by the witnesses with date. A copy of seizure
memo should be delivered to the person from whom the documents were seized and his
acknowledgement should be obtained for having received the copy.
It is observed that a feeling of helplessness is often expressed by the
Enforcement Officers regarding reluctance or non-cooperation of the employers in the
8
matter of production of record. If the situation so warrants, the officers can take resort
to their power of search and seizure in the manner stated above. This will have desired
effect and the employers will also have the fear of authority of Inspectors.
To sum up:
Use the power of search and seizure sparingly and with discretion.
Use it only when persuasion fails.
Apprise your Regional Provident Fund Commissioner about the circumstances and
preferably obtain his permission to carry out search.
Take the assistance of local police before proceeding for search, if law and order
problem is visualised.
Take two independent respectable and unprejudiced witnesses preferably two
Government servants from departments like ESI Corporation, Office of Labour
Commissioner, Factory Inspectorate, etc., as panchas.
Section 94 of Code of Criminal Procedure, 1973 (Old Section 98), inter alia,
provides-
“that if a District Magistrate, Sub-Divisional Magistrate or Magistrate of the First Class
(JMFC) has reason to believe that any place is used for depositing or selling stolen
property or for depositing, selling or producing any objectionable article described in
this Section, he may by warrant authorise any police officer above the rank of a
constable to:
(a) enter such place with such assistance as may be required;
(b) search the same in the manner specified in the warrant;
(c) to take possession of any property or article found there, which he reasonable
suspects to be one for which search was carried out.
Section 99 of Code of Criminal Procedure, 1973 states that provisions of Section 38,
70, 72, 74, 77, 78 and 79 shall so far as may apply to all search warrants issued under
Section 93, 94, 95 and 97.
Contents of Panchnama
1. Name and designation of the officer carrying out search
2. Name, designation and full address of witnesses.
3. Date and time of commencement of search.
4. Date and time of completion of search.
5. Description of what the panchas saw, viz., how the search was actually carried out,
names of members of search party, what documents/records were seized from which
place, that the articles seized where marked for identification, the employer or the
occupier of the premises was present and watched the proceedings of search. If no
seizure made then the description of documents found for examination and places
from where found, etc.
6. Panchnama to be drawn on the spot.
9
7. Panchnama to be signed by the Inspector carrying out search and by the witnesses
on the spot.
8. Copy thereof to be delivered to the employer or occupier of the premises and his
signature obtained in token of having received the same.
Seizure Memo
(Under Section 13(2)(d)/13(2A) of Employees’ Provident Funds and Miscellaneous
Provisions Act, 1952.)
1. Date of seizure :
2. Time of seizure :
3. By whom seized :
4. From whom seized :
5. Place from where seized :
Once the prosecution is sanctioned the complaints should be filed in the Court
within seven days along with the sanction of the Regional Provident Fund
Commissioner. A proper record of hearings, adjournments and consultations, if any,
with the Public Prosecutor or Private Lawyer should be maintained for each case, or a
group of cases to be disposed of jointly. Mere making of notes of hearing, adjournment
in the respective file is not enough. He should intimate the progress of the case(s) to
Regional Provident Fund Commissioner after each hearing.
(b) in the payment to any person of compensation for any loss or injury caused by
the offence, when compensation is, in the opinion of the Court, recoverable
by such person in a Civil Court;
(c) when any person is convicted of any offence for having caused the death of
another person or of having abetted the commission of such an offence, in
paying compensation to the persons who are, under Fatal Accidents Act, 1855
(13 of 1856) entitled to recover damages from the person sentenced for the
loss resulting to them from such death;
(d) when any person is convicted of any offence which includes theft, criminal
misappropriation, criminal breach of trust, or cheating, or of having
dishonestly received or retained, or of having voluntarily assisted in disposing
of, stolen property knowing or having reason to believe the same to be stolen,
in compensating any bona fide purchaser of such property for the loss of the
same if such property is restored to the possession of the person entitled
thereto.
(2) If the fine is imposed in a case which is subject to appeal, no such payment shall
be made before the period allowed for presenting the appeal has elapsed, or, if an
appeal be presented, before the decision of the appeal.
(3) When a Court imposes a sentence, of which fine does not form a part, the Court
may, when passing judgement, order the accused person to pay, by way of
compensation, such amount as may be specified in the order to the person who has
suffered any loss or injury by reason of the act for which accused person has been
so sentenced.
(4) An order under this section may also be made by an Appellate Court or by the
High Court or Court of Session when exercising its powers of revision.
(5) At the time of awarding compensation in any subsequent civil suit relating to the
same matter, the Court shall take into account any sum paid or recovered as
compensation under this section.
As soon as the final orders are passed by the Court, he should immediately
make a report to the Regional Provident Fund Commissioner giving a gist of the order.
He should take steps to obtain a copy of the order at the earliest. (To leave the task of
obtaining a copy to the Public Prosecutor or Private Lawyer, if one has been engaged,
may result in getting the appeal, if any, time barred).
Under no circumstances, he should with hold the sanction and delay the filing
of complaints except on written direction from the sanctioning authority, withdrawing
the sanction accorded. The Enforcement Officer should not Act on oral directions in
such cases.
The Courts should be prayed not to grant requests for adjournments so that the
employees of the establishment are not put to hardships due to delay in the realisation
of dues.
Wherever a portion of fine is awarded to the Organisation as compensation,
prompt action should be taken to collect the same from the Court and to deposit in EPF
Account No.02.
Wherever the employer did not comply with the orders of the Court in the
remittance of dues within the stipulated period, the Court should be approached for
invoking the provisions of Section 14C (2) of the Act for awarding enhanced
punishment.
12
2
COMPLIANCE 2001 – INTRODUCTION – SALIENT
FEATURES
INTRODUCTION TO COMPLIANCE:
In terms of securing compliance with Employees’ Provident Funds and
Miscellaneous Provisions Act, 1952, the Compliance Wing of the Organisation need to
ensure -
(1) Timely coverage of all coverable establishments.
(2) Timely allotment of Code Number for a covered establishment.
(3) Timely enrolment of all eligible employees to Provident Fund.
(4) Timely deduction and remittance of dues to the funds.
(5) Timely detection of default for recovery and penal action.
(6) Timely levy of damages.
(7) Timely grant of exemption.
(8) Timely inspection of establishments.
(9) Timely action on legal matters.
13
(10) Infusing and sustaining hope, faith and conviction in the minds of
subscriber-members.
To fulfil the mission of the Organisation and the objectives of the Act and
Schemes, the default management and the recovery of dues are the key factors. To
achieve this, the steps to be taken by the Enforcement are –
(a) Determine the dues under Section 7A of the Act.
(b) Realise Current Demand through the modes of recovery under Section 8F of the
Act.
(c) Issue Recovery Certificates to the Recovery Officer to realise the dues by
attaching the movable/immovable properties and arresting the employer and his
detention in prison.
(d) In the case of default of employees’ share of Provident Fund contributions, first
information reports are to be filed with the Police authorities in terms of Section
406/409 of Indian Penal Code.
(e) Ensure the frequent visits by Enforcement Officer to the defaulting
establishments.
(f) Defaulters should be brought to the notice of the employees’ Union and the
employers’ Organisation.
(g) Furnish the list of defaulters to the Banks so as to insist clearance certificate on
Provident Fund and other dues before considering sanction of loans/advances to
the establishments.
(h) Furnish the list of defaulters to the Income Tax authorities so as to enable them
to examine the question of allowing relief, etc.
(i) In genuine and deserving cases instalment facility be allowed to defaulting
employers to clear the dues.
(j) Recovery of interest under Section 7Q of the Act.
(k) Levy of damages on all belated payments in terms of Section 14B read with
relevant provisions of the Scheme(s).
(l) Approach the Executive Magistrate to bind the accused employers for good
conduct under Section 110 of Code of Criminal Procedure, 1973.
(m) Prosecution of defaulters, invoking Section 14 of the Act.
(n) Wherever the punishment awarded by lower Courts are meagre and inadequate,
appeals to be made to secure enhanced punishments.
(o) Display the list of ten highest defaulters with the names of the establishments and
the amount in default through a Notice Board, prominently placed at the entrance
of the Regional/Sub-Regional Offices/Inspectorates.
Set-up:
The Head Office at Delhi is responsible for securing ‘COMPLIANCE’ under
the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 including -
14
(a) conduct of survey for the purpose of inclusion of more industries and class of
establishments under the purview of the Act;
(b) to propose amendments to the provisions of the Act for effective enforcement.
(c) to assist the Committee on exempted establishment.
(d) to process the applications seeking exemption from the operation of the
Scheme(s).
(e) to monitor, review and assist the regions in the matter of recovery machinery,
default management, legal cases and Appellate Tribunal and to issue suitable
guidelines and procedural aspects in regard to the implementation of the Act.
(f) to look into the grievances/complaints on Enforcement through squad of
inspectors.
The Headquarters Office shall obtain the requisite data on various enforcement
matters for inclusion in the organisation’s Annual Report for its presentation to the
Central Board of Trustees, Employees’ Provident Funds and placing it before the
Parliament.
In the regions headed by Regional Provident Fund Commissioner, Grade I, he is
assisted by Regional Provident Fund Commissioners, Grade II, with definite
assignments namely, Enforcement, Recovery, Legal, Exemption, etc. The District
Offices are located wherever the concentration of establishments are there and manned
by Enforcement Officers for effective field functioning. The District Offices in certain
selected areas is also designated as Service Centres to guide and assist the employers in
complying with the provisions of the Act and Schemes and, in addition, render service
to the subscribers in getting their benefits under the Schemes framed under the Act,
expeditiously.
The Assistant Provident Fund Commissioner and Enforcement Officers are also
vested with the powers of enforcement to assist the Regional Provident Fund
Commissioner in their respective sphere so as to ensure proper enforcement of
Employees’ Provident Funds and Miscellaneous Provisions Act, 1952.
(2)Exemption Section -to process the exemption applications and monitor the
performance of exempted funds.
(3)Damages Section -to initiate action to levy and realise Penal Damages and
interest under Section 7Q, wherever due.
(4)Recovery Section -to initiate action to recover the arrear dues including
arrear interest due under Section 7Q.
(5)Legal Section -to handle Court cases, Appellate Tribunal and Writ
Petitions.
CENTRAL P.F.COMMISSIONER
(Chief Executive)
REGIONAL P.F.COMMISSIONER
(Region)
Assistant P.F.Commissioner
(Compliance & Recovery) Inspectorates
Enforcement / Inspection
Service Centers
Default Management – 7Q
Penal Action
Recovery Proceedings
what is claimed as establishments brought under the purview of the Act are
in effect brought under Compliance fold:
Strategy:
To achieve the above objective, the compliance (enforcement) wings of the field
offices has been reoriented and restructured. All enforcement functions have been
consolidated at the level of a Circle Officer (Assistant PF Commissioner) with appropriate
complement of Enforcement Officers and support staff in each circle. Targets have been
fixed for each Circle Officer in areas of detection of default, disposal of 7A cases, recovery
and in enforcing compliance against the non-complying establishments. The purpose was
to coordinate, focus and channelise the entire machinery and concentrate on delinquent
employers so that members who are or claimed to be their employees are given the
benefits under the Schemes as per their rights.
The compliance wing of an office covers the area of application of the Act to
eligible establishments, entertaining voluntary coverage, securing compliance, grant of
exemption, default management, enforcing penal provisions of the Act, levy of damages,
monitoring performance of Enforcement Officers, Recovery, Tribunal and Legal matters
and furnishing of authentic and accurate MIS data for ABP return.
7. Issue of letter allotting the Code No. of establishments within three days, by fax
and speed post.
10. The allotment of code number to an establishment with full details should be fed
to the computer so as to update the establishment master.
11. On assigning code number, simultaneously the accounts group should also be
earmarked so as to achieve the purpose and ensure compliance.
12. While accepting the Demand Draft alongwith the application for allotment of
code number, it is also necessary to collect the Form 9(Revised), 5,10, 12A upto
the current month and also nomination forms of the members.
13. The receipt of these documents should be entered into computer before its
transmission to accounts branch.
19
15. The services of the Enforcement Officer should not be utilized for filing
deposition, presenting the case during enquiry Under Section 7A, except in case
of absolute necessity and with the prior permission of the Regional
Commissioner concerned.
17. A register to watch the conduct of 7A enquiries till the assessment of dues
should be maintained. In addition separate register for current demand and
arrear demand should be maintained so as to extract the details of the amount
assessed, amount realised in each month.
23. The CCTS report should be thoroughly scrutinized with the assistance of
Enforcement Officer before its release.
20
24. To ensure prompt action in collecting the Form 12A through Enforcement
Officer, after 15 days of issue of 7A orders letter to banker should be sent under
Sec.8F wherever due.
26. Invoking the provisions of the Section 8B, issue of authority letters etc.
27. Transfer of current demand to arrear demand on first April of each year.
30. To obtain the list of inoperative establishment and to follow it up through the
Enforcement Officer for securing compliance.
31. The floppy on IEMS progress should be sent to Head Office every month
.
32. Identifying the closed establishment in the Computer under category 88.
34. The Enforcement Officer is expected to visit the office on weekly basis and meet
the Assistant Provident Fund Commissioner concerned and to submit the
Annexure ‘B’ and discuss the issues for follow up action. On receipt of the
Annexure ‘B’ from Assistant Provident Fund Commissioner with his remarks
and directions, follow up action should be taken by the compliance section
immediately.
36. Realisation of dues through Section 8F should be closely watched. Court cases
and prosecution cases should be pursued closely. All legal cases should be
21
reviewed every month. The data for ABP Return should be extracted only from
the concerned registers kept in the Compliance Section. These registers should
be closed on monthly basis under the signature of Assistant Provident Fund
Commissioner. The cases that are pending with the EPF Tribunal and Consumer
Forum etc. are to be examined for follow up action.
37. All Court cases should be attended by the Enforcement Officer and the Report
obtained for updating the History Sheet. At the end of each month a report from
the Enforcement Officer is required to be obtained to determine the follow up
action taken on the defaulters and realisation of current and arrear demand etc.
Wherever the penal damages and interest under Section 7Q are to be realized the
Enforcement Officer should be deputed and action initiated.
38. Unless the compliance is secured by the Compliance Wing it may not be
possible for the accounts branch to give compliance by issuing the Statement of
Accounts etc on due dates. Thus the successful functioning of an office is solely
depending upon the effective role of officials in the Compliance Wing.
3
ROLE OF APFCs COMPLIANCE
Issue of Annexure ‘A’ (copy enclosed) alongwith the authority letter, (duly
signed by the Asst. Commissioner) to the EOs with reference to CCTS report,
IEMS report, defaulters list, major defaulters, Defaulters current and arrear
demand, non-submission of Form 12A, non-submission of Form 3A and 6A,
Pending Court case etc. This should be sent for a week/15 days.
The EO on his visit to the office on weekly day should handover the Annexure B
alongwith the acknowledgement on the authority letter issued to the
establishment to the Assistant Commissioner. It is desirable to collect the tour
diary also from the EO, on weekly basis.
The response from employers on CCTS report should be carefully examined and
necessary action to be taken.
To display the top ten major defaulters of the office, duly updated every month.
Similarly the model employers list (numbering ten) should also be displayed and
this should be communicated to the accounts group for extending speedy service
and issue of PPO and other benefits on the day of superannuation of the PF
members.
22
The penal damages section should maintain the register for issue of notice with
reference to CCTS report, conduct of enquiry, issue of levy order, watching of
compliance through schedule of receipts and to take follow up action with
reference to current and arrear demand through EOs maintaining the summary
register to show the number of enquiries conducted, amount levied, amount
realized etc. While levying damages the amount due towards 7Q reflected
through CCTS report should also be conveyed to the employers.
The amount of interest under Section 7Q with effect from 1.7.1997 should also
be watched for its realization.
A separate review should be under taken in respect of past cases, i.e. with effect
from 1.7.97.
The dues towards pension contribution from the exempted establishment should
not be clubbed with the amount due from the exempted establishment to the
Board of Trustees.
The monthly and annual report should be watched properly and follow up action
to be taken.
The clarification etc. sought for by the establishment should be dealt on priority.
Action under Section 7A, 14B and other penal provisions should be initiated
promptly in respect of exempted establishments.
The intelligence wing of the enforcement should be geared up; the references
received should be given due importance and priority.
All applications under Section 1(4) should be scrutinised and forwarded to Head
Office.
Since the progress on IEMS is monitored through Computer and special efforts
should be made to secure compliance.
The collection of Form 12A to the extent of 90% of the establishment is the
responsibility of the Assistant Commissioner. The Enforcement Section should
assist him in complying this direction of the Head Office and to meet the
requirement, the service of the Enforcement Officer should be availed with
positive result.
Any omission in this regard cannot be categorised as ‘employers fault’, but the
‘fault of Enforcement Section’.
CATEGORIZATION OF ESTABLISHMENTS
All the establishments covered and members serviced have been categorized on the
following basis.
Active Members – Members having some balance in their account and in whose
case contributions have been received at least once in the last three years.
24
Inactive Members – Members having some balance in their accounts but in whose
case no contributions have been received at least once in the last three years.
The software classified the establishments and members into following three
categories.
------------------------------------------------------------------------------------------------------------------------------
PENAL DAMAGES & 7Q | ARREAR DEMAND CURRENT DEMAND
| P.D. 7Q P.D. 7Q
|
Due |
|
Collected |
|
Balance |
------------------------------------------------------------------------------------------------------------------------------
NO. OF DEFAULTERS | NON SUBMISSION NON REMITTANCE
WITH REFERENCE TO | OF F/12-A OF DUES
CCTS REPORTS |
(including current |
month) |
Due |
|
Collected |
|
Balance |
------------------------------------------------------------------------------------------------------------------------------
8F ORDERS | NO. OF ESTABLISHMENTS
|
Due |
|
Issued |
|
Balance to be issued |
|
Balance to be realized |
|
------------------------------------------------------------------------------------------------------------------------------
ACTION U/S 8B |
Due |
|
Action taken |
------------------------------------------------------------------------------------------------------------------------------
CASES PENDING – COURT/ | (furnish details)
TRIBULAN / CONSUMER |
FORUM |
|
|
|
Progress |
|
------------------------------------------------------------------------------------------------------------------------------
NON SUBMISSION OF |
FORM 3A & 6A BY THE |
ESTABLISHMENTS |
|
Due |
|
Received |
|
Balance with action taken |
------------------------------------------------------------------------------------------------------------------------------
26
------------------------------------------------------------------------------------------------------------------------------
IEMS |
|
Due for compliance |
|
Secured |
|
Closed Report |
|
Balance |
|
------------------------------------------------------------------------------------------------------------------------------
VISIT TO ESTABLISHMENTS |
Due as per ANNEXURE A - |
|
Visited w.r.t. ANNEXURE B - |
------------------------------------------------------------------------------------------------------------------------------
(ENFORCEMENT OFFICER)
REVIEWED
APFC RPFC
23
Duty Assigned for the week From ___________ To __________ COMPLIANCE CIRCLE______________
S.No. Code Name and address of the Nature of the work to completed Details of Action taken by the E.O. with Remarks
No. Establishment by the E.O. Supporting Reports of I.R./Cov. Proposal etc.
1 2 3 4 5 6
NOTE: This format will be completed in triplicate 2 copies will be handed over to the EO who will complete the assigned work and return one copy duly
completing column 5 & 6 supported by Inspection Report, Prosecution Proposal, Coverage memo, etc. and any other documents required Estt. wise
details in Annexure ‘A’ (one sheet should be used for one code no.) should be submitted along with the report.
24
ANNEXURE - B
NAME OF THE E.O.: COMPLIANCE CIRCLE-1/CIRCLE-2
NATURE OF THE WORK TO BE DETAILS OF ACTION TAKEN BY THE E.O WITH REMARKS.
COMPLETED BY THE E.O. SUPPORTING REPORTS OF I.R.
NOTE: This format will be completed by the E.O. Separate sheet should be used in respect of each establishment duly supported by
inspection report, investigation proforma, prosecution proposal, etc.
25
4
COMPUTERISED COMPLIANCE TRACKING SYSTEM- CCTS
The results thrown by the audit exercise compelled a thorough analysis of the
reasons for the poor compliance status from the un-exempted establishments. The
analysis broadly indicated that:
• There has been a steady deterioration over a period of years in the basic
function of maintenance of DCB Register, which was key for early default
detection and remedial action; this must have been the most significant factor
which resulted in the current state of poor compliance.
• The Accounts Groups to whom the ownership of DCBR is given, were made
responsible for the timely detection and communication of the defaults to the
compliance wing on monthly basis; the duty which was honoured in
exception rather than as a rule. Ideally, the compliance wing should not have
been made dependent on the Accounts Groups for detection and
communication of defaults.
• The fact that the computerization in the EPFO effectively disregarded this
vital function, must have contributed to the situation, thus leaving enough
scope for fraudulent practices.
During the last one year of implementation of CCTS, constructive feed back
has been received from various field offices.
26
Establishing a scientific information cum monitoring tool both for the field
offices as well for the Head Quarters Office (the functionality of erstwhile
IEMS software has been merged into the CCTS Version 2.0)
5
CCTS – SALIENT FEATURES
CODE DEFAULT
00 FULL COMPLIANCE
CCTS Report generated in the month of August i.e. dues and remittances relating
to the month of June.
The due date for remittances of EPF dues ----------- 15th of the following month.
i.e. for the month of June it is payable on15th July (within the grace period of
20th July).
The remittances made in a base branch, for example on 20th is expected to reach
the respective link branch by 22nd / 23rd July.
The scroll duplicate challan and Bank Statements are expected to be sent by
State Bank of India to the Regional Provident Fund Commissioner before
30th/31st.
The duplicate challans received in cash is processed and sent to EDP for data
entry for the purpose of CRAS.
After reconciling the CRAS with the Bank Statement the CRAS data is ready for
use as input for CCTS.
The due date for receipt of monthly dues details from employer is 25th of the
following month i.e. for the month of June, 25th July-which are normally
expected to reach by 31st July/1st of August.
These documents received in Tappal Section are sent to EDP for data entry and
thus the input data is completed by 4th of August.
The CCTS report for the wage month of June, generated on 5th of August is
expected to reflect the true picture to some extent.
If the CCTS report is generated prior to this date it may show the prompt
employers as defaulters and the consequence result.
Before generating the CCTS, the job pending in EDP towards input data should
be verified and not to follow the date as a matter of routine.
31
6
CCTS – INPUT AND OUTPUT – MONITORING REPORTS
IEMS SOFTWARE:
The latest version of the IEMS Software is being released by the Information
Services Division to provide for monitoring category-III establishments, I.S.
Division vide their letter No. CC-17 (2)2000/SWD/5229 dated 26.6.2001 have
separately issued detailed instructions regarding certain category of inoperative
establishments which are no longer in existence and which can be practically
removed from the work load shown for each office.
A copy of the print out of the floppy, which is being sent to Central Office
should be kept as office copy with the officer-in-charge along with a hard copy of
this declaration. Based on the certificate issued by each of the officers in charge of
the offices in the regions, RPFCs of the regions may also submit a certificate in
writing to the following effect:-
RPFCs Incharge of the regions are requested to ensure that a copy of the
certificate submitted to each of the Officer-in-charge of SROs/SAOs is kept with
them for their records, for future reference.
32
CCTS PROGRAMME:
1) Every month, the CCTS programme shall be operated between 7th and 10th
and the printouts taken. The following printouts are to be taken (i) Letters to
defaulting employers, (ii) Letters to employers who have not submitted Form
12A, (iii) Letters to employers where there is significant drop in membership
or in remittance.
All the above categories of letters are to be sent to the respective employers
every month. For this purpose each office of the organisation may make
arrangements with the post office for arranging the dispatch of bulk mail of
notices/letters generated under CCTS. Department of Post run a scheme
called ‘Business Post’, which may be used in this regard. In small SROs or
those SROs where compliance from the establishments are reasonably upto
date and as a consequence, the notices generated are comparatively less, they
can use their normal dispatch section to dispatch the notices to the
employers.
In order to facilitate easy dispatch of the notices, the CCTS programme will
generate the address of the employer at the end of the notices. Dispatch
Section need to fold the notices in such a way that the address portion alone
is visible outside and dispatch it under book post after the stapling together
the remaining portion. By this method there should not be any necessity for
putting the notices in envelopes and writing the addresses manually.
When an employer who has received such a notice for non remittance of dues
reports that he has already made the remittance and furnishes the date of remittance
of photocopy of challans such letters will be sent to the Cash Section where one of
the clerical staff can be instructed to verify the cash book to check up whether the
remittances mentioned by the employer are in fact received by the Organisation and
credited by the Employees’ Provident Fund Organisation’s accounts. In case any
33
discrepancy is found the cash section should enter the details of remittances
furnished by the employer such as the amount remitted account number wise, date of
remittance, bank name & branch in which the amount is remitted etc. in a register
called “CCTS follow up Register” and follow it up with the bank to locate the
payment.
The CCTS Program will also generate a separate list of those cases where
action under Section 7A is to be initiated compliance circle wise. It would be the
responsibility of the Assistant Provident Fund Commissioner-in-charge of the circle
to interact with the EDP Section and obtain such a list by 10th of every month.
The code number and name of the establishment and the period for which 7A
has been suggested by the CCTS programme should be incorporated in the Pendency
Register of Inquiries under Section 7A/14B.
In the summons issued to such defaulters, the period for which inquiry is
launched may be mentioned as “From ______________ onwards”. Such inquiries
should be completed as expeditiously as possible and in any case within a period of
three months when the assessment orders are issued due up to the previous month or
the month prior to that should be assessed without waiting to issue another notice for
the subsequent months.
7
ASSESSMENT OF DUES UNDER SECTION 7A, 7B & 7C
In order to determine the money dues from any employer and to decide the
dispute arising out of the applicability of the Act an inquiry under Section 7A can be
conducted and the employer must be given a reasonable opportunity to represent his
side. The Central Provident Fund Commissioner, any Addl. Central PF
Commissioner, any Deputy Provident Fund Commissioner, any Regional PF
Commissioner, or any Assistant PF Commissioner may by order conduct the inquiry
for the above said purposes.
For systematic and uniform approach and in order to remove ambiguity the
following procedures need to be followed during the inquiry under Section 7A.
7A Inquiries:
Where the returns in Form 12A have been received it is not necessary to
conduct inquiry under Section 7A for quantification of dues. Action under
Section 8B and 8F can be taken against such establishments.
The summary of the hearing must be recorded for every date of hearing with
details of documents filed/statement recorded. The compliance position of
direction of previous hearing if any must also be recorded on order sheets.
While conducting the inquiries it has to be borne in mind that the quasi-
judicial authority under Section 7A acts on behalf of the department based on
the records available and is expected to pass a judicious order as per the
provisions of Law.
The assessing officer must keep himself in touch with the relevant law
including some Labour law Journal. The reading of judgements of Hon’ble
High Courts and Supreme Court will develop the skill of examining and
analysing the issues.
Documents collected from sources other than from the employer are to be
made available for the perusal of the employer or his counsel at the time of
inquiry.
It shall be ensured that the person responsible for the affairs of the
establishments/owners of the establishment or a representative duly
authorised by the establishment/employer only represents the establishment.
36
The contentions made in writing and oral submission must be considered and
properly dealt with in the order. Any judgement relied upon must be quoted
with proper citation.
While issuing orders under Section7A care should be taken to ensure that it is
a speaking order. The preliminary part of the order should contain the
background of the case, details of initiation of the proceedings,
adjournments, if any, with the reasons etc. Details of responsible persons
who attended inquiry shall invariably be noted in the order.
The mode of payment and date of realisation shall be recorded under the
dated signature of the assessing officer in the register.
At the end of the financial year, recovery certificates shall be prepared, for
any Current Demand pending realisation, recording the reasons for non-
realisation, and forwarded to the Recovery Officer before 5th of April.
However, in exceptional cases for realisation of the Current Demand, a
special recovery certificate, mentioning the reasons for issuing an out of turn
recovery certificate to the recovery officer after obtaining concurrence from
RPFC-II in case the Assessing Officer is Assistant Provident Fund
Commissioner and RPFC-I where the Assessing Officer is Regional
Provident Fund Commissioner - Gr.II may be issued.
Assessing Officers are to open separate control registers for keeping control
over cases initiated under Section 7A/14B and a register for controlling the work
relating to realisation of current demand.
should be maintained upto date on a day to day basis and the same should be subject
to surprise check by supervisory officers at the level of Regional Provident Fund
Commissioner-I and Regional Provident Fund Commissioner-II.
The Assessing Officers should establish effective linkages with the accounts
wing in relation to cases under their jurisdiction for timely identification of default
cases for initiation of action under Section 7A and to receive/verify feed back on
realisation of the demand raised.
On last date of the financial year, all the Assessing Officers should take stock
of the cases where current demand (realizable and unrealizable) has remained
outstanding and initiate recovery action on the last day of the financial year.
Arrear Demand:
All demand that has remained unrealized, both realizable and not
immediately realizable, during the financial year, be categorized as “arrear demand”
on commencement of the next financial year. It includes arrears of contributions,
interest under Section 7Q and damages under section 14B, for both exempted and
unexempted establishments.
All demands which fall within the definition of arrear demand, whether
reported or not, should be accounted for by the respective assessing officer and a
certificate in relation to these issued to the Recovery Officer so that 100% of the
arrear demand stands covered by Recovery Certificates and the Recovery Officer
stands fully vested with jurisdiction over the entire arrear demand in each region.
All Recovery Officers should update their control registers for the
management of arrear recovery demand. The Regional Commissioner(I) should
personally satisfy himself that the registers are upto date and ensure that all the
arrear demand in the region stands covered by certificates.
The whole purpose of broad banding the apparatus for recovery work is to
establish and effective and aggressive default management regime. It is in this
context that the policy should be constantly reviewed so that exercise of quasi
judicial powers and accountability are effectively integrated and performance of the
Enforcement Wing is kept under constant scrutiny and review.
The Blue/Red Book should be closed every month and summary extracted
for reporting in monthly CAP return duly reconciled with the information contained
in the “Register of defaulting establishments” maintained by the Enforcement
Section.
39
As the EDP Section will generate the list of defaulters every month, immediately
after generation of Schedule of Receipts by using the software, Computerised
Receipt Accounting System (CRAS), there will not be any difficulty in identifying
the defaulters. Where the CRAS is not put into operation, it should be put into
operation immediately. In addition, the Enforcement Officer is required to inspect
the defaulting establishments every month and to send a special report. The action
against the defaulter should be initiated in the month following the month in which
contributions, administrative charges, etc., due for payment by the establishment and
the show cause notice under Section 7A of the Act should be issued at the latest by
the end of that month.
If the action is initiated every month it will be easier to recover the amount. If
the establishment is allowed to accumulate the arrears and take action after several
months, it will be difficult to recover the amount from the defaulter, as a defaulter
who is not in position to pay the dues for a month, will not definitely be in a position
to pay the dues for several months. If the timely action is not taken against the
defaulter every month, as stated above, it should be viewed seriously and the
responsibility for such delay should be fixed and the disciplinary action should be
initiated against them.
(10) Besides above, penal action as provided under Section 14 of the Employees’
Provident Funds & Miscellaneous Provisions Act, 1952 be taken against the
defaulting employers.
(11)Action under Section 406/409 of the Indian Penal Code for non payment of
employees’ share of contributions deducted from the wages of the employees
should also be taken vigorously excepting in case of Public Sector Undertakings
of Central and State Governments.
(12)It must be ensured that action as above is taken in case of all defaulting
establishments. Regional Provident Fund Commissioner (Enforcement &
Recovery) will send weekly report to Regional Commissioner (Recovery), Head
Office on the format prescribed.
Under Section (4) of Section 7A of the Act, ex-parte order can be reviewed
subject to the following conditions:
1. The employer should have applied within three months from the date of
communication of such order to the officer for setting aside exparte order.
2. The employer should satisfy the officer that his absence was due to non-
service of the show cause notice or he was prevented by sufficient cause
from appearing when the enquiry was held.
3. Upon satisfaction in the manner stated at (2) ibid the officer may after
serving notice on the opposite party make an order setting aside his earlier
order and appoint a day for proceeding with the enquiry.
4. No exparte order shall be set aside merely on the ground that there has been
irregularity in the service of the show cause notice, if the officer is satisfied
that the employer had notice of the date of hearing and had sufficient time to
appear.
Upon filing application for review where it appears to the officer receiving an
application for review that there is no sufficient ground for review, he shall reject the
application forthwith.
Where the officer is of the opinion that the application for review should be
granted, he shall grant the same provided that –
a) No such application shall be granted without previous notice to all the parties
to enable them to appear and be heard in support of the order in respect of
which review is applied for; and
b) No such application shall be granted on the ground of discovery of a new
matter of evidence which the applicant alleges was not within his knowledge
or could not be produced by him when the order was made without proof of
such allegation.
No appeal shall lie against the order of the officer rejecting the application
for review, but an appeal under this Act shall lie against the order passed under
review as if the order passed under review were the original order passed by him
under Section 7A.
8
EPF APPELLATE TRIBUNAL
With the amendment to the Act by the Amendment Act 33 of 1988, Section
19A has been deleted and provisions for set up of an Appellate Tribunal has been
incorporated under the Act. Sections 7D to 7O of the Act, which lays down the mode
of set up of an Appellate Tribunal, the powers of the Appellate Tribunal, etc., with
effect from 1.7.1997.
Constitution of Tribunal:
The Act has been amended by the Amendment Act 33 of 1988, empowering
Central Government to constitute one or more EPF Appellate Tribunal to enable any
person aggrieved by -
(1) Notification issued by the Central Government
(2) Orders passed by the Central Government applying the provisions
of the Act -
(a) to any establishment employing less than 20 persons (proviso to
sub-Section 3 of Section 1 of the Act)
(b) to apply the provisions of the Act to any establishment seeking
voluntary coverage under Act (Section 1(4) of the Act).
(c) to any establishment having common provident fund with
another establishment to which the Act becomes applicable
(Section 3 of the Act)
(3) order passed by any authority, i.e., Regional Provident Fund
Commissioner or Assistant Provident Fund Commissioner, as the
case may be -
(a) on the applicability of the Act to any establishment;
(b) on determination of dues from any employer under the
provisions of the Act and Schemes framed there under
(Sections 7A, 7B and 7C of the Act);
(c) on levy of damages under Section 14B of the Act;
to appeal against any such notification or order.
The Central government has constituted the EPF Appellate Tribunal with
effect from 1.7.1997 to exercise the powers and discharge of the functions conferred
on it by the Act in respect of establishments situated within the territories of India,
vide notification No.V-20025/1/96/SS-II dated 30.06.1997. The Tribunal shall sit in
Delhi. The act and procedures before the Tribunal shall not be called in question in
any manner on the ground of any defect in the constitution of the Tribunal.
Presiding officer:
The power to appoint the Presiding Officer of the Tribunal vests with the
Central Government. The persons to be appointed as Presiding Officer of the
44
Procedure of Tribunal:
The Tribunal shall have the power to regulate its own procedure in all
matters connected with its exercise of powers and discharge it functions, including
the place of its sittings. The Tribunal is vested with all powers, which are vested
with the authority under Section 7A of the Act for the purpose of discharging its
functions. The proceedings before the Tribunal shall be deemed to be a judicial
proceedings within the meaning of Section 193 and 228 or for the purpose of Section
196 of the Indian Penal Code. The Tribunal shall be deemed to be a Civil Court for
all the purposes under Section 195 and Chapter XXV of the Code of Criminal
Procedure, 1973. It is deemed to be a Civil Court for the above purpose only. But it
is not a Civil Court.
covering the procedure for filing appeals, scrutiny of appeals, time-limit for filing
appeals, etc. These rules came into effect from 21st June 1997.
As the Act provides for appeal to the Tribunal by the aggrieved person,
against the notification issued by the Central Government or the order passed by the
Central Government or order passed by the authority under Sections 7A, 7B, 7C and
14B there will be no occasion for the Central Government or EPF authorities to
appeal to the Tribunal. They will only be respondents in the appeals. Only the
employer will be the appellant and he will be filing the appeal.
The appellant should attach to and present with his appeal a receipt slip in
Form II appended to the EPF Appellate Tribunal (Procedure) Rules, 1997 which
should be signed by the Registrar or the Officer receiving the appeal on behalf of the
Registrar in acknowledgement of the receipt of the appeal.
On receipt of appeal petition in Form I appended to the EPF Appellate
Tribunal (Procedure) Rules, 1997 the Registrar or any other person authorised by
him should endorse on every appeal the date on which it is presented or deemed to
have been presented and should sign the endorsement.
If the appeal, on scrutiny, found to be in order, it should be duly registered
and given a serial number.
If it is found to be defective, the defect noticed is formal in nature, the
Registrar may allow the party to rectify the same in his presence. If the said defect is
not formal, in nature, the Registrar may allow the appellant such time to rectify the
defect, as he may deem fit.
If the appellant fails to rectify the defect within the time limit, the Registrar
may by order and for reasons to be recorded in writing, decline to register the appeal
and inform the appellant accordingly.
The appeal should ordinarily be filed by the appellant with the Registrar of
the Tribunal within whose jurisdiction:-
(i) the appellant is residing for the time being, or
(ii) the cause of action has arisen, or
(iii) the respondent or any of the respondents against whom relief sought,
ordinarily resides;
Every appeal filed with the Registrar should be accompanied by a crossed
demand draft on a nationalised bank or Indian postal order, for rupees two hundred,
drawn in favour of “The Registrar of Tribunal” and payable at the station where the
Tribunal is situated (at present at New Delhi only).
The appeal should be preferred within 60 days from the date of issue of the
notification or order against which the appeal is preferred. However, if the Tribunal
is satisfied that the appellant was prevented by a sufficient cause from preferring the
appeal within the time limit, it may extend the time limit by a further period of 60
days.
The Tribunal shall not entertain the appeal unless the appellant has
deposited to the Tribunal, 75% of the amount due from him as determined under
Section 7A, 7B, 7C. The Tribunal may, however, for reasons to be recorded in
writing, waive or reduce the amount to be deposited.
The appeal filed should set forth concisely under distinct heads the grounds
for such appeal. Such grounds should be numbered consecutively. An appeal,
including any miscellaneous application should be typed in double space on one side
on thick paper of good quality.
47
If the appeal is decided ex-parte, the respondent may apply to the Tribunal
for an order to set aside. If the Tribunal is satisfied that the respondent was prevented
by any sufficient cause from appearing on the date of hearing, the Tribunal may
make an order setting aside the ex-parte order, and shall appoint a day for
proceedings with the appeal.
Where the ex-parte order, the appeal is of such nature that it cannot be set
aside as against one respondent only, it may be set aside as against all or any of the
other respondents also.
The tribunal may, if sufficient cause is shown, at any stage of proceedings,
grant time to the parties or any of them, and adjourn the hearing of the appeal.
The order of the Tribunal shall be in writing and it shall be signed by the
Presiding Officer. The order shall be pronounced in the Open Court.
The final Order passed by the Tribunal should be communicated to the
Appellant and to the respondent concerned either by hand delivery or by registered
post free of cost. If they require the copy of any documents or proceedings, they
shall be supplied on payment of fees as may be fixed by the Presiding Officer.
Powers and Functions of the Registrar of Tribunal are enumerated in Rules
24 and 25 of the EPF Appellate Tribunal (Procedure) Rules, 1997.
The case file should be handed over to the Officer, who will present the
case before the Tribunal, after obtaining due acknowledgement, well before the date
of hearing, not less than a week before the date of hearing, to enable him to study
and present the case, before the Tribunal. In case, the case is entrusted to the
Standing Counsel, the file should be handed over to him on obtaining the due
acknowledgement.
The officer, who appears before the Tribunal should record a brief note on
the day to day proceedings of the hearing on the Note side the file. In case of
adjournment the date of next hearing should be recorded in the file, the Register of
Tribunal Cases and Diary of Hearing.
On the final orders of the Tribunal, Legal Section should study the orders and--
Where the Orders are in favour of the Organisation the decision of the
Tribunal along with a copy of the Order should be communicated to the
Enforcement Section. On its receipt, the Enforcement Section should lodge a claim
to the Tribunal for the amount deposited by the employer, if any, and
simultaneously should initiate action to recover the balance amount due from the
employer.
Where the Orders are against the Organisation, Regional Office should
examine, in consultation of the Standing Counsel, whether it is a fit case for filing a
Writ Petition in the High Court. Where the Tribunal order is against the notification
or orders issued by the Central Government, the matter should be referred to the
Central Government, through Central Provident Fund Commissioner.
Where the case is remitted back, a copy of the order of the Tribunal should
be sent to the Enforcement Section. On its receipt Enforcement Section should take
necessary action to issue notices to the employer, rehear and finalise it, as directed
by the Tribunal.
The Legal Section in Central Office/Regional Office shall obtain the orders
of the Tribunal deciding the future cases.
51
9
PENAL PROVISIONS
Introduction
With a view to ensure expedite action of invoking the penal provisions, the
power to prosecute (which was initially vested with Central and respective State
Governments) was delegated, effective from 1.11.1973, to Central Provident Fund
Commissioner and Regional Provident Fund Commissioners.
OFFENCES UNDER THE EPF & MP ACT AND THE SCHEMES THEREUNDER:
Under this section the Courts are bound to give minimum fine of Rs.10,000/-
irrespective of the amount in default in case there is any default in payment of
employees contribution deducted from their wages and offences are proved.
In case the Court wants to give a lesser punishment, the court has to record
specifically the special reasons or other adequate reasons for which it
considers it necessary to impose a lesser sentence and such lesser sentence can
be given only in respect of imprisonment and not in the quantum of fine.
(4) Section 14(2) : This is an enabling provision which enables the Government
of India while framing the Schemes to incorporate suitable provisions for
punishments for any offences. The ambit of this section is quite wide in as
much as it provides for punishment to any person who defaults in complying
with any of the provisions contained in the three schemes. Thus, not only the
default in payment of contribution but also the non submission of returns or
any other requirements under the Schemes can be brought under the purview
of this section read with the relevant sub clause of Para 76 of the EPF Scheme.
Punishment provided under this Section is imprisonment upto one year or with
fine which may extend upto Rs.4000/- or with both.
(5) Section 14(2A) : In the case of exempted establishments if they are not
complying with any of the provisions of the Act or any of the conditions
subject to which exemption was granted under Section 17 they can be
prosecuted under this Section. Punishment provided is imprisonment upto six
months but shall not be less than one month and shall also be liable to pay a
fine upto Rs.5000/-. There is no discretion for the Court under this section to
award lesser sentence if the accused is guilty.
53
(6) Section 14AA : Under this Section those who have been convicted previously
for any offence under the Act and the three schemes are liable for enhanced
punishment. Punishment is imprisonment upto five years but which shall not
be less than two years and shall also be liable to a fine of Rs.25000/-. Unlike
in Section 14(1A) or in Section 14(1B) there is no discretion for the Court
under this section to impose a lesser sentence of imprisonment and the Courts
are bound to give a minimum sentence of imprisonment for two years and a
fine of Rs.25,000/-
The penal provisions are given in a tabular statement on Page 62 & 63 for easy
reference.
violation of the said law, shall be deemed to have been dishonestly used the amount
of said contributions in violations of directions of law as aforesaid”
Thus where an employer after deducting the employees’ share from their wages fails
to remit the contributions so deducted within a specified time, he shall be deemed to have
committed an offence of criminal breach of trust as explained in Section 405 of the Indian
Penal Code, which is punishable under Section 406 and 409 of the Indian Penal Code.
The Enforcement Officers need not wait for the sanction of the Regional Provident
Fund Commissioner for prosecution of the accused for the above offence. Before initiatiing
action, it should be ascertained that the wages for the relevant period of default of
employees’ share, has been paid to the members. They may lodge a complaint (FIR) direct
with the police authorities within whose jurisdiction the offence of criminal breach of trust is
alleged to have been committed by the accused employer after collecting all basic
documentary evidence such as Form 12A salary registers, etc., so as to build up a strong
case against the accused. Case filed under this provision cannot be withdrawn by the
Employees’ Provident Fund Organisation. A special feature on cognizable offence under
section 47 of Cr. PC is that a police can arrest a person concerned in such offence without a
warrant from the Magistrate.
EOs are advised to make it a point to call on the person or persons shown in
Form 5A at the time of every visit and to bring the observations in Part II of
Inspection Report.
iv. The complaint to be filed by the Inspector under Section 200 of Cr.P.C. need not
however bear the Court Fee Stamp as he is exempted from Court Fee Stamps as a
Public Servant.
56
NOTE:-
a) Under Section 25 of the Cr.P.C.1973, all the Inspectors appointed under
Sec.13(1) of the Act, have been appointed as Assistant Public Prosecutors
for purpose of conducting EPF cases in the Courts of Magistrates.
b) A set proforma prescribed for preparing the complaint may be used by
the Complainant Inspector with suitable changes wherever required for
preparing and complaint;
c) Sanction, once given, should under no circumstances be returned or
withdrawn even when the accused employer makes good the default by
subsequent remittance and returns.
d) In cases of habitual defaulters, special prayer should be made before the
Court for awarding the maximum punishment including imprisonment
prescribed under the Act.
e) Alongwith every complaint under Section 14AA, a certified copy of the
previous judgement should be attached.
JOINDER OF CHARGES :
The Inspectors are well advised to file separate complaints before the Court
in respect of not more than 3 offences of the same kind committed within a span of
12 months as required under 218 and 219 of Cr.P.C. Each of the following is a
separate offence for the purpose of Section 218 of Cr.P.C. Misjoinder of charges
would run the risk of dismissal of the complaint.
i. Non-remittance of PF or Pension or E.D.L.I. contribution for each month is a
separate offence.
ii. Non-remittance of inspection charges or Administrative charges for each
month is a separate offence
iii. Non-submission of monthly returns/annual returns/contribution
card/nomination /declaration /initial return in Form 9 (EPF) or in Form 3(PS)
etc., is a separate offence.
If any of the above complaints are filed jointly, Provident Fund Inspector
runs the risk of Misjoinder of charges.
PROCEDURAL LAW :
1. There are two type of cases, summons and warrants case (Sec.4(c)) Cr.P.C.
Warrant case means a case relating to an offence punishable with imprisonment
exceeding two years. Summons case is a case relating to an offence punishable
with imprisonment of two years or less. Offence under Sec.406 of IPC is
punishable with imprisonment of three years. It is therefore triable as a warrant
case.
2. There are two types of offences: Cognizable (Section 2(c) Cr.P.C.) and non-
cognizable (Section 4(c) Cr.P.C.) Cognizable offence is an offence for which a
police officer can arrest an offender without a warrant. Non-cognizable offence
is one in which a police officer cannot so arrest. Offences under EPF Act and
Scheme are non-cognizable offences except an offence relating to default in
payment of contributions by the employer (Sec.14 AB) and offence under
Sec.405 of IPC is a cognizable offence.
3. Offences under EPF Act and Scheme framed there under are not
compoundable (Schedule II Cr.P.C.) Offence under Sec.406 of IPC is
compoundable only when it relates to Rs.250/- or less (Schedule II Cr.P.C.)
When all the modes of service fail even after exercising due diligence, a
prayer may be made to the Court for issue of warrant (bailable on non-bailable) for
arrest of the accused under Section 70 Cr.P.C. The warrant of arrest is sent through
Police Officer. Some times, even warrant of arrest would fail to get the appearance
of the accused. In such cases the complainant should make a strong prayer before
the Court for issue of proclamation against the accused and attachment of the
properties belonging to him under Section 82 and 83 Cr.P.C.
Conduct of trial
1. Offence under EPF & MP Act and Scheme are triable as summons case or
warrant case depending upon the period of imprisonment prescribed.
2. Summons cases are triable in accordance with Chapter XX of the Cr.P.C.
The procedure is as under:-
a) When an accused appears before a Court and the case is taken up for hearing a
plea of the accused whether he pleads guilty or not to the charge to be taken
(Sec.251)
b) If the accused pleads guilty to the charge and the Court accepts it, he is
convicted and sentenced (Sec.252)
c) If the accused pleads not guilty, evidence is to be led by the prosecution.
d) Order of evidence is as follows:
ii) Other witnesses will then be called by the prosecution and similarly
examined.
iii) After the evidence of prosecution the Court is to examine the accused
under Sec.313 Cr.P.C. The accused can put in written statement on his behalf
at this stage.
iv) The accused is then to examine any witnesses on his behalf if he so
desires.
v) If the accused leads evidence then he has to argue first. The
prosecution will then reply. If no evidence is led by the accused, the
prosecution has to argue its case first and the accused replied.
vi) The court is then to deliver judgement. If the Court convict the
accused, the Court can impose a sentence of imprisonment against him as
prescribed in the Act.
CONVICTION/ACQUITTAL/APPEAL/REVISION:
There is a basic difference between discharge and acquittal under the Cr.P.C.
Chapter XX of the Cr.P.C. which deals with trial of summons cases provides for
conviction/or acquittal of an accused. The accused on appearance before the Court
may either plead guilty of the charges or seek trial. In case where the accused does
not plead guilty the Court will proceed to hear the prosecution (Inspector) and take
all evidence on his behalf and subsequently will hear the accused. The Court, upon
taking the evidence finds the accused guilty, it shall pass a sentence according to
law. If it finds the accused not guilty, it can record an order of acquittal. Non-
appearance or death of the complainant or withdrawal of the case can also result in
acquittal of the accused under Sections 256 and 257 Cr.P.C. Court can also discharge
an accused under Section 258 Cr.P.C. where it has not jurisdiction to try a case even
after taking evidence such as when the case is barred by limitation. In cases of
acquittal, the complainant can file an appeal before the High Court under Section
378 Cr.P.C. after obtaining special leave to appeal within 6 months of the order of
acquittal. Similarly, the complainant can file a revision petition either before the
High Court or before a Sessions Court under Section 397 Cr.P.C. in cases of
discharge ordered under Sec.258 Cr.P.C.
Certified copy of every order of the Court shall be collected so that at the
time of filing prosecution under Sec.14AA, there is no difficulty in leading the
evidence of earlier conviction.
The Inspector is, therefore, advised to make specific prayers for awarding
expenses in the complaints (being incurred by them) which shall include traveling
expenses from their Headquarters to the Court on each day of appearance incidental
61
expenses such as typing, cost of papers and all other expenses incidental thereto.
Prayers shall also be made for awarding compensation from out of fine being
imposed on the accused which shall be equivalent to the amount due and outstanding
from the accused towards Provident Fund and other dues for the period for which
such complaints are filed in the Court. Normally, Court will be reluctant to pass
order for such compensation unless it is strongly prayed for. The Provident Fund
Inspectors should, therefore make it a point to specifically include prayers for
compensation in all complaints filed against the accused.
Absence of complainant:
If on the day of any hearing of the complaint, the complainant remains
absent, the Court may dismiss the complaint and acquit the accused. However, the
Court may dispense with the attendance of complainant and proceed with the trial of
the case (Sec.247 Cr.P.C.)
Many of the Public Sector Undertakings depend on grants etc. from the
Government for their survival and payment of statutory dues including PF dues.
Hence, the matter may have to be taken up with the concerned authorities at the
appropriate level, to make them realize the importance of PF dues and the
consequences of not remitting such dues i.e. levy of damages and interest alongwith
penal actions such as arrests and prosecutions. Apart from this, you should also
build pressure on PSUs to recover the dues. Coercive actions like attachment of
bank accounts, sundry debtors and immovable property if taken regularly and in all
cases will definitely yield positive and substantial results.
To give effect to this strategy the following actions are required to be taken :-
the same will not be factored in any financial arrangement set up for such
PSUs. It should be made very clear to all the Assessing Officers that they
should complete the assessment in all cases of Central and State PSUs on
priority basis.
3. Constant monitoring and updation of this database with regard to any further
addition in default on account of damages and interest leviable and further
default committed, if any, and scheme being sanctioned if the unit is
registered with BIFR.
4. Constant interaction with BIFR or the Official Liquidator, as the case may
be, by officers fully equipped with the provisions of statute and case laws to
strengthen their case.
5. Constant and persistent efforts to get the stay, if any, granted by any court,
vacated.
Contravention or Default in
payment of Contribution Up to 3 years
payable under Sec.6,
14(1A) An Employer
Nonpayment of Inspection (a) But not less Rs.10000/-
Charges payable in A/C.No.2 & than one year for
Non Payment of Administrative non remittance of
63
Up to or with fine
One year which
Contravention or Default in
may
14(2) Any Person Complying with any of the
Extend to
provisions of the three Schemes.
Rs.4000/-
Or with both.
Contravention or Default in
complying with any provisions
of the Act or any condition And also fine
Up to 6 months
subject to which exemption was extend to
14(2A) Whoever (but not less
granted under Sec.17 (if no Rs.5000/-
than one month)
other penalty is else-where
provided under the Act)
The prosecution once filed in the law court should not be withdrawn under
any circumstances whatsoever except with the prior and specific permission of the
Central Provident Fund Commissioner. Section 257 of the Code of Criminal
Procedure deals with drawal of prosecution complaints. It reads as follows :
“If a complainant at any time, before a final order is passed in any case
under this chapter satisfies the magistrate that there are sufficient grounds for
permitting him to withdraw his compliant against the accused or if there be more
than one accused, against all or any of them, the magistrate may permit him to
withdraw the same, and shall there upon acquit the accused against whom the
complaint is so withdrawn.”
a. the accused is a first offender and has not been convicted for a similar
offence earlier, nor any other prosecution under the EPF & MP Act, 1952
is pending against him
b. the accused has set right all the contraventions against which the
compliant was filed.
d. the accused person has paid to the fund the damages upto date levied
under Section 14 B of the EPF & MP Act, 1952 and also, reimbursed the
legal and other expenses incurred by the office in connection with the
prosecution.
65
10
LEVY OF PENAL DAMAGES – AN INTRODUCTION
The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
has been amended by Act 37 of 1953 providing for recovery of damages on the
belated payment of dues under the Act/Schemes. The power to recover damages
vested with the appropriate government till 25.4.1957. The power to levy damages
was delegated to the State Government from 26.4.1957. As there was considerable
delay in levy of damages, the Act has been amended by amendment Act 40 of 1973
vesting the power to levy damages to the Central Provident Fund Commissioner or
such other officer as may be authorised by the Central Government. The Central
Government has authorised the Regional Provident Fund Commissioners to levy
damages vide notification S.O. 548(E) dated 17th October 1973 as amended by
S.O.No.2793 dated 18.6.1983 with effect from 1.11.1973. The Regional Provident
Fund Commissioners in the region as well as in the Sub-Regional Offices are
empowered to levy and recover damages. With effect from 4.5.2002 the APFCs have
also been empowered to levy and recover damages. The organisation was taking a
stand that the damages as imposed under section 14B includes the penalty and the
loss of interest sustained by the organisation by the belated payment of dues. The
Apex Court has also held the same view in the case of Organo Chemical Industries
66
v/s Union of India and others. By the amendment Act 33 of 1988, for the words
“from the employers such damages not exceeding the amount of arrears as it may
think fit to impose”, the words “from the employer by way of penalty such damages,
not exceeding the amount of arrears as may be specified in the Scheme” were
substituted to make it clear that the damages is by way of penalty only.
Simultaneously section 7Q was inserted in the Act making employer liable to pay
interest on belated payment of any dues under the Act.
All the covered establishments are required to pay the dues within 15 days
from the close of the month. Five days grace period is also allowed. The dues shall
include, any amount of contribution or amount to be transferred to the Fund on
account of coverage under Section, 15(2) or amount to be transferred to the Fund
under Section 17(5), after the cancellation of exemption or payment of any charges
payable under any other provisions of the Act/Schemes or any of the conditions
specified under Section 17 of the Act. If the amount is not deposited within this
stipulated time, penal damages not exceeding the amount of arrears can be imposed
under Section 14-B of the Act on the establishment. But before levying and
recovering damages, the employer shall be given reasonable opportunities of being
heard.
. As soon as the default is detected, the Accounts Section should prepare the
statement of delayed remittances and pass it on to the Damages Cell. The Damages
68
Cell may take action on the Penal Damages Statement generated through CCTS
Software and the amount realised should be accounted for properly.
According to Section 14-B of the Act read with the provisions of the relevant
scheme the Regional Provident Fund Commissioner may recovered from the
employer by way of penalty such damages, not exceeding the amount of arrears, as
specified in the Scheme. The rates of damages given in the Schemes are reproduced
hereunder.
E.P.F. Scheme ……..Para 32-A
E.P.S.-1995 ……..Para 5
E.D.L.I. Scheme ……..Para 8-A.
The Central Board of Trustees may reduce or waive the damages levied
under Section 14-B of the Act in relation to an establishment which is a sick
industrial company and in respect of which a Scheme for rehabilitation has been
sanctioned by the Board for Industrial and Financial Reconstruction established
under Section 4 of the Sick Industrial Companies (Special Provisions) Act, 1985
69
subject to such terms and conditions specified in the relevant Scheme. In other
cases, depending upon merits reduction of Damages upto 50% may be allowed.
The order passed under Section 14B can not be revised or rescinded.
However, any clerical or arithmetical mistake can be rectified either suo motto or on
a representation from the employer provided that no such rectification should be
made without giving the employer a further opportunity of hearing where such
rectification will have the effect of enhancing the liability of the employer. An ex-
parte order may be re-opened if it is subsequently brought to the notice of the
Regional Commissioner by the employer that he did not receive the notice or that he
was prevented by sufficient cause from sending representation in writing/appearing
before the authority on the first date. In such cases, the Regional Commissioner may
issue revised speaking order indicating the reasons for the review etc. cancelling the
earlier order.
However, the past cases already decided may not be reopened. To avoid
confusion and inconvenience in the matter of remittance of PF dues where the
establishments are covered belatedly, the coverage notices shall henceforth
contained instructions that ‘payments of PF contributions and allied dues shall be
made within 15 days from the date of receipt of the coverage notice’.
The Regional P.F. Commissioners in charge of the Regions have been given
the task of completing the task of creation of database I & II as their key functional
areas.
Retrospective application of the Act – From the normal due date, from the
date of coverage and not from the date of issue of Code Number.
The CBT, EPF at its 163rd meeting held on 19-08-2003 has approved
delegation of enhanced powers of the RPFCs in the matter of granting instalment
facility for liquidation of outstanding statutory dues as detailed below:-
However these officers shall be required to ensure that the dues are realized
during the current financial year itself. Cases where the amount exceeds Rs.10 lakhs
in arrears and where the amount is not realisable within the current financial year, fit
cases shall be referred by the Regional P.F. Commissioner-I of the region to the
Central Office with his/her specific recommendations.
*******
GUIDELINES FOR GRANT OF INSTALMENT FACILITY TO LIQUIDATE
THE ARREARS
2. Except in the case of sick units, the defaulters shall be required to liquidate
the employees’ share, before applying for instalments.
3. The scheme shall operate from the subsequent month of grant of the facility.
6. Where the case is to be decided by the Head Office, the proposal complete in
all respects shall be forwarded by the Regional Provident Fund Commissioner-I
alongwith his observations and specific recommendations.
7. RPFC-I shall recommend the instalment only where it exceeds the delegated
powers or where the period required stretches beyond the calendar year.
8. Only if the RPFC is satisfied about the viability of the scheme, he shall send
his recommendation.
10. The establishment shall be required to remit the instalment amount before
15th of the subsequent month.
11. The establishment shall ensure remittance of the current dues alongwith the
instalment dues before 15th of the month.
13. The instalment scheme shall be deemed to have been cancelled in case of any
default in payment either of instalment amount or current dues.
14. Consequent on the cancellation of the instalment facility all coercive steps
shall be initiated against the establishment/employer for realizing the outstanding dues
without further notice.
15. Even where the default amount is within the powers of the RPFCs a review
shall be made by the RPFC-I of the region periodically.
[vide Headquarters letter No.C.II/Misc/Inst./03/DL/65517 dated 02.12.2003]
16. The field offices shall forward proposals for grant of instalments to liquidate
only the assessed dues so that in case of default the recovery proceedings can be
initiated immediately.
(H.O. Lr. No. Comp.05/Recovery/Cir/Co-ord/Adm. Inst./21840 dated 2.6.2005)
When the Compliance 2001 program was introduced during 2001 detailed
instructions were issued to all the field formations to scrupulously follow certain
norms for accountability and transparency in quantification of dues under the Act.
They were also required to maintain the basic books of accounts and furnish the
information to the Recovery Officer as per the existing instructions. The Circle
Officer was made the centre point of compliance in all matters regarding to arrear
management including recovery up to the end of the financial year. Specific work
norms were fixed for the Assessing Officers as well. However, it is a matter of
record that many regions do not adhere to these instructions strictly with the result
the arrears mount up which are not brought to the books of accounts.
11
APPLICATION OF SECTION 7Q
Section 14B of the Act was also amended on the lines of section 221 of the
Income-tax Act, 1961.
For the words “may recover from the employer such damages not exceeding
the amount of arrears, as it may think fit to impose” in section 14B of the Act, the
following words were substituted.
77
“may recover from the employer by way of penalty such damages not
exceeding the amount of arrears, as may be specified in the Scheme”.
By adding the words “by way of penalty” in Section 14B, it is made clear
that the damages imposed is by way of penalty and it does not cover the loss of
interest to the fund. Further Income-tax Act, 1961 also provided for penalty in
addition to simple interest to be charged on the dues. In view of the above, employer
is liable to pay simple interest at the rate of twelve percent per annum on the belated
payment of contributions, administrative charges, inspection charges, previous
accumulations due for transfer on coverage of establishment or cancellation of
exemption from the date they become due for payment till the actual date of
payment/transfer, in addition to the damages payable under section 14B of the Act.
The exempted establishment also should pay the simple interest at twelve percent on
the belated payment of contribution to the Board of Trustees of the exempted fund in
addition to the damages payable under section 14B of the Act. The interest should
be paid to exempted fund.
Section 7Q of the Act creates liability on the employer to pay simple interest
on any amount due from him under the Act and the damages levied under Section
14B of the Act is the amount due under the Act. Further rule 5 of the Second
Schedule to Income-tax Act, 1961 provides for the payment of interest on belated
payment of penalty also. In view of the above, simple interest at the rate of twelve
per cent per annum should be recovered from the employer from the date it becomes
due ( i.e. fifteen days from the date of receipt of levy order, as ordered in the levy
order itself) till the date of actual payment.
As the section 7Q of the Act came into force with effect from 1.7.1997 the
employer is liable to pay simple interest at twelve per cent per annum on the belated
payment of contribution, administrative charges, inspection charges, damages and
past accumulations due from 1.7.1997. Demand should be raised for such amounts
straightening after calculating the same. There is no necessity to hear the employer
the before raising the demand, as it is not a penalty.
12
EPFO - RECOVERY MACHINERY
RECOVERY CERTIFICATE:
Recovery Certificate means an authority given by the authorised officer to
the Recovery Officer to recover the amount from the defaulter invoking the
provisions of Section 8B to 8G. As such the authorised officer has to issue Recovery
Certificate to the Recovery Officer furnishing the amount of due and the details of
the defaulter. It is also the duty of the authorised officer to inform the recovery
officer the assets and properties of the defaulter. Whenever the defaulter pays the
amount or installment is granted or the amount due is waived the fact should be
informed to the Recovery Officer then and there. The assessing officer on the close
of every financial year before 5th of April the total defaulting amount to be intimated
to the Recovery Officer through Recovery Certificate. On receipt of the Recovery
Certificate by the Recovery Officer in his office enter in a register called Demand
Collection Register the details of the Recovery Certificate. By which the Recovery
Officer can ascertain his work load and the quantum of amount to be recovered from
the defaulter for that financial year.
The Recovery Officer has to issue notice of demand in Form No.1 to all the
defaulters giving 15 days time to remit the amount. On expiry of the 15 days, the
Recovery Officer has to proceed for the recovery of the amount due wherever not
remitted within that 15 days by invoking the powers of
ATTACHMENT:
The attachment means after serving the copy of the warrant to the defaulter,
the Enforcement Officer, if he desires to attach the property he should choose
movable property and its approximate value to be attached, then he has to make a
punchanama (Mahajar) furnishing the entire events right from the stepping into the
establishment to till the proceedings is over. In the mahajar he should mention the
time and date of his arrival and leaving and the persons present over there, details of
the properties attached and the value of the properties attached and where the
attached property is kept and also he should obtain signature of the witnesses and
signature of the employer or his representatives. Finally, the Enforcement Officer
should sign the mahajar and the copy of the same should be handed over to the
employer and one copy should to pasted in the notice board of the Recovery Officer.
The attachment by the seizure should be made after the sunrise and before
the sunset and not otherwise.
Issue of notice:
If the defaulter fails to pay the dues within the date specified in the
assessment under Section 7A or levy order under Section 14B, action should first be
initiated under Section 8F of the Act to recover the dues. If the dues could not be
recovered, either fully or partially, by taking action under Section 8F or if it is not
feasible to initiate action under Section 8F, action should be initiated under Section
8B of the Act to recover the dues. The concerned Assessing Officer, i.e. Regional
P.F. Commissioner or Asst. P.F. Commissioner himself should draw up statement of
dues (i.e. the Recovery Certificate) specifying the period, amount, etc., in his
capacity as Recovery Officer and issue the demand notice in the Form EPFCP-I
requiring the defaulting employer or the establishment, as the case may be, to pay
the arrears specified in the Recovery Certificate within 15 days receipt of notice, by
registered post with acknowledgement due. Alternatively, the area Enforcement
Officer may be directed to serve the demand notice and obtain the acknowledgement
of receipt of notice from the defaulter. The notice should be issued only in the
prescribed form. The non issue of notice as required above will render entire
proceeding taken by the Recovery Officer, illegal and void. The issue of Recovery
Certificate should be noted in the Register of Recovery Cases.
As further action will have to be taken based on the date of receipt of notice
by the defaulter, the receipt of acknowledgement card should be watched and the
date of receipt of notice by the defaulter should be entered in the Register of
Recovery Cases. The Acknowledgement Card should be preserved properly in the
relevant recovery file of the establishment. The Acknowledgement Card may be
printed by the office, if necessary, after getting approval of the Postal Department,
with Red Border on all the four sides of the Card for easy identification.
After the service of notice, the defaulter or his representative in interest shall
not be competent to mortgage, charge, lease or otherwise deal with any property
belonging to him and if created, without specific permission of the Recovery Officer,
it shall be void. Nor shall any Civil Court issue any process against such property in
execution of a decree for the payment of money.
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Issue of warrant:
When the movable property is to be attached, the Recovery Officer should
direct the area Enforcement Officer to serve a copy of the warrant in Form EPFCP-2
on the defaulter and take further action as directed therein. Enforcement Officer
should return the warrant on or before the date specified therein with an endorsement
certifying the date on which and manner in which, it has been executed. This
requirement of service of the copy of the warrant of attachment on the defaulter, is
to afford an opportunity to the defaulter to pay the amount. For due compliance of
this requirement service should be personal service and not by affixation. The whole
aim should be to recover the money and not otherwise.
If the defaulter, after the service of warrant, fails to pay the amount of arrear
dues forthwith, the Enforcement Officer should proceed to attach the movable
property of the defaulter and intimate the details of the property attached to the
Recovery Officer. If he could not execute the warrant, he should give reasons for its
non-execution.
While attaching the property, it should be ensured that the property exempt
from attachment under Section 60 of code of Civil Procedure 1908 is not attachable.
The Recovery Officer’s decision as to what property is so entitled to exemption shall
be conclusive.
Where the movable property other than the agricultural produce, is in the
possession of defaulter, Enforcement Officer should attach the property by actual
seizure. He should keep the property in his own custody and he should take
adequate care and steps to keep the property safely, till the Recovery Officer directs
him to sell the property.
When the property seized is subject to speedy and natural decay or when the
expense of keeping it in the custody is likely to exceed its value, he may sell it at
once.
Warrant of Sale:
On receipt of report of Enforcement Officer regarding the attachment of
property, Recovery Officer should issue the warrant of sale in Form EPFCP.12, in
triplicate and direct the Enforcement Officer to act as per the instructions therein.
The date of issue of warrant of sale should be entered in the Register of Recovery
cases and the report of the Enforcement Officer should be watched. After serving
the copy of the warrant of sale on the defaulting employer, Enforcement Officer
should send a report indicating the date on which and manner in which it was served
and also the valued of the each movable property seized to enable the Recovery
Officer to fix the reserve price and order for sale of movable property.
Proclamation of sale:
On receipt of the report of the Enforcement Officer, the date of receipt of
report of the Enforcement Officer should be entered in the Register of Recovery
cases. Thereafter, the proclamation of sale of the property in the form EPFCP-13
should be issued by the Recovery Officer in the languages to district of the intended
sale. He should also fix the reserve price for each article and indicate in the
proclamation of sale. The reserve price should be determined after an objective
82
consideration of all the relevant facts. It should not be any figure having no relation
whatsoever to the minimum price which the property intended to be sold is expected
to fetch at the auction sale. The copy of the proclamation of sale should be affixed
in a conspicuous part of the office of the Recovery Officer and Enforcement Officer.
He should normally direct the area Enforcement Officer to conduct the sale by
public auction in one or more lot as the Enforcement Officer considers necessary. If
the Recovery Officer considers that it is more advantageous to appoint a person
other than the area Enforcement Officer to sell the property, he may appoint any
other Enforcement Officer of the Regional Office/Sub-Regional Office, whom he
considers more suitable for the job. He may also appoint any other fit person other
than the Enforcement Officer from the approved, auctioneers to sell the property and
fix the remuneration to be allowed to him for rendering such services. The
remuneration payable to such person should be treated as cost of the sale and should
be recovered from the defaulter along with other costs. While appointing an
auctioneer, adequate care should be taken in selecting the auctioneer.
The Recovery Officer may summon any relevant person and examine him in
respect of any matters relevant to proclamation and required him to produce any
document or power relating thereto for the purpose of ascertaining the matters to be
specified in the proclamation of sale. The Enforcement Officer should arrange for
the proclamation of sale by beating of drum or other customary mode:
(a) in the village in which the property seized or if the property was seized
in a town or city, then in the locality in which it was seized.
(b) At such other place as the Recovery Officer may direct.
(2) in case of property attached otherwise than by actual seizure, in such places,
as Recovery Officer may direct.
No sale of property should take place until the expiry of atleast fifteen days
calculated from the date on which the copy of the proclamation of sale affixed in
the office of the Recovery Officer, i.e., Regional Office or Sub/Regional Office,
as the case may be.
Where the property is subject to speedy and natural decay or when the
expense of keeping it in custody is likely to exceed its value, sale may take place
before fifteen days. If the defaulter gives his consent, in writing, for selling the
property before fifteen days, sale may take place before fifteen days.
Proclamation of sale:
The proclamation of sale should be issued in the Form EPFCP.13. It should
be in the language of the district of the intended sale. Recovery Officer should
normally direct the area Enforcement Officer to sell the property attached or
portion thereof to cover the amount of arrears due and other expenses relating to
recovery. If Recovery Officer considers that it will be more advantageous to
appoint a person other than area Enforcement Officer to sell the property he may
appoint any other Enforcement Officer of the Regional Office/Sub-Regional
Office, whom he consider as more suitable for the job. He may also appoint any
other fit person (other than the Enforcement Officer) from the approved
auctioneers list to sell the property and to fix the remuneration to be allowed to
him for rendering such services. The remuneration payable to such person
should be treated as cost of sale and should be recovered from the defaulter along
with other costs. While appointing an auctioneer, adequate care should be taken
in selecting the auction agency.
The Recovery Officer may summon any relevant person and examine him in
respect of any matters relevant to proclamation of sale and require him to
produce any document or power relating thereto for the purpose of ascertaining
the matters to be specified in the proclamation of sale. The notice for settling the
sale proclamation should be issued in Form EPFCP-17.
85
Contents of Proclamation:
The proclamation of sale of immovable property should be drawn up after
notice to the defaulter in Form EPFCP.17 and it should state the time and place
of sale and also should specify, as fairly and accurately as possible
Time of sale:
Sale to be by auction:
The sale of immovable property should be by public auction to the highest
bidder, subject to confirmation of sale by the Recovery Officer. Sale by public
auction is mandatory and the sale held in any other manner is not valid.
However, no sale shall be made, if the amount of bid by the highest bidder is
less than the reserve price, if any, fixed.
Postponement of sale to enable the defaulter to raise amount due under the
recovery certificate:
The whole aim of the recovery action is to recover the amount of arrears and
not otherwise. In view of this, if the defaulter proves to the satisfaction of the
Recovery Officer that there is reason to believe that the amount of the recovery
certificate may be raised by the mortgage or lease or private sale of such property
or some part thereof or of any other immovable property of the defaulter and he
applies for the postponement of sale of the property ordered for sale, the
Recovery Officer may postpone the sale on such terms, and for such period, as
he thinks proper, to enable the defaulter to raise the amount. In such case, the
Recovery Officer should grant a certificate, in Form EPFCP.21, to the defaulter,
authorizing him within a period to be mentioned therein, to make the proposed
mortgage, lease or sale, subject to the condition that all money payable under
such mortgage, lease or sale should be paid to Recovery Officer only and not to
the defaulter.
Authority to bid:
All persons bidding at the sale should be required to declare as to whether
they are bidding on their own behalf or on behalf of their principals. In the latter
case, they should be asked to deposit their authority letter of their principals. If
they fail to deposit the authority letter, their bids should be rejected.
amount not less than reserve price fixed by the Recovery Officer, an “authorised
officer”, as defined in section 2(aa) of the Employees’ Provident Funds and
Miscellaneous Provisions Act, 1952, if so authorised by the Chairman of the
Central Board of Trustees, may bid for the property on behalf of the Central
Board of Trustees at any subsequent sale.
APPOINTMENT OF RECEIVER:
The Recovery Officer may attach the business of the defaulter and appoint a
person as receiver to manage the business. This mode of attachment will have to
be opted only in rarest of rare situations, where the adoption of other modes of
recovery is not found feasible, as it is not the function of the Employees’
Provident Fund Organisation to manage the business and apart from that it has
no expertise in this field. It should be ensured that by choosing this mode of
recovery, the organisation will not land in trouble.
(2) open a account in the name of receiver ship in the bank as directed by the
Recovery Officer.
(3) deposit all receipts immediately after the receipt thereof, less the amount
required for meeting day to day expenses.
(5) submit his accounts once in every three months to the Recovery Officer
within fifteen days of each period of three months (the first of such accounts
commencing from the date of his appointment and ending with the expiry of
three months should be submitted within fifteen days of expiry of said period)
The Recovery Officer may at any time make an enquiry as to the amount, if
any, due from the receiver, as shown by his accounts or otherwise, or an enquiry
as to any loss to the property occasioned by his willful default or gross
negligence and may order the amount found due, if not already paid by the
receiver, or the amount of the loss so occasioned, to be paid by the receiver
within the period to be fixed by the Recovery Officer.
If the receiver fails to pay any amount which he has been ordered to pay
within the period specified, the Recovery Officer may direct such amount to be
recovered from the security (if any) furnished by the receiver or by attachment
and sale of his property or, if his property has already been attached by the sale
and sale of his property or, if his property has already been attached by the sale
of such property, and may direct the sale proceeds to be applied in making good
any amount found due from the receiver or any such loss occasioned by him and
the balance (if any) of the sale proceeds should be paid to the receiver.
If a receiver fails to submit his accounts at such periods and in such form as
directed by the Recovery Officer without reasonable cause or improperly retains
any cash in his hands, the Recovery Officer may disallow the whole or any
portion of the remuneration due to him for the period of the accounts with
reference to which the default is committed and may also charge interest at a rate
not exceeding twelve percent per annum on the moneys improperly retained by
him for the period of such retention without prejudice to any other proceedings
which might be taken against the receiver.
Withdrawal of management:
The attachment of management may be withdrawn at any time at the
discretion of the Recovery Officer or if the arrears are discharged by receipt of
such profits and rents or otherwise paid.
(1) that the defaulter, with the object or effect of obstructing the execution of
Recovery Certificate, has after drawing up of the Recovery Certificate by the
Recovery Officer, dishonestly transferred, concealed or removed any part of his
property or
(2) that the defaulter has or has had since the drawing up of the Recovery
Certificate by the Recovery Officer, the means to pay the arrears or some
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substantial part thereof and refuses or neglects or has refused or neglected to pay
the same.
The Recovery Officer should not order for the arrest and detention of woman
or any person who in his opinion is a minor or of unsound mind.
When the defaulter appears before the Recovery Officer in obedience to the
show cause notice issued to him, the Recovery Officer should give the defaulter
an opportunity to show cause why he should not be committed to civil prison.
If the defaulter has not appeared before the Recovery Officer on the day
specified in the above notice served on him, he may issue the warrant for the
arrest of defaulter in Form EPFCP-26 and direct the area Enforcement Officer to
act as directed therein.
If the defaulter for the time being found in the jurisdiction of other Recovery
Officer, i.e., in other region (The jurisdiction of Regional Provident Fund
Commissioners and Assistant Provident Fund Commissioners in Regional
Office/ Sub-Regional Office is for the whole of the region, as they are notified as
Recovery Officer for the area covering the whole region), the warrant of arrest
issued by the Recovery Officer of one region may also be executed by the
Recovery Officer of such other region.
For the purpose of making the arrest of defaulter, as ordered by the Recovery
Officer, the Enforcement Officer should not enter the dwelling house after the
sun-set and before sun-rise. He should not break open the outer door of the
dwelling house. If, however, such a dwelling house or a portion thereon is on
occupancy of the defaulter and he or other occupants of the house refuses or in
any way prevents access thereto, he may break upon the outer door of the
dwelling house. If he has gained entry to any dwelling house in a normal way,
he may break open the door of any room or apartment, if he has reason to believe
that the defaulter is likely to be found there.
the Enforcement Officer has given notice to her that she is at liberty to withdraw
and has given her reasonable time and facility for withdrawing.
When the defaulter is brought by the Enforcement Officer and appear before
the Recovery Officer, he should give the defaulter an opportunity of showing
cause, why should not he be committed to civil prison. Though the rule 75 of
Second Schedule to Income-tax Act, 1961 provides for detention of defaulter in
the custody of any officer, as the Recovery Officer may think fit, pending
conclusion of the enquiry the other alternative to release him on his furnishing
security to the satisfaction of the Recovery Officer for his appearance, when
required, is better than the earlier one, the Recovery Officer may adopt this
procedure.
Once a defaulter has appeared before the Recovery Officer in response to the
notice issued to him in Form EPFCP-25 he is not to be arrested unless the
inquiry contemplated by rule 74 of the Second Schedule to Income-tax Act, 1961
is over or the conditions mentioned in Rule 73(1) or 73(3) are fulfilled.
Upon on the conclusion of enquiry, the Recovery Officer may make an order
for the detention of the defaulter in the Civil Prison, in Form EPFCP-27 and
should in that event cause him to be arrested, if he is not already under arrest.
He may give an opportunity to the defaulter to pay the arrears before making
order of detention and leave him in the custody of officer arresting him or any
other officer for a specified period not exceeding fifteen days or release him on
his furnishing security to the satisfaction of the Recovery Officer for his
appearance at the expiration of the specified period, if the arrears are not paid.
When the Recovery Officer does not make an order of detention, he should,
if the defaulter is under arrest, direct his release.
Where the Recovery Officer is satisfied that the defaulter who has been
arrested has disclosed his whole of property and has placed it at his (Recovery
Officer) disposal and that he has not committed any act of bad faith, he may
order release of the defaulter.
If he has ground for believing the disclosure made by the defaulter earlier to
have been untrue, he may order for his re-arrest. The period of detention in the
civil prison should not in aggregate exceed the period mentioned above.
The Recovery Officer may release the defaulter on the following grounds:
(i) defaulter suffering from serious illness
(ii) he is not in a fit state of health to be detained in the civil prison.
(iii) existence of any infectious or contagious disease or serious illness.
A defaulter released from detention under this rule should not, merely by
reason of his release, be discharged from his liability for the arrears; but he
should not be liable to be re-arrested under the certificate in execution of which
he was detained in the civil prison.
APPEAL
Though there is provisions for appeal in Rule 86 of the Second Schedule to
Income Tax Act, 1961, for filing appeal against any original order of the
Recovery Officer, not being an order, which is conclusive, no authority has so far
been specified for hearing such appeal. As such, the appeal provision will be
inoperative till the Central Government notify the Appellate Authority to make
them operative.
After the Government notifies the Appellate Authority, the appeal must be
presented to the specified Appellate Authority, within 30 days from the date of
order appealed against or within such period as may be specified by the
Government in respect of orders passed by the Recovery Officer before the
appointment of Appellate Authority.
Procedure in appeal:
The specified Appellate Authority should fix a day and place for the hearing
of the appeal and should give a notice of the same to the appellant and the
Recovery Officer against whose order the appeal is preferred.
The appellate authority, before disposing of any appeal, make such further
enquiry as it thinks fit or may direct the Recovery Officer to make further inquiry
and report the result of the same to the Appellate Authority.
The Appellate authority at the time of hearing appeal allows the appellant to
go into any ground of appeal not specified in the grounds of appeal, if the
appellate authority is satisfied that the omission of that ground from the form of
appeal was not willful or unreasonable.
The order of the appellate authority should be in writing and should state the
points for determination of the decision therein and the reason for the decision.
The appellate authority should communicate the order to the appellant, defaulter
(if he is not the appellant) and Recovery Officer. The appeal should be disposed
as expeditiously as possible and endeavor should be make to dispose of the
appeal within six months from the date on which it is presented.
Assistance by Police:
Scale of Fees for process, charges for other proceedings and poundage fees
etc.
The fees for (i) service and execution; (ii) copying; (iii) inspection; (iv)
poundage etc., should be charged as prescribed in Rule 56 to 59 of Income Tax
(certificate proceeding) Rules, 1962.
Register to be maintained:
The Registers specified should be maintained and verified every month by
the Recovery Officer.
Note:
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As per the provisions of Section 8G of the Act, the provisions of the Second
and Third Schedule to the Income Tax Act, 1961 and The Income Tax
(certificate proceeding) Rules, 1962, as in force from time to time shall apply
with necessary modifications as if the said provisions and the rules referred to
the arrears of the amount mentioned in Section 8 of the Act instead of the
Income Tax Act.
Further any reference in the said provisions of the rules to the “assessee” shall
be construed as a reference to the “employer” under the Act.
“Defaulter” means the establishment who has failed to pay the dues, damages,
interest payable under the Act and the three schemes framed there under.
13
PENAL PROVISIONS TO EXEMPTED ESTABLISHMENTS -
APPLICATION
The provisions of Section 6, 7A, 8 and 14B apply to the employer of the exempted
establishment. Further the exemption is granted to an establishment/class of
employees/employee, subject to certain conditions specified in the notification granting
the exemption. An employer who contravenes or makes default in complying with the
provisions of the Act or conditions governing grant of exemption or any other provisions
of the Act, attracts the penal provisions of the Act and thus punishable under section 14 of
the Act.
a. Whether Annexure “A” has been received within 25th of the close of each
month, if not action taken.
b. Whether inspection charges have correctly been calculated and deposited by
the employer within fifteen days of each month. If not, whether any action
taken to levy damages has been taken.
e. Whether the information showing the contractor’s workers has also been
shown or not.
f. In case of deficiencies in the Rules, whether the same have been amended by
the Company, if not Action Taken.
g. Whether the Provident Fund Rules of the Company have been scrutinised
and approved by the Income Tax Authorities and the Regional Provident
Fund Commissioner, if not action taken.
j. Whether Board of Trustees has been properly constituted and there is equal
representation to the employer and the workers side, as per Paragraph 79C of
the Scheme.
k. Whether the Board of Trustees is common to more than six units, if so, action
taken to bifurcate them so that each group of six units or less is required to
have a separate Board of Trustees.
m. Whether the forfeiture amount is being utilised for the welfare of the
members according to rules as per pattern duly approved by the Regional
Provident Fund Commissioner.
t. Whether the amount lying uninvested at the end of each month is within the
permissible limit and justified.
u. Whether a copy of the Balance Sheet together with audit report for each year
has been received in the Regional Office, if so, whether there is any adverse
comments of the Auditors with require further action.
14
DRILL FOR CONDUCT OF INSPECTION OF UNEXEMPTED
ESTABLISHMENTS
The Enforcement Officers are expected to attend office and report to their
Assistant Provident Fund Commissioner (in case of Inspectorates at the
Inspectorate) except where directed otherwise by the Assistant Provident Fund
Commissioner, In-charge, of the Circle or Regional Provident Fund
Commissioner (Enf.) or Regional Provident Fund Commissioner – Gr. I.
The Enforcement Officers will be deployed by the Assistant
P.F.Commissioner to whom they are assigned to attend to any work assigned
to them.
They will attend court cases as directed by the Assistant P.F.Commissioner In-
charge of Enforcement to whom they are attached.
The Inspector should examine the person present in the establishment and
must record his statements on relevant matters. It is the responsibility of the
Enforcement Officer to lay his hands on the required documents and examine
the person whom he believes to be in-charge of these documents. In case it is
felt that an offence has been committed relevant books, registers or other
documents or portion thereof as may be considered relevant in respect of these
offences may be seized. Enforcement Officer must record his observation
with dated signature in the Inspection Book of the establishment and bring a
photocopy/carbon copy thereof for submission to Assistant Provident Fund
Commissioner in-charge of the circle alongwith his report.
Enforcement Officers may ensure collection of details regarding the change of
ownership, details of responsible persons, Bank-accounts- Sundry creditors-
debtors/properties etc. to be utilised for realisation of the dues if the dues are
not remitted within the period specified in the speaking order.
15
DRILL FOR CONDUCT OF INSPECTION OF EXEMPTED
ESTABLISHMENTS
BOARD OF TRUSTEES – SPECIAL INSPECTION ON INVESTMENT:
during the last two financial years as disclosed in the monthly Annexure-A as well as
the report of the squad during the exempted months need not be inspected during this
financial year.
In case the monthly returns are not received from an establishment a letter
should be sent by the APFC reminding the establishment in polite language to
submit the return. If the first letter does not elicit any reply or submission of returns
within fifteen days a more tersely worded letter has to be sent to the establishment.
If the second letter also do not generate any response an EO should be sent to the
establishment with a specific written direction to ascertain the reasons for non-
submission of the returns. The EO is not expected to do any inspection. Depending
upon the report of the EO, the APFC, In-charge of Enforcement should inspect the
establishment. This procedure is intended to detect default promptly and to take
necessary legal action immediately so that the arrears do not mount.
16
TERMS & CONDITIONS OF EXEMPTION (UNDER PARA 27AA)
All exemptions already granted or to be granted hereafter under section 17 of the Act or
under paragraph 27A of the Scheme shall be subject to the revised Terms and conditions
as given in the Appendix below.
APPENDIX – A
1. The employer shall establish a Board of Trustees under his Chairmanship for the
management of the Provident Fund according to such directions as may be given
by the Central Government or the Central Provident Fund Commissioner, as the
case may be, from time to time. The Provident Fund shall vest in the Board of
Trustees who will be responsible for and accountable to the Employees’
Provident Fund Organisation, inter alia, for proper accounts of the receipts into
and payment from the Provident Fund and the balance in their custody. For this
purpose, the “employer” shall mean –
2. The Board of Trustees shall meet at least once in every three months and shall
function in accordance with the guidelines that may be issued from time to time
by the Central Government/Central Provident Fund Commissioner (CPFC) or an
officer authorised by him.
3. All employees, as defined in section 2(f) of the Act, who have been eligible to
become members of the Provident Fund, had the establishment not been granted
exemption, shall be enrolled as members.
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5. The employer shall transfer to the Board of Trustees the contributions payable to
the Provident Fund by himself and employees at the rate prescribed under the
Act from time to time by the 15th of each month following the month for which
the contributions are payable. The employer shall be liable to pay simple
interest in terms of the provisions of Section 7Q of the Act for any delay in
payment of any dues towards the Board of Trustees.
6. The employer shall bear all the expenses of the Administration of the Provident
Fund and also make good any other loss that may be caused to the Provident
Fund due to theft, burglary, defalcation, misappropriation or any other reason.
7. Any deficiency in the interest declared by the Board of Trustees is to be made
good by the employer to bring it upto the statutory limit.
8. The employer shall display on the notice board of the establishment, a copy of
the rules of the funds as approved by the appropriate authority and as when
amended thereto along with the translation in the language of the majority of the
employees.
9. The rate of contributions payable, the conditions and quantum of advances and
other advances laid down under the Provident Fund rules of the establishment
and the interest credited to the account of each member, calculated on the
monthly running balance of the member and declared by the Board of Trustees
shall not be lower than those declared by the Central Government under the
various provisions prescribed in the Act and Scheme framed there under.
10. An amendment to the Scheme, which is more beneficial to the employees than
the existing rules of the establishment, shall be made applicable to them
automatically pending formal amendment of the Rules of the Trust.
11. No amendment in the rules shall be made by the employer without the prior
approval of the Regional Provident Fund Commissioner (referred to as RPFC
hereafter). The RPFC shall before giving his approval give a reasonable
opportunity to the employees to explain their point of view.
12. All claims for withdrawals, advances and transfers should be settled
expeditiously, within the maximum time frame prescribed by the Employees’
Provident Fund Organisation.
13. The Board of Trustees shall maintain detailed accounts to show the contributions
credited withdrawal and interest in respect of each employee. The maintenance
of such records should preferably be done electronically. The establishments
should periodically transmit the details of members’ accounts electronically as
and when directed by the CPFC/RPFC.
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14. The Board of Trustees shall issue an annual statement of accounts or passbooks
to every employee within six months of the close of financial/accounting year
free of cost once in the year. Additional print outs can be made available as and
when the members want, subject to nominal charges. In case of pass book, the
same shall remain in custody of employee to be updated periodically by the
trustees when presented to them.
15. The employer shall make necessary provisions to enable all the members to be
able to see their account balance from the computer terminals as and when
required by them.
16. The Board of trustees and the employer shall file such returns monthly/annually
as may be prescribed by the Employees’ Provident Fund Organisation within the
specified time limit, failing which it will be deemed as a default and the Board
of Trustees and employer will jointly and separately be liable for suitable penal
action by the Employees’ Provident Fund Organisation.
17. The Board of trustees shall invest the monies of the provident fund as per the
directions of the Government from time to time. Failure to make investments as
per directions of the Government shall make the Board of Trustees separately
and jointly liable to surcharge as may be imposed by the CPFC or his
representative.
18. (a) The securities shall be obtained in the name of the Trust. The securities so
obtained should be in Dematerialised (DEMAT) form and in case the
required facility is not available in the areas where the trust operates, the
board of trustees shall inform the RPFC concerned about the same.
(b) The Board of trustees shall maintain a script wise register and ensure timely
realisation of interest.
19. All such investments made, like purchase of securities and bonds, should be
lodged in the safe custody of depository participants, approved by Reserve Bank
of India and Central Government, who shall be the custodian of the same. On
closure of establishment or liquidation or cancellation of exemption from EPF
Scheme, 1952, such custodian shall transfer the investment obtained in the name
of the Trust and standing in its credit to the RPFC concerned directly on receipt
of request from the RPFC concerned to that effect.
20. The exempted establishment shall intimate to the RPFC concerned the details of
depository participants (approved by Reserve Bank of India and Central
102
Government), with whom and in whose safe custody, the investments made in
the name of trust, viz., investments made in securities, bonds, etc. have been
lodged. However, the Board of Trustees may raise such sum or sums of money
as may be required for meeting obligatory expenses such as settlement of claims,
grant of advances as per rules and transfer of member’s P.F. accumulations in
the event of his/her leaving service of the employer and any other receipts by
sale of the securities or other investments standing in the name of the Fund
subject to the prior approval of the RPFC.
21. Any commission, incentive, bonus, or other pecuniary rewards given by any
financial or other institutions for the investments made by the Trust should be
credited to its account.
22. The employer and the members of the Board of Trustees, at the time of grant of
exemption, shall furnish a written undertaking to the RPFC in such format as
may be prescribed from time to time, inter alia, agreeing to abide by the
conditions which are specified and this shall be legally binding on the employer
and the Board of Trustees, including their successors and assignees, or such
conditions as may be specified later for continuation of exemption.
23. The employer and the Board of Trustees shall also give an undertaking to
transfer the funds promptly within the time limit prescribed by the concerned
RPFC in the event of cancellation of exemption. This shall be legally binding on
them and will make them liable for prosecution in the event of any delay in the
transfer of funds.
24. (a) The account of the Provident Fund maintained by the Board of Trustees
shall be subject to Audit by a qualified independent chartered accountant
annually. Where considered necessary, the CPFC or the RPFC in-charge of the
Region shall have the right to have the accounts reaudited by any other qualified
auditor and the expenses so incurred shall be borne by the employer.
(b) A copy of the Auditor’s report along with the audited balance sheet
should be submitted to the RPFC concerned by the Auditors directly within six
months after the closing of the financial year from 1st April to 31st March. The
format of the balance sheet and the information to be furnished in the report shall
be as prescribed by the Employees’ Provident Fund Organisation and made
available with the RPFC Office in electronic format as well as a signed hard
copy.
(c) The same auditors should not be appointed for two consecutive years and
not more than two years in a block of six years.
25. A company reporting loss for three consecutive financial years or erosion in
their capital base shall have their exemption withdrawn from the first day of the
next/succeeding financial year.
26. The employer in relation to the exempted establishment shall provide for such
facilities for inspection and pay such inspection charges as the Central
Government may from time to time direct under Clause (a) of sub-section (3) of
Section 17 of the Act within 15 days from the close of every month.
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27. In the event of any violation of the conditions for grant of exemption, by the
employer or the Board of Trustees, the exemption granted may be cancelled after
issuing a show cause notice in this regard to the concerned persons.
28. In the event of any loss to the trust as a result of any fraud, defalcation, wrong
investment decisions etc. the employer shall be liable to make good the loss.
29. In case of any change of legal status of the establishment, which has been
granted exemption, as a result of merger, demerger, acquisition, sale,
amalgamation, formation of a subsidiary, whether wholly owned or not, etc., the
exemption granted shall stand revoked and the establishment should promptly
report the matter to the RPFC concerned for grant of fresh exemption.
30. In case, there are more than one unit/establishment participating in the common
Provident Fund Trust which has been granted exemption, all the trustees shall be
jointly and separately liable/responsible for any default committed by any of the
trustees/employer of any of the participating units and the RPFC shall take
suitable legal action against all the trustees of the common Provident Fund Trust.
31. The Central Government may lay down any further conditions for continuation
of exemption of the establishments”.
17
HOLDING OF SECURITIES IN DEMAT FORM
OPENING OF DE-MAT ACCOUNT BY EXEMPTED PF TRUSTS:
Advantages of De-mat.
The Reserve Bank of India has advised that RBI regulated entities will have
to hold and deal in debt instructions in the De-mat form. As a result, in due course,
entities like PF holding securities in the physical form may be faced with problem of
liquidity on account of counter parties un willing to transact in the physical mode.
The Reserve Bank of India, therefore, suggested to issue suitable instructions to PF
trusts exempted under EPF & MP Act, 1952 to start the process of dematerializing
the existing holding in their own interest.
Henceforth, the securities are to be transferred only in Demat form to the CSGL
Account of the Employees’ Provident Fund Organisation.
DEMATERIALIZED MODE:
The Reserve Bank of India has extended the facility of holding Government
securities in Subsidiary Ledger Form to all exempted Provident Funds. The Public
Debt Offices of Reserve Bank of India has permitted the exempted trust to hold a
minimum balance of Rs.10,000/- to open an SGL Account. This facility was
allowed in the year 1987.
Since the bank’s current account with the RBI gets debited in case of
purchase by the bank or by the bank’s constituent, the constituent must have
clear funds in its Current / Savings account with the bank to enable the
transaction to be put though.
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4. The constituent will receive a Debit / Credit advice for both the SGL as well
as the Current / Savings account if a transaction is put through on its behalf.
The RBI credits the Coupon and Redemption proceeds for G-Sec/T-Bill to
the bank’s Current Account with the RBI. The constituent will receive a credit
advice for the amount credited to its Current / Savings account immediately on
receipt of the funds from RBI.
When any trust buys securities via the constituent SGL account, the
Securities are transferred to the name of the trust immediately on
confirmation of a valid delivery-versus-payment transaction. If scripts are
purchased in physical form the trust will have to wait for over one moth for
scripts to be transferred in their name, while the trust has already paid the
seller the full consideration. Thus the trust will have to take settlement risk
on the seller of the security, who may be a broker or NBFC . The SGL
account system has been designed by RBI to eliminate risk of default, which
the investor may face while transacting in government securities.
When the trust’s bid is successful at a RBI auction, RBI may directly credit
the securities allotted into the SGL account. Any refund amount will be
directly be credited into the trust’s bank account. Thus the trust will be
spared the bother of collecting refund and securities from the Reserve Bank.
The bank also allows non-Mumbai trusts to maintain their bank accounts in
their city but purchase securities in Mumbai. This enable a non-Mumbai
trust to take advantage of the deeper security market in Mumbai.
Additionally, as Treasury bills are only transacted in Mumbai the non-
Mumbai trust will also be able to invest in the same.
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There is no scope of any risk of loss, theft or fraud with regard to stock
certificate. If securities are maintained in a Constituent SGL account it is not
necessary to have a safe custody account for Government Securities and
Treasury Bills, thereby saving the safe custody charges.
The Bank provides the statement of holdings on a monthly basis. This will
aid in audit and valuation of the trust’s holding.
The bank will collect interest on SGL holdings on behalf of the constituent
and will credit the constituent’s bank account at no extra cost. As the recent
budget has removed tax reduction at source on government securities, the full
amount of interest as paid by RBI will be credited to the client’s account. As
per the investment guidelines, any interest earned has to be reinvested in
similar category of securities. The Bank can also offer quotes for sale of
securities to its client for their investments.
18
EPF SYSTEM OF ACCOUNTS
INTRODUCTION:
lump sum benefit and withdrawals, it now also offers a pension benefit. To meet the
growing number of subscribers and pensioners and the resultant volume of
transactions a sound and transparent accounting system is to be followed.
A Retrospect:
The Employees’ Provident Funds & Miscellaneous Provisions Act and the
schemes viz. Employees’ Provident Fund Scheme, 1952, Employees’ Pension
Scheme, 1995 and Employees’ Deposit Linked Insurance Scheme, 1976 framed
there under provides various benefits in the nature of Social Security to the working
class and their families. The EPF Organisation, in its 50 years of existence, is
marching ahead in extending and enlarging the various Social Security benefits. To
begin with, a compulsory contributory Provident Fund Scheme was introduced to the
employees in the year 1952 to which both the employees and the employers would
contribute. A Provident Fund has been set up for this purpose and administered by
the CBT-EPF. Thus, the system of accounts and the maintenance of accounts was
initially applicable to the administration of the EPF Scheme, 1952. The rate of
contribution payable by the employees and employers was also steadily increased
from 6.25% to the present level of 12%. The accounts of the EPF subscribers were
maintained and the advances/withdrawals were allowed apart from issuing the
Annual Provident Fund Statement of accounts to the subscribers through their
employers.
The employers were depositing the EPF dues alongwith the administrative
charges into the State Bank of India. The benefits were released through a separate
account known as the EPF refund account and thus three different accounts were
maintained till the year 1971. On introduction of Employees Family Pension
Scheme, 1971, a contribution account exclusively for crediting the contribution
towards family Pension Fund at the rate of 1.16% of the pay diverted from
Employees and Employers share of Provident Fund account was opened. On
introduction of EDLI Scheme, 1976, the Employers (alone) were asked to deposit
the EDLI contribution alongwith the administrative charges. In the year 1995, the
Employees Family Pension Scheme has been converted into a Pension Scheme by
introducing the Employees Pension Scheme, 1995. Thus the EPF Organisation is
vested with the administering the Employees Provident Fund, Pension Fund and
Insurance Fund alongwith the Administration funds. The rate of administration
charges has also been increased from 3.% of total contribution to 1.10% of pay. To
begin with the EPF money collected by the State Bank of India were transferred to
the investment account and the money required to meet the obligatory out goings
was made by making a requisition for transfer from the investment account with the
approval of Headquarters Office, New Delhi.
The EPF Organisation is administering the schemes through its Field Offices
located in the Regional Offices/Sub-Regional Offices. The main operational area
was practically categorised as Enforcement (Compliance) Wing and the Accounts
Wing. The Enforcement (Compliance) wing is responsible for application of the Act
and in securing compliance from the establishment and also to invoke the Penal
provisions against the defaulters. In the Accounts Wing the individual Ledger
accounts of the EPF members are being maintained and the services to the members
were extended through this individual ledger account. Initially, the employers were
111
asked to furnish the wages and contribution of the individual members every month
and postings were made in the ledger card manually and at the end of the financial
year the closing balance was conveyed to the members through the establishment.
The payment of interest to the EPF balance was allowed upto 1.4.93 at the
declared rate on the amount stood as Opening Balance as on 1st April. The method
of crediting the interest to the subscribers account had been changed whereby the
interest was credited on monthly balance method.
The organisation is preparing its balance sheet alongwith the audit report and
presenting to the Government and Parliament as per the mandate given in the EPF
scheme, 1952. To facilitate this all the field offices in the region are also required to
compile the monthly classified summary of receipt and payment and forward to the
Headquarters for consolidation. A regional balance sheet is also prepared and
consolidated in the Head quarters every year.
With a view to ensure expeditious payment of benefits, the payments are also
being made through ECS. The monthly pension to the members and Family Pension
are being released through the banks designated for this purpose in each region
113
which includes Nationalised Banks and Scheduled banks such as HDFC, UTI and
ICICI. Necessary agreement have been entered into with the disbursing agencies i.e.
Banks and Post Offices and the accounting procedure has been evolved for
reconciliation of payment.
Proposed Action Plan: Under the Reinventing EPF India, the EPF
Organisation is preparing in for Business Process Reengineering (BPR) for total
computerisation of the entire operation of the accounting in EPFO. It is also under
consideration whether to switch over to double entry accounting in handling various
accounting aspects of EPF System of Accounts.
The Manual of Accounting Procedure, Part II-A, Chapter-I provides for the
details on the system of accounts prescribed under the EPF.
19
SALIENT FEATURES OF THE NEW BANKING
ARRANGEMENTS ENTERED WITH SBI
DEFINITIONS
g. “The Services” mean all of the services which the SBI is required to
perform for the Trustees under the Agreement.
STANDARDS:
i. The SBI shall not, without the Trustees’ prior written consent, disclose the
Agreement, or any provision thereof, or any specification, or information
furnished by or on behalf of the Trustees in connection therewith, to any
person other than a person employed by the SBI in
performance of the Agreement except as may be and to the extent required
under any law, statute or by any statutory regulation or other authority
exercising power under any law/rules/regulations. Disclosure to any such
employed person shall be made in confidence and shall extend only as far as
may be necessary for purposes of such performance.
ii. The SBI shall not, without the Trustees’ prior written consent, make use of
any document or information except for purposes of performing the
Agreement.
5.1 The trustees shall maintain and operate the Savings Bank Accounts as a two-
tier arrangement i.e. one at the level of Regional, Sub Regional and Sub Accounts
Office and other at the Headquarters.
5.2 In the Headquarters of the Regional, Sub Regional and Sub Accounts offices
there shall be a branch designated as the Link branch. The said Link Branch shall
maintain the accounts and also receive the dues directly from the employers within
the territorial jurisdiction of each of the concerned office of the Trustees. There
shall be a number of branches of the SBI and its Associate Banks within the
territorial jurisdiction of each of the concerned office of the Trustees for the purpose
of collecting the dues as specified in the Act and Schemes framed there under
(hereinafter referred to as Base Branches). The base branches shall, after collecting
the dues paid by the employers, transmit the same to the Link Branch in which
accounts of the Trustees are being maintained, on the date of receipt itself. The
receiving branch what so ever will have no responsibility and liability in regard to
correctness of the deposits made by the employers’ vis-à-vis their liability under the
respective Act.
5.3.1 The Link Branch, apart from accepting Monies and other dues on
behalf of the Trustees in the manner applicable to all base branches, will maintain
the following Savings Bank accounts of the Head Office, Regional Office, Sub
Regional, Sub Accounts Office, as the case may be.
115
5.4 The remittances received from various base branches as well as the
remittances deposited directly in the link branch shall be credited to the respective
accounts as per schedule detailed in clause 5.5. The credit/debit advice pertaining to
the above mentioned accounts shall be sent to the Head Office/Regional Office/Sub
Regional Office/Sub Accounts Office concerned on daily basis. The link branch
shall furnish the reconciled Bank Statements & supporting challans and other
documents to the concerned office of the Trustees in the manner and periodicity as
set out in the Annexure I of this agreement.
5.6 The cheques received by the link branch as well as the base branches shall
be presented for clearing on the date of receipt or on the next working day itself.
5.8 Any delay in crediting the amounts indicated in Para 5.5., over and above
the period prescribed shall attract payment of interest, which shall be equivalent to 2%
above the Savings Bank Interest rate as applicable from time to time on the Savings Bank
Deposits of SBI.
5.9 On the services so rendered as narrated above, SBI shall be entitled to the
remuneration/fee as detailed in the paragraphs given herein after.
5.10 The Service charges @ Rs.2.50 per Rs.1000/- on the total monies received
on behalf of the Trustees by the base branches and remitted to the link branch (excluding
the direct deposit with link branch) is payable to the link branch of the State Bank of India
by the respective Regional Office/Sub Regional Office every month.
5.11 The remittance charges @ Rs.1.50 per Rs.1,000/- on the monies received on
behalf of Trustees by the link branch directly is payable to the link branch of the State
Bank of India by the respective Regional Office/Sub Regional Office every month.
5.13 Levy of charges shall by only on remittances from base branches to link
branches and on provident fund dues collected by the link branches. Other inter
departmental remittances shall be excluded from the levy of charges.
5.15 The monies received at base branches (other than the situation when
the link branch acts as base branch) should be transferred through electronic mode
wherever possible and where such arrangement has been set up in consultation with
Trustees’ officers. However, in other cases old system of transfer of funds through
DD may continue till such facilities are available at these branches.
5.16 the monies and other remittances received in the Link branch, net of
payments authorised by designated officers of the Trustees shall be transferred to the
respective investment accounts by the SBI immediately on receipt of instructions
from the respective field offices of the Trustees.
5.17 The link branches shall provide the Regional, sub Regional Offices,
Sub Accounts Offices the particulars of balance available in the accounts maintained
by them on daily basis and that the link branches shall provide the facility of remote
long in (wherever available) to the respective field offices so as to facilitate efficient
transfer of funds. The transfer from the link branch to the respective investment
accounts and vice versa shall be through electronic mode only (wherever available).
NODAL OFFICER:
SBI has informed that a Nodal Officer of AGM rank in each of their 14
circles all over the country shall be notified for coordinating all issues concerning
EPFO. The name, designation etc. of the Nodal Officers shall be intimated as and
when received by Headquarters. All offices are requested to take up the outstanding
issues with the Nodal Officers and get them resolved.
20
PROCEDURE FOR INVESTMENT OF PROVIDENT FUND MONIES
The employer of an establishment exempted from the operation of
Employees' Provident Fund Scheme, 1952 either in respect of the establishment as a
whole for which, exemption granted under Section 17(1)(a) or 17(1)(b) of the Act or
in respect of an employee/Class of employees for whom exemption granted under
Paragraph 27 or 27-A of Employees' Provident Fund Scheme, 1952, respectively,
shall transfer the monthly Provident Fund contributions (both shares, after diverting
118
the Pension contributions from the employer's share of Provident Fund) including
the refund of withdrawals to the respective Board of Trustees within fifteen days of
the close of the month (with five days grace period), through a cheque drawn in
favour of the Trust.
The Area Enforcement Officer should ensure the actual crediting of the
monthly dues remitted by the employer duly verifying the Pass Book of the
Exempted Fund and the Bank Statement showing the realization of Cheque before
due dates. All belated remittances, as explained in the Chapter on Penal Damages,
will attract levy of damages by the Regional Provident Fund Commissioner
concerned.
After meeting the obligatory outgoings, the money available (investible fund)
should be invested as per the pattern of investment notified by the Ministry of
Labour, Government of India, under Section 17(3)(a) of the Act.
PATTERN OF INVESTMENT
NOTIFICATION : GOVT. OF INDIA, MINISTRY OF LABOUR, New Delhi,
NO. G-27031/3/99/-SS.II dated 9th July, 2003
Percentage of amount to
Sl.No.. Category
be invested
(i) Central Government securities as defined in Section 2
of the Public Debt Act, 1944(18 OF 1944); and/or units
of such Mutual Funds which have been set up as
Twenty five per cent
dedicated Funds for investment in Government
securities and which have been approved by the
Securities and Exchange Board of India.
(ii) (a) Government securities as defined in Section 2 of
the Public Debt Act, 1944 (18 of the 1944)
created and issued by any State Government ;
and/or units of such Mutual Funds which have
been set up as dedicated Funds for investment in
Government securities and which have been Fifteen per cent
approved by the Securities and Exchange Board
of India.
and/or
(b) Any other negotiable securities the principal
whereof and interest whereon is fully and
unconditionally guaranteed by the Central
Government or any State Government except
those covered under (iii)(a) below.
(a) Bonds/Securities of "Public Financial Institutions
(iii) as specified under Section 4(1) of the Companies
Act; "Public Sector Companies" as defined in
Thirty per cent
Section 2(36-A) of the Income Tax Act, 1961
including Public Sector;
and/or
(b) Short duration (less than a year) Term Deposit
Receipt (TDR) issued by Public Sector Banks
To be invested in any of the above three categories as
Thirty per cent
(iv) decided by the Trustees
The Trusts, subject to their assessment of the risk-return prospects, may invest upto
(v) 1/3rd of (iv) above, in private sector bonds/securities which have an investment grade
rating from at least two credit rating agencies.
% of amount to
S.No. Category
be invested
(i) Central Government securities as defined in Section 2 of the
Public Debt Act, 1944 (18 of 1944); and / or units of such
Mutual Funds which have been set up as dedicated Funds for 25 %
investment in Government Securities and which have been
approved by the Securities and Exchange Board of India
(ii) (a) Government securities as defined in Section 2 of the Public
Debt Act, 1944 (18 of the 1944) created and issued by
any State Government ;and/or units of such Mutual funds
which have been set up as dedicated Funds for
investment in Government Securities and which have
been approved by the Securities and Exchange Board of 15 %
India; and/or
Item (iv) of the pattern provides investment of 20% of the investible funds in
any of the three categories, viz., Central Government securities, State Government
Securities and Public Financial Institution/Public Sector Companies/IDFC/Public
Sector Banks/IDFC/Certificate of Deposits issued by the Public Sector Banks. The
option for investment of 20% in any of the said categories is left to the concerned
Board of Trustees.
With effect from 1.4.1998, the Board of Trustees may invest the extent of ten
per cent out of the amount allocated for item (iv) (which is to be invested at the
discretion of the Board of Trustees in any three categories specified above) in private
sector bonds/securities which have an investment grade rating from at least two
credit rating agencies. While doing so, the Board of Trustees should assess the risk-
return prospective of the bonds/securities of the private sector companies.
Credit rating refers to the rating (or assessment and gradation) of creditorship
securities or debt instruments, particularly with regard to the probability of timely
discharge of payment of interest and repayment of principal obligations
The ratings from "AA" to "CCC" may be modified by the addition of a plus
or minus sign to show relative standing within the major rating categories.
Credit rating aims to-
I. provide superior information to the investors at a low cost;
II. provide superior information to the investors at a low cost;
III. provide a sound basis for proper risk-return structure ;
IV. subject borrowers to a healthy discipline ; and
V. assist in the framing of public policy guidelines on institutional investment.
Thus, the credit rating financial services represent an exercise in faith
building for the development of a healthy financial system.
122
21
SETTLEMENT OF PF CLAIMS
CLAIM FORMS
1.In case of claim which is to be settled immediately under Para 69(1) (a) to (dd) &
Para 70 , the employer has to get the claim application from the member /
nominee duly filled in, attest it and forward the application within 5 days of its
receipt to the Commissioner.
2. In case the member has to prefer the claim after the waiting period of 2
months, the employer has to get the claim application from the member when
he/she leaves the service, attest it and handover to the member for submission to
the Regional P.F.Commissioner after the completion of waiting period of 2
months.
3.The employer has to attest the claim forms of the members forwarded to him by
the Commissioner for attestation and return the same to the Commissioner within
5 days of its receipt.
4. The Employer has to ensure submission of Form -10 & Form 3A for the broken
currency period (for the previous financial year(s) also, if not submitted already)
along with Claim forms in Form – 19 / Form – 20.
Immediate settlement
1.Provided that a member, who has not attained the age of 55 years at the time of
termination of his service, shall also be entitled to withdraw the full amount standing
to his credit in the Fund if he attains the age of 55 years before the payment is
authorised.
2.The Employer may forward the claims of such members 3 months in advance
before the date of retirement on attaining age of 55 years in order to enable the
Commissioner to make arrangement for payment of PF accumulation to the
members on the date of Retirement.
3. The Certificate issued by the Medical Board which exists by mutual agreement
between the employer & employees of the establishment.
4. In doubtful cases the claim will be settled after 2 months waiting period.
1.The Attested copies of the Passport, Air ticket & Immigration Visa must be
forwarded alongwith the claim form.
2.In case of a member taking up employment at abroad, the offer of appointment
letter received by the member is to be forwarded.
3.The payment to such member who already left the country will be credited to his
bank account maintained at any Scheduled / Exchange bank in India.
Under Para 69(2) Other cases viz. Resignation, Left Service, etc.
Note: For female members leaving service for the purpose of getting married;
waiting period is not applicable.
Para 70(ii): If no nomination subsists, payment will be made to the members of his
family (as defined under Para-2(g) of EPF Scheme 1952) other than those indicated
below in equal share.
(a) Major sons, (b) Sons of a deceased son who have attained majority, (c)
Married daughters whose husbands are alive. (d) Married daughters of a deceased
son whose husbands are alive.
Para 70(iii): In any cases where 70(i), 70(ii) do not apply, the whole amount will be
paid to the person legally entitled to it.
him/her. If such a person is found guilty and convicted, the share will be paid
equally to other person(s) entitled to receive the accumulations.
Para 72 (1 & 2): In case there is no nominee and also there is no person entitled to
receive the amount, if the amount to the credit of the Fund does not exceed
Rs.10,000/- the Commissioner may pay such amount to the claimant after enquiry
and after satisfying the title of the claimant.
a) The Manager appointed for the minor’s estate under Indian Lunacy Act,
1912.
Whether the account so opened is only an individual account and not a joint
account.
Whether the name, branch and address of the Bank have been clearly
furnished in the Form 19. Any correction should be attested by the
Employer.(Attach the first page of Savings Bank passbook showing the name
and account number of the member)
Whether the member has completed the advanced stamped receipt (furnished
in the Form 19 itself) and appended his signature on one rupee revenue stamp
affixed in the relevant portion.
5) If the reason for leaving service is “Left”, “Resigned”, etc., ensure that 2
months period has been completed from the date of leaving service to the
date of preference of the claim. However this will not be applicable if the
member has completed 55 years of age or being a female member resigned
for her marriage.
6) In case the member is an illiterate, whether thumb impression of the member
is affixed at the relevant portion.
7) Whether Form 5 and Form 10 particulars are reproduced in the claim Form.
8) a) Whether Form 3A, if any, for the broken period of currency is enclosed.
b) Whether Form 3A for the previous currency period is sent, if not,received
already
c) Whether Form 3A is completed and signed and reasons for ‘Nil’
contribution is given.
d) Whether the period of non-contributory service is indicated where the
wages are not drawn for a full month.
9) Whether the remittances are made upto date and returns submitted. If for any
reasons, any remittance is outstanding in respect of the claimant, the amount
due on his/her account needs to be indicated.
10) Whether the specimen signatures of the authorised officials of the
establishment are already submitted to the Regional Provident Fund
Commissioner. If not, it shall be done and be updated whenever there is
change in the officials.
11) Whether the claim has been attested by the authorised officials of the
establishment, duly affixing his official seal and date.
Note : The Points given below are in addition to common points such as attestation,
Form 3A, mode of Payment, completion of form etc., as given in the checklist for
claims in Form 19.
eligible legal heir of the member, as the case may be. (In such case, a list of
members of the family duly certified by the employer or the Revenue official
or an affidavit by the family members sworn before a Notary Public should
be enclosed).
5) In case, the parents of the deceased member are included in the list of family
members, whether or not the parents were dependent on the member is to be
specified.
6) In case of the claims preferred by any person other than natural guardian on
behalf of the minor member/nominees/legal heirs, ensure that the required
Guardianship certificate etc. are enclosed.
7) Whether the age and marital status of the family members/Legal heirs are
furnished as on the date of death of the member and NOT on the date of the
claim.
8) Separate application should be preferred by each eligible claimant. In the
case of minor, guardian is to prefer the claim.
7. Whether the medical certificate in proper form obtained from the factory
doctor/designated medical officer / the Registered Medical
Practitioner/Hospital is enclosed. Before forwarding it to the RPFC, the
genuineness of the certificate should be ensured.
8. It should be noted that one month hospitalisation is compulsory in case of the
illness of family members.
9. In case of treatment of heart ailment/mental derangement a certificate by a
specialist doctor is necessary
10. For marriage purpose certificate regarding advance required to meet the
expenses in connection with the marriage needs to be furnished in the
claim form.
11. In the case of education a certificate from the educational institution
regarding the course of study and the anticipated expenditure needs to be
submitted
12. Before forwarding the applications for the reasons noted under item No10 the
genuineness of the case shall be ensured by the employer.
13. In case of advance for the natural calamity (flood/earthquake/riot) whether
the certificate from an appropriate authority to the effect that the movable or
immovable property has been damaged as a result of the natural calamity and
it should be ensured that the State Government has declared that the calamity
has affected the general public in the area. It is also to be ensured that the
application for advance is made within a period of 4 months from the date of
declaration by the State Government.
14. In the case, affected by cut in electricity it should be certified that the fall in
wages amounting to 25% or more than 25% of the wages in respect of the
member is due to power cut. A certificate from the State Government is also
necessary to the effect that the cut in the supply of electricity was enforced in
that area where the factory is situated.
15. Purchase of equipment for physically handicapped member: whether the
certificate from a competent medical practitioner furnishing the details like
name of the person, nature of the handicap, nature of the equipment
required and its approximate cost is submitted.
16. Payment of withdrawal within one year before the retirement. The employer
should ensure that the member has attained the age of 54 years or within one
year before his actual retirement on superannuation, which is later and then
the application is submitted. He should also ensure that the said particulars
tally with the age particulars furnished in Form – 9 or Form – 2.
22
EPS-1995 – BENEFITS – DOS & DONT’S IN PROCESSING THE
CLAIMS – SCRUTINY OF FORM 10C AND 10D
DETAILS OF BENEFITS TO MEMBERS OF EMPLOYEES’ PENSION
SCHEME 1995 & THEIR FAMILY MEMBERS
Pension is defined as the Pension payable under the Employees’ Pension Scheme,
1995 and includes the Family Pension admissible and payable under the ceased
Employees’ Family Pension Scheme, 1971.
129
TYPES OF BENEFITS:
WITHDRAWAL BENEFIT
WIDOW PENSION
SCHEME CERTIFICATE
CHILDREN PENSION
PENSION
ORPHAN PENSION
1.SUPERANNUATION PENSION
2.RETIRMENT PENSION
DISABLED CHILDREN PENSION
3.SHORT SERVICE PENSION
NOMINEE PENSION
4.DISABLED PENSION
On attaining the age of 58 years the member can normally draw the pension.
On attaining the age of 58 years the member is not required to pay the pension
contribution.
The completed age of the member alone should be taken into account for all
purposes and as such the question of rounding off of age does not arise.
In the case of children, on attaining 18 years of age they become major. Till
then, the guardian is to be appointed to receive the benefit.
SALARY
The term “SALARY” means the pay / wages on which contributions is due.
“Pay” for the purpose of contributions means “Basic wages dearness allowance,
retaining allowance and cash value of food concession, admissible, if any” [para
2(xiii)]
131
The Salary drawn as on 16.11.1995 or date of exit whichever is earlier was divided
into two groups .
i) Salary upto Rs.2500/- per month.
ii) Salary more than Rs.2500/- per month.
a).Upto 15.11.1995
1. SERVICE
a) as on 15.11.1995
2. SALARY
132
SERVICE
1. Past Service
2. Actual Service
3. Eligible Service
4. Pensionable Service
The total period of each service referred to above is calculated for the following
purposes
1. To decide the eligibility of the member for Pensionery Benefits under the
Employees’ Pension Scheme, 1995.
DEFINITION:[PARA 2]
PAST SERVICE:
BREAK IN SERVICE:
The period of Break in Service is the period of Past Service for which no
contributions to EFPS, 1971 were payable due to non eligibility for wages. (first
proviso to para 6 of EFPS, 1971).
133
ACTUAL SERVICE:
PENSIONABLE SERVICE:
‘Pensionable Service’ means the service rendered by the member for which
contributions have been received or are receivable.[para 2(xv)]
CONTRIBUTORY SERVICE:
‘Contributory Service’ means the period of Actual service rendered by a
member for which the contributions to the fund have been received or are
receivable. [para 2(iv)]
• Wages on the date of exit in respect of Death cases otherwise only minimum
pension of 450 alone.
1. Where about of the member not known. Date of filing FIR note the date of
disappearance.
2. After the death of the member pensioner adopted child – Children Monthly
Pension not eligible.
136
opened a Savings Bank Account in any Bank branch and he has furnished
Savings Bank Account Number and complete postal address of the Bank in
the relevant column of the Form-10D.
11) Whether the claimant has exercised any option for Return of Capital, in the
relevant column of Form-10D. If so, please specify the Para such as 13(1),
13(2) or 13(3). In case of opting for Para 13(2), the nomination should be
made in favour of person other than the spouse. Similarly it should be
ensured that the member furnished his option for Commutation under Para
12A.
12) While furnishing family details, the relationship with the member may be
furnished correctly in Form-10D.
13) Whether the particulars of wages etc. at Page 7 of the claim form is duly
checked and correctly filled up by the employer.
14) Separate Savings Bank Account for the minor children may also be opened in
the same branch at which the Savings Bank Account opened to the
widow/widower.
1. From the following particulars calculate the Short Service Pension payable to
Mr. ‘X’.
SOLUTION
The member has rendered eligible service of 10 years or more but less than
20 years.
Pensionable Service
Date of Exit == 11.10.2000
16.11.1995
-------------
25.10. 4
-------------
140
5000 X 5
---------------- == 142.85
70
CALCULATION OF PENSION
(Para: 12 – EPS 1995)
---------------------------------------------------------------------------------------------------
Past Service Pension Aggregate Pension
Formula Pension
Minimum Formula Pension Aggregate Minimum Pension
---------------------------------------------------------------------------------------------------
If it is below Rs.500/600/800
Rs.600/- and while doing so, wherever the Eligible Service is below 24 years,
reduce the Pension quantum proportionately. (For this purpose, the Past
Service and Pensionable Service will be construed as Eligible Service).
23
PENSION DISBURSEMENT – RECONCILIATION –
DISBURSING AGENCIES – LIFE CERTIFICATE
PENSION RECONCILIATION
The Link branch of the designated Bank is the nodal point to ensure proper
and prompt disbursement of pensions under the Employees’ Pension Scheme, 1995
co-ordinating the activities of Regional Office / Sub-Regional Office and the paying
branches, in the matter of receipt and disposal of Pension Payment Orders, monthly
disbursement, maintenance of SB account and reconciliation with the payment
received from Employees’ Provident Fund Organisation and the amount reimbursed
to the paying branches etc.
The Paying Branch should verify the PPO and keep in a separate file for its
preservation and maintenance being the basic document for release of pension.
143
On 8th of every month, the paying branch shall return the duplicate and
triplicate copy of the said statement of the link branch. The link branch shall
forward the duplicate copy containing the date of payment and other details on
cessation of pension, if any, to the RO/SRO concerned on 12th of each month. A
summary on total quantum of pension disbursed by each branch and the consolidated
amount of pension disbursed by the bank during the current month will be sent
alongwith the said statement duly indicating the balance available in the SB Account
maintained at the Link Branch.
The Commissioner shall with the approval of the Central Board, enter into
arrangement for disbursement of pension and other benefits under this Scheme with
disbursing agencies like Post Office or Nationalised Banks or Treasuries or
Scheduled Commercial Banks including Regional Rural Banks or Co-operative
Banks.
The Commission payable to the disbursing agencies and other charges incidental
thereto shall be met as provided in paragraph 27 of this Scheme.
144
Such Nationalised Banks with whom agreement was entered into are called
Designated Banks. Such Designated Banks have to identify a Bank to act as their
agents (Link Branch). Such Link Branch of each designated Bank has to identify the
Paying Branches of the Bank under its control with Branch code number. The
Region-wise name of the disbursement agencies are furnished in the next page.
145
The RO/SRO shall open a “Pension Payment Savings Account” with the
Head Post Office(s) falling within their respective jurisdiction for depositing the
money required for pension disbursement. The specimen signature of the
authorised officer of the EPFO shall be provided to the respective Head Post
Office.
The modified version of the Programme has already been released separately
vide Head Office Circular Letter No.Pension-1/7(2)2000/CEPS, dated 27/4/2001.
The new arrangement will come into effect from 1st July 2001. It is
requested that necessary arrangement may be made to disburse pension through the
Post Office in addition to the existing arrangement of disbursement through the
banks.
“ Pensioner may, at their discretion opt to draw pension either from the
designated Post Office or from a designated Bank”.
As per the agreement, the Employees’ Provident Fund Organisation will pay
service charges to the Bank and Post Offices on the turnover of the Pension
amount disbursed. The rate of service charges currently in force is 1.25% for
disbursement of monthly pension & 0.25% on non-recurring lump sum payments
such as commutation, arrears etc The service charges should be claimed by the
link branch from the concerned Regional Office / Sub-Regional Office on or
before 15th of every month, furnishing a statement of pension actually disbursed
by the paying branches (Annexure – 5) in the preceding month. The demand
should be sent to Regional Provident Fund Commissioner in the prescribed form
(Annexure – 15). The Regional / Sub-Regional Office will remit the service
charges through a separate cheque and forward to the concerned link branch
within 7 days of the receipt of the demand.
1) LIFE CERTIFICATE:
2) NON-REMARRIAGE CERTIFICATE:
The details of the receipt of the above certificate must be updated in CEPS
programme against each pensioner every year.
Appropriate check point has also been provided in the CEPS programme for
stopping the pension to the pensioner whose Life Certificate / Non-Remarriage
Certificate has not been received.
24
EMPLOYEES DEPOSIT LINKED INSURANCE SCHEME, 1976 –
PROVISIONS IN BRIEF – CASE STUDY
Introduction:
Applicability:
The Scheme applies to all the establishments to which the EPF & MP Act
applies.
Membership:
All the members of the EPF Scheme (both exempted & unexempted) are
covered as members of the EDLI Scheme also.
Contribution:
Under this Scheme, the members do not contribute any amount. However,
the employer pays an amount equal to 0.5% of the total wages paid to the members
as contribution.
Administrative Charges:
As regards Administrative charges, the employer is required to pay an
amount equal to 0.01% of the wages subject to a minimum of Rs.2/- per month.
Exemption: (Section 17(2A) of the Act and Para 28 of the EDLI Scheme, 1976):
The provisions are available as per Section 17 (2A) of the Act and Para 28(1)
and 28(4) of the EDLI Scheme, 1976, for grant of exemption to an establishment or
to an employee or to a class of employees as the case maybe, from the operation of
all or any of the provisions of the Scheme if without payment of any separate
contribution/premium the employees are entitled to the life assurance benefit of the
Scheme in the establishment which are more beneficial than the benefits provided
under the statutory scheme.
Inspection Charges:
An employer of an establishment exempted from the provisions of the EDLI
Scheme is required to pay inspection charges at the rate of 0.005% subject to a
minimum of Re.1/- per month.
Assurance Benefit:
The benefit provided under the EDLI Scheme is called Assurance Benefit.
On the death of the member while in service, the nominee or any other person
151
entitled to receive the Provident Fund benefits will, in addition to the Provident
Fund, receive the Assurance Benefit under EDLI Scheme.
1. OB as on 1.4.2000 is Ee : Rs.45,320/-
Er : Rs.45,320/-
2. The contributions payable are as follows: (Both Shares)
i. from March 2000 to May 2000 : Rs.627/- pm
ii. from June 2000 to Sep2000 : Rs.674/- pm
iii. for Oct 2000 : Rs.705/-pm
iv. for Nov 2000 : Rs.736/-pm
v. from Dec 2000 to Feb 01&May 01 : Rs.783/-pm
vi. from June 2001 to July 2001 : Rs.1019/- pm
152
EDLI.A/C.No.___________
Member died on: - 9.8.2001
*Interest for the period 2000-2001 @ 12 % from 4/2000 to 6/2000 & 11 % form
7/2000 to 3/2001
** Interest for the broken period (4 months) for 2001-2002 calculated on IBB
@ Member has not earned any wages
@@ Establishment has not remitted the amount of dues. Anyhow, the contributions
due even though not paid, has been taken into account.
NOTE:
1. If the Average Balance exceeds Rs.1,35,000/-, then the Assurance Benefit
payable to the members family will be restricted to Rs.60,000/-
2. Opening Balance as on 1.4.2000 includes contributions in respect of wages
of the member upto 29.2.2000 ( i.e wages for Feb 2000, paid in March
2000)
3. Contributions for 12 months upto the end of the month preceding the date
of death are taken (i.e from August 2000 to July 2001 wage month)
4. The interest should be restricted to the month preceding the month in
which the death occurred ( in this case upto 31.7.2001)
4. Contribution:
Note both share of contributions from March of the first financial year
and determine the opening balance at the commencement of first month.
(First month with reference to 2).
6. Default Period:
Note default period.
Even there is default, that should be taken into account for calculation
purpose with contribution, as given in Form 3-A.
7. Withdrawals:
Note withdrawals within the given ‘period’ and post in the month in
which it has been authorised.
After the privatisation of the Insurance Sector, many Private Sector Life
Insurance Companies have approached the Employees’ Provident Fund Organisation
for approval of the Term Group Plan offered by them for issuance in lieu of
Employees’ Deposit Linked Insurance Scheme, 1976.
The Central Board of Trustees, in its various meetings had approved the
proposal for allowing the following insurance companies in private sector coming
under the regulatory control of IRDA to offer the Group Insurance Scheme
conferring similar or better benefits than the Employees’ Deposit Linked Insurance
Scheme, 1976.
155
25
PROCEDURE FOR CREDITING OF INTEREST
Interest on the amount standing to the credit of EPF Member’s account as on
1.4.93 onwards is to be paid on monthly running balance. The Government of India
has notified the said decision and amended Para 60 of the Employees’ Provident
Fund Scheme accordingly.
Thus the claims to be settled from 1.4.93 will have to be paid interest on
monthly running balance. A detailed procedure for calculation of this interest is as
follows:
a) Account No. and Name should be filled up from the ledger card.
b) Opening balance i.e. Column No.2 for the moth of April, 1993 should
be filled up with the opening balance of 1.4.1993 as arrived at in
Ledger Card.
c) Withdrawals if any in the Ledger Card are to be posted in Column No.4
against the months in which the withdrawals have taken place.
156
In the case of settlement of claims, from 1.4.93, under para 69 or 70, interest
is to be paid on monthly running balance, upto the end of month preceding the date
on which the final payment is authorised irrespective of the date of receipt of the
claim from the claimant.
The interest upto and for the current month shall be payable on the claims
which are authorised on or after the 25th day of a particular month but the actual
payment is to be made after the end of the current month.
If an establishment is covered for the first time under the Act/Scheme during
the course of the current period the interest shall be allowed on all the sums credited
to the member’s account on and from the first day of the month succeeding the
month of credit to the end of the current year.
157
Where arrears of contribution pertaining to the past years are received in the
current year, it should be posted in the accounts of the members for the current year
(as Opening Balance) and interest on the contributions pertaining to the past years
should be credited at the rate declared for the related year on compound rate basis.
The total interest due till the preceding year is to be credited as Opening Balance for
the current year. (There is no need to recast the accounts of the previous years and
once the account is closed for an accounting year any credit due for the past period is
to be effected only in the current year.)
Where the penal interest is recovered from the member for misuse of
withdrawal made by him under para 68 B of the Scheme, it should be credited to the
Interest Suspense Account only and not to the member’s account.
actual amount of cash transfer from the date of grant of exemption to the month
preceding the month in which cash portion is transferred through cheque. (as per
Para -60 of the Scheme).
26
NOMINATION – IMPORTANCE - HANDLING OF DEATH
CLAIMS IN THE ABSENCE OF NOMINATION
Nomination:
A member may in his nomination distribute the amount that may stand to his
credit in the Fund amongst his nominees at his own discretion.
Provided that where there is no major person in the family, the member may,
at his discretion, appoint any other person to be a guardian of the minor nominee.]
A nomination or its modification shall take effect to the extent that it is valid
on the date on which it is received by the Commissioner.
Nomination Form:
with the S.S. Under no circumstances, should the bundles of Form 2 be allowed to
be kept unattended to either on the tables or side racks of the dealing assistant. The
AAOs should ensure proper maintenance of the stock register of Form 2 and
periodical check up of the register to ensure that all the wanted Form 2 have not only
been received from the establishment but also are safely lodged and properly
maintained.
On change of charge, the handing over and taking over certificate in respect
of these forms should signed by both the officials.
The member may nominate one or more persons from among the family
members as defined Para 2(g) of the EPFS, 1952. The family for the purpose of
EPFS is as follows:
(i) in the case of a male member, wife, children (including legally adopted
children) whether married or unmarried, major or minor, dependant parents
deceased son’s widow and children, whether married or unmarried, major or minor;
(ii) in the case of a female member, her husband, children (including legally
adopted children) whether married or unmarried, major or minor, her dependant
parents, her husband’s dependant parents, deceased son’s widow and children,
whether married or unmarried, major or minor;
(iii) if the male member proves that his wife has ceased, under the
personal law governing him or the customary law of the community to which the
spouse belongs, to be entitled to maintenance shall no longer be deemed to be part
of the member’s family for the purpose of this Scheme, unless the member
subsequently intimates by express notice in writing to the Commissioner that she
shall continue to be so regarded;
(v) if the child of a member or, the child of a deceased son of the member
as the case may be, has been adopted by another person and if, under the personal
law of the adopted, adoption is legally recognised, such a child shall be considered
as excluded from the family of the member. The child is no longer deemed to be a
‘family member’ of the member. In view of this, the nomination in favour of such
child given on adoption to another person is not valid, if other ‘family’ members are
alive. However, such child shall deemed to be the ‘family’ member of the adopted
persons. If the adopted persons are member of the Provident Fund, they may
nominate such child, as a member of the ‘family’.
If, at the time of making nomination the member has no family or deemed to
have no family in the circumstances stated in Para (iii) & (iv) above, he may
nominate a person of his choice even an institution. If he subsequently acquires a
161
On his marriage, any nomination made by him before his marriage even if, it
is in favour of his dependent parents shall be deemed to be invalid. He should make
fresh nomination. However, where a member has made a nomination in favour of
the dependent parents after his marriage, such nomination is valid. The unmarried
daughter on her marriage, the minor son on becoming a major, continues to be a
family members and as such the validity of nomination in their favour is not affected
and there is no need to change the nomination, if the member, so desires. Where a
nomination is wholly or partly in favour of a minor, the member may appoint major
person of his family, as guardian of the minor. If, however, there is no person of his
family, he may appoint a person of his choice as guardian for the minor. The
member may modify his nomination at any time by submitting a fresh Form 2
(Revised), but if he has got a family, he has to nominate a person belonging to his
family. A nomination or its modification shall take effect from the date on which it
is received in the Regional/ Sub-Regional Office. In view of this, acceptance or
otherwise of Form 2 does not have any bearing on the validity of the nomination.
However, the prescribed check should be made.
Where a Hindu member nominates two wives or his second wife when his
first wife is alive, such nomination in favour of his second wife is not valid under the
Hindu Marriage Act.
The nomination made by the male member in favour of his wife continues to
be valid even if she remarried after the death of her husband (member).
The nomination made by the employee under the EPFS,1952 shall hold good
for the payment of Assurance Benefit payable to the nominee and nominees under
EDLI , 1976.
If the member has a Family, the person nominated should fall within the scope
of definition of “Family”.
162
A member who is not married or who does not have a living spouse and or
children below the age of 25 years shall nominate a person of his choice. The
nomination should be in favour of one person only. In the event of member acquiring
a family subsequently, the nomination made in favour of a person not falling within
the family shall become void.
Normally, children who attained the age of 25 years are not eligible for
children pension.
However, if the member has no living spouse and all children attained the age
of 25 years, he should nominate any one of his children, irrespective of their age and
marital status to receive the monthly pension.
The eligibility of pension to nominee would arise only when a member who
does not have any living spouse and or eligible child dies while in service or after the
date of exit (before 58 years). Further in the case of death after leaving service,
before 58 years of age, the member should have rendered 10 years eligible service and
should not have availed reduced monthly pension. In case requisite service of 10
years is not there, the nominee shall entitled to ROC only under para 13 (1) of the
EPS, 1995.
Wherever the member, without having eligible members of family, draw
MMP and dies subsequently, his/her nominee is not entitled for pension. Thus, after
commencement of MMP, the nominee is ineligible for pension.
The nomination made by the employee under the EPFS,1952 shall hold good
for the payment of Assurance Benefit payable to the nominee and nominees under
EDLI , 1976.
27
ISSUE OF PF ANNUAL STATEMENT OF ACCOUNTS
The foremost responsibility of the Employees’ Provident Fund Organisation
in the field of Service to Subscribers, apart from timely payment of Provident Fund
amount and other benefits to the members and their beneficiaries, is the prompt and
accurate issue of Annual Provident Fund Statement of Accounts to the members.
Para 73 of the Employees’ Provident Fund Scheme, 1952, stipulates that the
Accounts Section in Regional Office/Sub-Regional Offices should issue an Annual
Provident Fund Statement of Accounts soon after the close of each financial year.
The promptness in compiling the Annual Statement of Accounts of the Provident
Fund member will accelerate the pace of settlement of Provident Fund Accounts and
grant of withdrawal/advance.
benefits are not related to the contributions paid in respect of a member. Hence the
Annual Statement of Accounts is required to be issued to a PF member and should
reflect the correct balance of a member in his PF account and not in respect of his
pension or EDLI account. This position should be explained to the member through
a note on the reverse of Form 23.
For example, the annual accounts issued for the year 2004-05 will reflect the
following:
a. O.B. as on 1.4.2004
ADD: 2) Contribution received for the wages from March,2004 to Feb.2005
ADD: 3) Refund of withdrawals received during 1.4.2004 to 31.3.2005
ADD: 4) Interest at declared rate
LESS: 5) Withdrawal from 1.4.2004 to 31.3.2005
6) C.B. as on 31.3.2005
The software viz. CAMPS 95(Revised) facilitates the job of compiling the
Annual Accounts through computer.
Due date for submission of Form 3A/6A by the Establishment: 30th April of
each year. It is desirable to collect the same through floppy along with hard copy in
respect of the establishment having the membership of 200.
164
1. Form 9 (Revised), duly updated with reference to Form 5 for the period from
March to February.
2. Reconciled and approved Form 24 of the preceding financial year.
3. Form 12A for the period from March to February.
4. Form 3A and 6A of the current Financial year.
5. DCB Register kept in Accounts alongwith the EDP generated report through
CCTS.
6. Withdrawal register alongwith the details of payment from EDP.
7. Transfer in and out registers (both Inter and Intra Office transfers)
8. Payment made from SRF, DRF & UCD.
9. Default position of the establishment in the submission of returns and
remittances of dues and details of Excess/short remittances made.
It is certified that the following checks have been made with reference to
Form-3A & 6A.
CLERK:
VERIFIED AND FOUND CORRECT
DATE:
SECTION SUPERVISOR/ASST. ACCOUNTS OFFICER
To
EDP Section.
FOR THE OFFICE OF EDP SECTION
(A) In case of regular establishment i.e. where the employer has sent
all the returns and remitted the dues upto date.
Please verify –
(i) whether the DCB Register is properly reconciled and item numbers
are verified from the Schedule of receipts and tallied with the EDP
Statement of DCB extracted from CCTS Report.
(ii) Whether Form 3A has been received in respect of all the members
including members who have already left the service/where accounts
settled.
(iii) Whether Form 6A reflects the Contribution in respect of all the
members who have contributed during the financial year. The last
account No. shown in Form 6A should tally with the one given in
Form 9(R), upto February.
(iv) Whether the Form 3A has been prepared on remittance basis.
(v) Where any member has contributed in excess of the statutory rate or
the statutory limit or a member’s Pension contribution is beyond the
wage ceiling. These factors should be verified and noted.
(vi) Whether the non-contributory period of service is properly filled in
Form 3A and wherever there is no wages, the non-contributory period
should be taken as 30 days ( if it occur between the two spells of
wage period).
(vii) Forward the Annual returns alongwith the prescribed documents to
the EDP for generation of Check list. Wherever the Annual Returns
are received in floppy, the hard copy should be received and the
prescribed checks should be exercised before the floppy is sent to the
EDP Centre.
(F) Where there is no compliance for the whole year or where the
Monthly/Annual Returns are not forthcoming from the date of
coverage.
8. “COMPLIANCE”- Definition:
9. “BROAD SHEET” –
The compilation of Annual Accounts is completed only when the ‘Broad
sheet’ is prepared and reconciled and the closing balance is certified by the AAO.
Annual Accounts once compiled can not be revised and any additions/deletions
should be incorporated in the current years account only. There is no question of
provisional issue of Annual Statement of Accounts. PA dues or any arrear dues for
the past period should be included in the current year account with due interest. The
clerks in Accounts Section is required to maintain the prescribed Register for the
168
receipt and disposal of Form 3A & 6A and the progress in compilation of Account of
each establishment.
28
TRANSFER OF PROVIDENT FUND ACCUMULATION
ON GRANT/CANCELLATION OF EXEMPTION
Hitherto, on grant of exemption under Section 17 of the Act, or Para 27/27A of the
Employees’ Provident Funds Scheme 1952, the past accumulations have been transferred
partly in cash and partly in securities.
2. The Central Board of Trustees at its 163rd meeting held on 19.08.2003 has decided
that consequent to grant of exemption or in any other eventually necessitating transfer of
past accumulations to an establishment or trust, 100% of past accumulations be
transferred in cash in all cases. All pending cases are also required to be regulated
accordingly, However, where the requisition for transfers are pending in Headquarters
Office, the decision to transfer 100% past accumulations in cash may be made after
getting specific instructions from Headquarters Office in each individual case.
3. The amount transferred in cash should be invested as per the prescribed pattern of
investment immediately and submit the proof thereof to the Regional Provident Fund
Commissioner.
Main Branch, Mumbai, where the Special Deposit Account of Central Board of
Trustees is being maintained.
4. Statement showing the details of deposits made, interest due, collected, etc.,
as on the date of coverage(Applicability of the Act to the establishment or as on the
date of cancellation of exemption as the case may be) should be submitted in
quadruplicate together with the SDS Pass Book with upto date entries.
5. The interest upto 31st December of the previous year should have been
realized and credited to the account.
6. Copy of the resolution passed by the Trustees for transfer of Special Deposit
Account.
8. After the transfer is effected, SDS Pass Book with due endorsement thereon
should be collected from the transferor branch of the Bank and submitted to the
Regional Provident Fund Commissioner along with photocopy of the Pass Book.
(3) The endorsement should be made only by the authorised Trustees of the
Fund.
(4) Endorsement should be certified by the public Debt Office of Reserve Bank
of India/authority issued the securities, by affixing the seal on the instrument itself.
170
(6) Actual purchase price of the securities should be intimated to this office duly
certified by the area Enforcement Officer of the Employees’ Provident Fund
Organisation.
(8) Securities which have already been notified for repayment and securities
which are in the ‘short period’ i.e. which are due for repayment within a period of
one month cannot be accepted on account of the past accumulations.
(10) Securities purchased after the date of application of the Act should not be
transferred, i.e all accumulation after the date of application of the Act should be
transferred only in cash, by deposit in EPF Account No.1 in State Bank of India.
(11) The details of interest due on securities but not collected beyond the notified
period should be furnished.
(15) In the case of NSC and NPSC, appreciated value will be taken into account
in determining the amount for transfer, in case the difference between face value and
appreciated value has been credited to the members.
(16) Securities etc., to be transferred within thirty days and cash in hand/Savings
Bank Account of the Trust should be transferred within ten days.
171
29
TRANSFER VALUE OF PENSION FUND FROM EXEMPTED TO UNEXEMPTED
OR UNEXEMPTED TO EXEMPTED FUND ON GRANT/CANCELLATION OF
EXEMPTION UNDER EMPLOYEES’ PENSION SCHEME 1995
TRANSFER VALUE:
“TABLE-E
(see paragraph 39-B)
(Transfer of contribution from Employees Pension Scheme, 1995 to exempted or
other pension fund or vice-versa)
1 0.978
2 1.979
3 3.003
4 4.051
5 5.124
6 6.221
7 7.345
8 8.494
9 9.671”
[F.No.S-65012/1/2000-SS-II]
D.S.POONIA,Jt.Secy.
172
FORM 1A
(Please see para 39-B)
Certified that above particulars are correct and the amount claimed are as per
Table E of EPS 1995 against the existing Pension Fund Members of the
_______________ Employees Pension Fund Trust.
---------------------------------------------
---------------------------------------------
---------------------------------------------
---------------------------------------------
Form 1A contd.
Certified that the claim for refund by________________ have been verified
as per Form 3A/7PS and ledger and found to be correct. The claim has been
processed as per Table E of EPS 1995 as under:
Total = _____________________________
3. Certified that full particulars of the claim has been verified with the records
available with this office and Rs.__________________ is recommended for refund
to the Trust namely _________________.
-----------------------------------------------
-----------------------------------------------
-----------------------------------------------
-----------------------------------------------
Note: Past accumulation under EFPS 1971 for the period up to 15.11.1995 is to be
claimed by submitting separate claim for the existing members.
174
Statement showing service & contribution details of employees of M/s._________________________ (For Establishment)
Name of Date of Father’s/ Provident/ Date of Break in Date of Wages Wages as In case of Details of 3A/7PS 3A/7PS Amount
the birth Husband’s Pension joining reckonable joining as on on date of cancellation (NCP) non submitted enclosed payable as
member (Enclose Name Fund EPFS service upto EPS 1995 15.11.95 exemption/ of exemption contributory up to for the per Table E
Form 2) Account 1971 16.11.95 cancellation wage period from which period
No. particulars 16.11.95 to the period for
from date of which it
16.11.95 to exemption/ was not
date of cancellation sent to
cancellation (years/months/ EPFO
(furnish in days)
Form 7PS)
1 2 3 4 5 6 7 8 9 10 11 12 13 14
APPENDIX I
IMPORTANT CIRCULARS
USE OF ASHOKA EMBLEM AS THE OFFICE STAMP OF RECOVERY
OFFICERS
Ministry of Home Affairs has objected the use of Ashoka Emblem as the office
stamp by the autonomous bodies. Headquarters has also taken a serious view of the use of
Ashoka Emblem without any authority and sanction and also directed that the practice of
using Ashoka Emblem as the office seal by some of the Recovery Officers of the
Employees Provident Fund Organisation has to be stopped with immediate effect. The
officers of the EPFO including the Recovery officers shall use only the approved symbol
of the EPFO in their office stamp as well as for letterheads. Any deviation will be viewed
seriously.
Recovery Certificates are issued in respect of all cases of demand raised during the
financial year which remain uncollected as on 31st March of the year, during the first week
of April itself.
Recovery Certificates relate to contributions, damages u/s 14B or interest levied u/s
7Q of the Act. In the Recovery Certificates item-wise details is required to be given as to
the nature of the dues, period of default etc. While issuing the Recovery Certificates care
may be taken to ensure that interest u/s 7Q is calculated up-to the date of issue of the
Recovery Certificate and shown separately by the authorised officer and added to the total
dues. Thereafter, admissible interest u/s.7Q shall be collected by the Recovery Officer
executing the certificate until the date of realization of the dues. This shall be specifically
reported and accounted against each Recovery Certificate.
The Recovery Officer shall show specifically the nature of dues in the challans
while making remittance on execution of the certificate. The Assessing Officer shall
ensure that there is no confusion in accounting, that the interest and damages are
accounted properly and not accounted against the PF dues.
Directions were also issued making it imperative on the part of the supervisory
officers like RPFC-II and RPFC-I to scrutinize the assessment orders, at least eight orders
of each Assessing Officer every month. Out of the eight orders, four were to be selected
by the supervisory officer whereas four were to be submitted by the Assessing Officer as
per his choice. This should be communicated to the Head Office for every month before
10th of the subsequent month. Except from a very few regions, such information is not
received in the Head Office, which has been viewed seriously by the Central Provident
Fund Commissioner.
All such cases which are pending as relaxed under Para 79 for more than two years
may be reviewed and their proposal may be submitted to Head Office along with all
supporting documents.
In case the establishment does not satisfy all the condition required for exemption,
the matter for withdrawal of relaxation be considered after following the due procedure as
laid down in this regard without any delay.
The expenses towards recovery exercises are to be recovered from the defaulters
and all the field offices shall have a uniform approach to the same as detailed below:
The spirit behind the scheme is to provide some additional social security to
the family of the member in the form of insurance if he dies in service while being a
member of the Fund. In case of a missing member it cannot be established that
member died while in service.
The Original pension in the case is Rs.250/- and Return of Capital amount is
accordingly Rs.25,000/. However the member aged 18 years and on his death the
reduction @Rs.1000/- for every year by which the age falls short of 50 years (32 years)
amounts to Rs.32000/-. Therefore the total amount of Return of Capital benefit is
Rs.25000/-. Whereas the total amount to be deducted comes to Rs.32000/-.
Wherever on the application of the above provision results in minus payment, the
option for ROC in such cases may not be entertained.
The member is entitled to withdrawal benefits only in respect of the period for
which the contributions are received.
It is reiterated that while considering all such cases the guidelines issued by this
office vide circular No.Pension.3/8/Orissa/96-97 dated 8.1.02 should strictly be followed.
The employees whose salary as on 16.3.96 was above statutory limit or exceeded
the wage limit after 16.3.96, but remittances made by the employer to A/c No.10 is upto
wage ceiling and not on such higher wages drawn by the employee, such workers can not
be allowed now to contribute at higher wages. If any workers wages was over and above
the salary ceiling and whose options were (exercised) forwarded to RPFC but contribution
were not on such higher wages drawn by them, retrospective remittance cannot be
allowed. The establishment was not expected to forward the option on piecemeal at their
discretion, if any worker has exercised option to contribute on such higher salary with
retrospective the same cannot be allowed. In some cases it is revealed that though the
workmen salary was over and above the wage ceiling prescribed under EPS, 1995 but
contribution were restricted to the wage ceiling up to 31.5.2001 and some have exercised
option to contribute on such higher salary w.e.f. 1.6.2001 to avoid back period
contributions. Such practice should not be allowed.
All the assessing officers are requested to follow the following drill to tackle the
defaulters and arrest the growth of arrears:
(i) Enquiry under section 7A should be initiated on month to month basis against all
persistent and chronic defaulters. Officer-in-charge shall ensure the assessment of dues on
monthly basis against all such defaulters;
(ii) In case of default in payment of employees’ share deducted from the wages of the
workers, the assessing officers shall ensure that the police complaint u/s 405 explanation
(1) are filed on monthly basis without fail. It shall be the responsibility of the RC(C&R)
and Officer-in-charge of the SROs/SAOs to ensure the logical end as per law to all such
complaints filed with the police authorities.
(iii)In case of failure on the part of the establishment to remit the dues as per the time
given in the Order under section 7A, the Prosecution cases u/s 14 of the Act shall be
launched against the estts. and its’ responsible persons. It shall be the responsibility of
Officer-in-charge in case of SROs/SAOs and of RC(C&R) & RC(I) in case of ROs to
ensure that the Prosecution Cases are filed against the persistent and chronic defaulters. It
is to clarify that the establishments which are in default of more than 10 lakhs shall come
within the definition of persistent and chronic defaulters. The estts. which fail to remit the
dues for three months in the financial year shall also be treated as the persistent and
chronic defaulters. These instructions are in modification of the instructions issued vide
Circular No. PQ Cell/1(1)87/Vol-I dated 12.5.1993 wherein the Regional Commissioners
are restrained from prosecuting the sick estt. registered with BIFR without prior approval
of Central Office. Henceforth, no approval of Head Office is required.
182
(iv) The Recovery Officers and the Assessing Officers shall invoke all the actions
provided in Section 8B to 8G of the Act for the realization of dues. Any failure on the part
of the concerned officer to invoke timely recovery action such as attachment and auction
of movable and immovable property, arrest and detention in the civil prison of the
defaulting employer and appointment of receivers shall be viewed seriously. It is to
emphasise that all movable and immovable properties attached uptil now should be put up
for auction for the realization of dues. There should not be any un-reasonable delay in
putting the property to auction after attachment of the same. RC (I) of the region and
Officer-in-charge shall review the cases of establishments in more than 10 lakhs on
fortnightly basis and record their observations in the concerned file of the estts.
(v) In case of delay in remittances of dues, assessing officers shall, besides timely levy &
recovery of damages u/s 14B of the Act shall ensure collection of interest u/s 7Q of the
Act as well for delayed payment including delay in remittances of damages after the expiry
of time granted in the 14B Order.
1. AAO in charge of Accounts Group may authorize claims up to Rs.10000/- out of UCD
accounts provided the same is counterchecked by another AAO.
2. APFC may authorize claims up to Rs.50000/- out of UCD account provided the same is
counterchecked by another APFC.
3. Claims of Rs.50000/- and above out of UCD accounts may be authorized by OIC or RC
(F&A) only.
It is however, reiterated that all the existing procedures provided in the Manual of
Accounting Procedure and instructions issued by HQ be scrupulously followed while
processing such claims out of UCD Accounts.
[vide H.O.Letter No.WSU/5(1)2003/Clar/71618 dated 28.12.2004]
The Leave encashment salary comes under the ambit of basic wages for payment of P.F.
contributions vide circular No.Co-ord/3(4)2002 clarification/7731-2844 dated 6th May,
2004 and Circular No.C-I/(20)(1)2003/Misc/DL/72311 dated 3.3.2003. For uniform
application, it has been decided that Leave Encashment paid on or after 1.10.1994 i.e.
the date of the judgement of the Hon’Ble High Court of Bombay shall be liable for
Provident Fund deductions.
The widow pensioner under EPS, 1995 shall not be required to submit Non-
remarriage certificate every year, instead an undertaking to the effect that, in the event of
her remarriage she would report this fact to the Pension disbursement agency/EPFO
immediately, shall be taken at the time of commencement of pension. The modified
Proforma of Non-re-marriage certificate is annexed. However, widower pensioner will
continue to submit non-remarriage certificate as usual in the month of November every
year. All widow Pensioners may also be asked to provide the certificate in modified
Proforma this year, so that they will not be required to furnish Non-remarriage certificate
from next year.
Certified that I have seen the pensioner whose details are given above and that he/she is
alive on this date.
Place:
Date:
Signature of the Manager with Bank Seal
I hereby declare that I have not re-married and I undertake to report such an
event promptly to the Pension Disbursing Agency/EPFO.
Date:
Signature/Thumb impression of pensioner
Place:
184
I certify to the best of my knowledge and belief that the above declaration is correct.
Place: Name_____________
Date : Designation____________________
Forwarded to Regional P.F. Commissioner through Link Branch. One copy of the
above certificate is retained.
(1) (i) This Scheme may be called the Employees’ Provident Funds
(Amendment) Scheme, 2007.
(ii) It shall come into force on the date of its publication in the Official
Gazette.
(2) In the Employees’ Provident Funds Scheme, 1952, in paragraph 60, after
the second proviso to clause (b) of sub-paragraph (2), the following proviso shall be
added, namely:-
“Provided also that the rate of interest to be allowed on claims for refund for the
broken currency period shall be the last declared rate on Employees’ Provident Fund
and if the rate declared for any current year happens to be less than the previous year’s
declared rate, then it would accrue as bonus to the outgoing members and it shall be
incorporated into calculation for deriving the current year’s rate of interest at the end of
the year and the claims settled under this proviso shall be final.”