Retirement fund body EPFO has decided not to impose any penalty for delay in payment of employees’ provident fund contributions by firms during the nationwide lockdown.

Since the imposition of lockdown on March 25 by the government to contain the COVID-19 spread, businesses have been facing liquidity or cash crunch, leading to difficulties in paying their mandatory provident fund dues.

“During the lockdown period, we are not going to impose any damages (penalty). This is our pro stakeholder/business/employer attitude which we are following,” Employees’ Provident Fund Organisations (EPFO) Central Provident Fund Commissioner Sunil Barthwal said during a webinar organized by industry body PHDCCI on Friday.

The EPFO has a provision of charging damages or penalty from the employers who are unable to deposit PF contributions as mandated under the EPF Scheme 1952.

Employers are required to deposit dues on a month’s salary by the 15th of the next month. However, they get 10 days of grace for payment after that.

Earlier on April 30, the EPFO allowed employers to file monthly EPF returns without making simultaneous payment of dues, which gave relief to about 6 lakh firms amid the lockdown.

Under the scheme, employers are required to file employees’ provident fund returns and make payment of dues simultaneously.

EPF returns have details about employees’ and employers’ contributions towards the social security scheme run by the EPFO.

During the ongoing coronavirus-induced lockdown, businesses are not able to function normally and are facing liquidity issues or cash crunch to pay their statutory dues even though they are retaining the employees on their rolls, labor ministry had said in a statement on the decision.

Barthwal also told the industry representatives during the webinar that the government’s decision to cut employers’ and employees’ PF contributions to 10 percent each from the existing 12 percent would be implemented in May month’s salaries.

“Soon notification is going to be out…May month’s salaries would be due in June. So we will apply it on the May month salaries,” he said.

Earlier this week, Finance Minister Nirmala Sitharaman had announced a reduction of statutory provident fund contribution by both employers and employees to 10 percent of basic wages from the existing 12 percent for the next three months.

The decision was taken to facilitate more take-home salary for employees and give relief to employers in payment of PF dues, resulting in liquidity ease of Rs 6,750 crore.

The decision is expected to benefit 4.3 crore employees and 6.5 lakh employers reeling under liquidity crunch due to COVID-19 lockdown.

Without divulging details about the type of claims and time period, Barthwal said as many as 23 lakh claims were settled with the disbursal of Rs 8,000 crore.

Earlier on March 28, the EPFO had allowed formal sector workers under its ambit to withdraw a non-refundable advance from their retirement savings to deal with hardships due to lockdown.

Under this provision, non-refundable withdrawal to the extent of the basic wages and dearness allowances for three months or up to 75 percent of the amount standing to member’s credit in the EPF account, whichever is less, is provided.

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