What is PF Return Filing?
PF return filing refers to the mandatory monthly submission of an Electronic Challan cum Return (ECR) by employers to the Employees' Provident Fund Organisation (EPFO).
This return contains details of employee wages, their respective PF contributions, and the employer's contributions for a particular month.
Along with filing this return, employers must also remit the corresponding PF contributions to the EPFO.
What is an Employee Provident Fund (EPF) Scheme?
The Employee Provident Fund (EPF) is a social security scheme managed by the EPFO.
It's a retirement savings plan where both the employee and the employer make regular contributions.
These contributions accumulate over time and earn interest, providing a lump sum amount to the employee upon retirement, resignation, or in certain other specified circumstances.
The EPF scheme is designed to offer financial security to employees in the organized sector.
PF Contribution Breakdown The standard contribution rate for both employee and employer is typically 12% of the employee's "basic wages" (basic salary + dearness allowance + retaining allowance).
Employee's Contribution: 12% of Basic Wages: The entire 12% deducted from the employee's salary goes into their EPF account (Account No.
1).
Employer's Contribution 3.67% of Basic Wages: Goes into the employee's EPF account (Account No.
8.33% of Basic Wages: Goes into the Employee Pension Scheme (EPS) account (Account No.
10).
This contribution is capped at a maximum of Rs.
1,249.50 per month, as it is calculated on a wage ceiling of Rs.
15,000.
15,000, the EPS contribution is still capped at Rs.
1,249.50 (8.33% of Rs.
15,000).
0.5% of Basic Wages: Goes towards the Employees' Deposit Linked Insurance (EDLI) Scheme (Account No.
21).
This is capped at a wage ceiling of Rs.
15,000, meaning a maximum of Rs.
75 per month.
0.5% of Basic Wages (approximately): Towards EPF Administrative Charges (Account No.
2).
This has a minimum monthly payment of Rs.
75 for establishments with no contributory members and Rs.
500 for those with contributory members.
0.001% of Basic Wages (approximately): Towards EDLI Administrative Charges (Account No.
22).
This is subject to a minimum of Rs.
2.
Table view Account Type Contribution Rate Goes To Notes Employee's EPF Account 3.67% of Basic Wages EPF Account (A/c No.
1) - Employee's Pension Scheme 8.33% of Basic Wages EPS Account (A/c No.
10) Capped at Rs.
1,249.50/month (on Rs.
15k ceiling) Employees' Deposit Linked Ins.
0.5% of Basic Wages EDLI Scheme (A/c No.
21) Capped at Rs.
75/month (on Rs.
15k ceiling) EPF Administrative Charges 0.5% of Basic Wages EPF Admin Charges (A/c No.
2) Min.
Rs.
500 for contributory establishments EDLI Administrative Charges 0.001% of Basic Wages EDLI Admin Charges (A/c No.
22) Min.
Rs.
2 In specific cases, such as establishments employing fewer than 20 persons or certain declared sick industries, the contribution rate for both employee and employer may be reduced to 10% each.
Who Needs to File PF Returns?
Any establishment covered under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, is legally obligated to file PF returns.
This Act generally applies to: Every factory engaged in any industry specified in Schedule I, or any other industry notified by the Central Government, and employing 20 or more persons.
Any other establishment employing 20 or more persons or a class of such establishments which the Central Government may, by notification in the Official Gazette, specify for this purpose.
Establishments that employ fewer than 20 persons but have voluntarily opted for PF registration.
Once an employee becomes a PF member, they cannot opt out, irrespective of their future salary increments.
Benefits of Timely PF Return Filing for the Employer Beyond legal obligation, timely PF return filing offers several advantages for employers: 1.
Legal Compliance Adhering to PF regulations ensures your business stays compliant with the law, avoiding penalties, legal disputes, and potential prosecution.
This demonstrates responsible corporate governance.
2.
Tax Advantages Both employer and employee contributions to PF are eligible for tax benefits.
For Employers: Contributions made to EPF by the employer are deductible as a business expense under the Income Tax Act.
For Employees: Employee contributions are eligible for deduction under Section 80C of the Income Tax Act, and interest earned and maturity proceeds are tax-exempt under certain conditions.
3.
Organized Record-Keeping The ECR system facilitates systematic recording of employee contributions and wages, leading to better payroll management and organized HR data.
This streamlined approach to PF return filing simplifies audits and internal record management.
4.
Enhanced Brand Image Timely PF compliance showcases an employer's commitment to employee welfare and financial security.
PF Return Filing Due Dates Missing the PF return filing due date can lead to significant penalties.
Here are the key dates: Return Type Return Period Due Date for Filing Remarks Monthly PF Payment & ECR Filing Monthly (1st to End of Month) On or before the 15th of the following month Deposit employee and employer PF contributions and file ECR; e.g., June wages due by July 15 April to March (FY) By 30th April of the following financial year Annual reconciliation of monthly contributions and reporting System-generated from monthly ECR data; employers must download and verify what is the last header on the last column frst row Documents Required for PF Return Filing To ensure a smooth PF return filing process, keep the following documents and information readily available: Document Name Purpose/Description Who Provides It PF Challan Payment Receipt Proof of PF contribution payment made to EPFO Employer / Bank Electronic Challan cum Return (ECR) Monthly return containing employee PF contribution details Employer / EPFO Portal Employee Details List of employees with PF account numbers, wages, and contributions Employer’s HR/Payroll Department Form 3A (Individual Ledger Statement) Shows monthly contribution details per employee System-generated from EPFO Form 6A (Annual Contribution Statement) Consolidated annual contribution statement System-generated from EPFO Bank Statements To verify PF payments Employer / Bank Salary Register / Payroll Report Details of employee wages for the month Employer’s HR/Payroll Department Attendance Records To cross-verify employee presence and wage details Employer’s HR/Payroll Department Authorization Letter (if applicable) For third-party filing of PF returns Employer / Authorized Consultant Process for PF Return Filing Online (ECR Method) The entire PF return filing process has been digitized through the EPFO Unified Employer Portal, streamlining monthly submissions.
This is how to file monthly PF returns online.
Step 1: Log in to the EPFO Unified Employer Portal Access the EPFO Unified Employer Portal using your establishment's login credentials (Employer ID and password).
Ensure your digital signature certificate (DSC) is registered and configured, as it's often required for file validation.
You need to generate an Electronic Challan cum Return (ECR) text file from your payroll software or manually as per the EPFO-specified format.
This file contains: Member's UAN (Universal Account Number) Member's Name Gross Wages (basic + DA) EPF Contribution (Employee Share) EPS Contribution (Employer Share - Pension) EPF Contribution (Employer Share - Provident Fund) NCP Days (Non-Contributory Period Days - days for which no wages were paid) Date of Joining/Leaving (if applicable) Reason for Leaving (if applicable) Step 3: Upload the ECR File On the EPFO portal, navigate to the "Payment" menu and select "ECR Upload." Choose the correct "Wage Month," "Salary Disbursal Date," and "Rate of Contribution" (12% or 10%).
Then, browse and select your prepared ECR text file for upload.
This step is crucial for compliance.
Step 4: Validate the ECR File After uploading, the system will validate your ECR file against predefined conditions.
If there are any errors, the system will display them, and you will need to correct the ECR text file and re-upload it.
If successful, you will see a "File Validation Successful" message.
Step 5: Generate the TRRN (Temporary Return Reference Number) Upon successful validation, the system generates a Temporary Return Reference Number (TRRN) for your uploaded ECR file.
Note this number down.
Click "Verify" to proceed.
Step 6: Prepare and Finalize the Challan Click on "Prepare Challan" to generate the ECR summary sheet.
Here, you will see the calculated amounts for EPF, EPS, EDLI, and administrative charges (Account Nos.
2, 21, and 22).
You might need to manually input the administrative charges for Account Nos.
2 and 22 if they are not auto-populated correctly.
Verify all amounts carefully.
Once satisfied, click "Finalize." You can also download the acknowledgement and receipt file at this stage.
Step 7: Make the Payment After finalizing the challan, click the "Pay" button against the relevant TRRN.
Select "Online" as the payment mode and choose your desired bank from the list.
You will be redirected to your bank's internet banking portal.
Log in and complete the payment transaction.
Step 8: Download Confirmation After successful payment, download the payment receipt (challan copy) from your bank's portal and the EPFO portal.
This confirms your PF return filing and payment.
This completes the monthly PF return filing and payment process.
Key PF Forms While PF return filing is largely electronic now, it's helpful to understand the traditional forms and their current relevance: Form Number Name of Form Current Role / Purpose Form 1 Declaration Form Used by employees to declare personal details and nominate beneficiaries.
Form 2 Nomination Form To nominate family members for PF benefits.
Form 3A Individual Ledger Statement System-generated monthly statement showing employee-wise PF contributions.
Form 5 Employee Contribution Return Used for claiming PF refund on exit or withdrawal.
Form 10 PF Withdrawal/Advance Claim Used by employees to claim PF withdrawal or advance.
Form 11 New Employee Declaration Submitted by new employees to declare PF account details or apply for a new PF account.
Form 13 PF Transfer Form Used to transfer PF balance from one PF account to another.
What Happens if You Delay Filing Your PF?
Delaying PF return filing or payment can lead to significant financial penalties and legal repercussions for the employer.
1.
Interest on Late PF Payments (Section 7Q) The Employees' Provident Fund Organisation (EPFO) levies a simple penal interest of 12% per annum on the outstanding amount for each day of delay in remitting PF contributions.
This interest is mandatory and applies from the due date until the actual date of payment.
2.
These damages are calculated as a percentage of the arrears and increase with the duration of the delay.
Here's the penalty structure: Type of Delay Consequence Penalty/Interest Applicable Late PF Contribution Payment Interest is charged on delayed payment to EPFO.
12% per annum interest under Section 7Q of the EPF Act.
Late Filing of ECR (Monthly Return) Non-submission of ECR can lead to a legal notice and disqualification.
Repeated Delays or Willful Default Inspection, audit, and potential prosecution by EPFO.
Risk of asset attachment.
Full penalties under Sec 7Q & 14B, plus potential fines and imprisonment.
Non-payment or Avoidance Can lead to imprisonment and fines.
Up to Rs.
5,000 per employee plus prosecution under the EPF Act.
Damages for Default (U/S 14B) Additional penalty over interest for willful default.
5% to 100% of arrears, depending on the duration of delay Delay up to 2 months Late payment 5% per annum penalty Delay between 2 and 4 months Increased penalty 10% per annum penalty Delay between 4 and 6 months Higher penalty 15% per annum penalty Delay exceeding 6 months Maximum penalty; legal action possible 25% per annum penalty (may go up to 100%) Any delay Interest on the unpaid amount 12% per annum simple interest until payment is made Note: These are indicative rates and can be subject to change by EPFO notifications.
The maximum damages cannot exceed 100% of the arrears.
Connect with an expert to get a clear understanding of the rates.
Difficulty in Obtaining Loans: Banks and financial institutions often check PF compliance records before sanctioning loans.
PF Return Filing Costs The direct costs associated with PF return filing are primarily the contributions themselves, along with certain administrative charges levied by EPFO.
15,000 Basic Salary) Payable Amount (Rs.) EPF Administrative Charges 0.50% of basic wages (A/c No.
2) Rs.
500 per contributory month / Rs.
75 if no contribution 0.5% of Rs.
1,50,000 = Rs.
750 Rs.
750 EDLI Administrative Charges 0.001% of basic wages (A/c No.
22) Rs.
2 minimum 0.001% of Rs.
1,50,000 = Rs.
1.5 → Rounded up Rs.
2 EDLI Contribution 0.50% of basic wages (A/c No.
21) No minimum 0.5% of Rs.
1,50,000 = Rs.
750 Rs.
750 Total EPFO Filing Charges Sum of above – Rs.
750 + Rs.
2 + Rs.
750 Rs.
1,502 Professional Fee (Consultant) Rs.
1,000 – Rs.
5,000 (based on scope & team size) Varies by service provider Avg.
Rs.
2,000 (indicative) Rs.
2,000 (approx.) Total Cost with Consultant – – Rs.
1,502 + Rs.
2,000 Rs.
3,502 (approx.) Connect with Easyfilings and let our experts handle the legal hassle while you grow your business.
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