EPF and ESI registered businesses have recently received a non-compliance notice, with the subject titled “NO Complaince filled form registration till JUN-2023”. Know what this notice means, why has it been sent, and how to file an accurate response for it. Consult our experts directly for professional assistance in filing the response timely and accurately.
The Employee Provident Fund (EPF) Scheme is a crucial social security initiative of the Indian Government to ensure the safety and welfare of employees in commercial establishments. Besides, upholding the well-being of employees, these schemes also make sure that employers fulfill their obligations and responsibilities towards their workforce. In this blog, we’ll understand how to deal with intricate compliance issues related to the EPF Scheme in the context of a recent notice sent by the respective regulatory organization (EPFO). So, let’s begin by understanding the contents of the notice first.
Understanding the EPFO Notice
This is the sample of the EPFO Notice sent to all the registered establishments as of 15th December 2023. The core message revolves around the failure of the concerned establishment to remit dues since the coverage period. The term “coverage” here refers to the eligibility of the establishment for complying with the EPF and ESI Regulations. The notice serves as a mere reminder for the employers to review their compliance requirements and statuses to remit their dues timely. Accordingly, they are expected to respond to the notice as soon as possible.
Who is Eligible to Comply with EPF / ESI Regulations?
Establishments incorporated before 15th February 2020 have been granted EPF and ESI registrations only after exceeding the threshold limits of 20 and 10 employees respectively. Thus, these establishments must comply with the EPF and ESI regulations promptly. However, according to the Press Release issued by the Ministry of Labour on 6th March 2020, New Public, Private, and One Person Companies established after 15th Feb 2020 and those that have been granted EPF and ESI registrations regardless of their employee count, are not required to file PF or ESIC Return until their number of employees reaches the threshold limit of twenty in case of PF and ten in case of ESIC.
These registrations have been granted through the “Integrated SPICE Plus” applications during the incorporation itself. Since the employee threshold limits were not considered while granting the registrations, it was clarified that such establishments, though registered, need not comply with the EPF and ESI regulations unless they exceed the threshold limits. The ESIC further clarified that such establishments have to mark themselves dormant every six months to continue with their non-compliance status until they exceed their threshold limits.
How to Respond to the EPFO Notice?
To accurately respond to the EPFO Notice, registered establishments must first analyse their compliance requirements and status. The compliance requirements and statuses depend on two factors. Firstly, the date of incorporation of the entity, and secondly, the employees count. Remember, organizations are only eligible for compliance if they exceed the prescribed employee count, which is 20 in case of PF compliance and 10 in case of ESI compliance. Accordingly, only two scenarios are possible.
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Scenario 1: NON-COMPLIANT |
Case 1: If incorporated before 15th Feb 2020 and the establishment has obtained PF number, they must comply and file PF Returns. If the establishment has been filing the return and paying the govt dues, then there is nothing to be done with respect to the generic notice of non compliance. |
Case 2: If incorporated after 15th Feb 2020 and the establishment has obtained PF number, the employee strength will determine the compliance status. As soon as the employee strength exceeds 20, PF compliance will be mandatory. |
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Scenario 2: COMPLIANT |
Where the establishment is filing its PF return, there is no impact of aforesaid notice and the same may be ignored. |
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Let’s discuss each scenario separately. A registered business can be non-compliant with EPF / ESI Regulations only if their compliance status is active. For this, consider the incorporation date and employee count. Businesses incorporated before 15th Feb 2020 shall have an active compliance status, no matter what. So, if non-compliant, they must immediately remit their dues to avoid penalties.
On the other hand, businesses incorporated after 15th Feb 2020 may or may not have an active compliance status based on their employee count. For EPF compliance, this count must exceed 20 whereas for ESI compliance it must exceed 10. In case the employee counts are below this limit, the concerned entities will not have to comply, even if registered under the EPF and ESI schemes. However, a clarification in this regard must be filed in response to the notice sent by the department. If the employee count exceeds the threshold limit, the accurate response to the notice will be completing the compliance as soon as possible. Note that there is no need to file any response to the notice if you’ve already complied with the regulations timely.
How Can We Assist?
At Setindiabiz, we recognize the uncertainties that come with receiving an EPFO non-compliance notice. Our experienced team is ready to provide you with a thorough consultation tailored to your specific scenario. Whether you’ve already settled the dues, or are struggling to do so, we offer actionable insights to guide you through the process.
If you decide to seek professional assistance in responding to the EPFO notice, our team excels in navigating the complexities of EPF and ESI regulations. We streamline the reply-filing process, ensuring your response is not only timely but also strategically crafted to address the concerns raised by the EPFO. Trust us to be your reliable compliance partner and we will handle your regulatory challenges confidently.
When it comes to EPF and ESI regulations, compliance is not just a legal obligation—it's a pledge to employee well-being and business sustainability. As you address the nuances of non-compliance notices, remember that staying informed and taking prompt actions are pivotal. Whether an established entity or a new company, the journey to compliance is an investment in your business's stability and growth. By navigating these challenges with diligence, you forge a path toward a secure and prosperous future for both your business and employees.
FAQs
Q1: I received an EPFO non-compliance notice. How Should I respond?
Assess your compliance status first. First, consider your establishment’s incorporation date and employee count. If incorporated before 15th Feb 2020, compliance is active, and immediate action is needed to remit dues. For entities established post-15th Feb 2020, compliance is inactive unless the employee count surpasses 20 for EPF and 10 for ESI. In that case, a clarification needs to be sent to the Department.
Q2: My company was registered after 15th Feb 2020. Should I comply with EPF & ESI regulations?
If your employee count is below the prescribed limits (20 for EPF, 10 for ESI), compliance status is inactive. For ESI, there is an additional requirement to make the ESI registration status dormant. However, if the employee count exceeds the threshold, initiate compliance at the earliest.
Q3: Can I ignore the EPFO notice if my compliance is already done?
If your compliance is already done, there is no need to respond to the EPFO & ESIC non-compliance notices.
Q4: What if I do not comply with EPF Regulations?
Non-compliance with PF regulations in India may result in penalties, including damages for late remittance, interest on late payments, and potential legal proceedings leading to fines.
Q5: When should I apply for the Dormant status of the ESI Registration Number?
If your organization has the ESI registration but has not exceeded the employee count threshold for ESI compliance, make sure you apply for its dormancy immediately after its incorporation. Also, make sure you keep on extending this period, 6 months at a time, till your employee count exceeds the limit of 10.