If you employ people in India, you must be aware of the term EPF and its compliance. The Employees’ Provident Fund (EPF) is a long-term savings scheme that helps employees build a safety net for retirement. It is supervised by the Employees’ Provident Fund Organisation (EPFO), which ensures that both employees and employers follow the rules under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952.
For employers, EPF compliance is about more than just paperwork. It’s a legal obligation — every eligible business must register, deduct contributions, deposit them on time, and file regular returns. For employees, understanding how EPF works helps you make sure that your money is being properly credited and remains safe for the future.
EPF Compliance Checklist
Who comes under the ambit of EPF?
The EPF Act, 1952, applies to all establishments that employ 20 or more people. However, ineligible organisations can also choose to register voluntarily. Once a company registers under EPFO, compliance becomes mandatory even if the number of employees later falls below 20.
Employers have to register their establishment within one month of reaching the eligibility limit. The registration process requires the business to submit details like its PAN, address, nature of work, number of employees, and the identity proof of owners or directors. Once approved, the EPFO issues an Establishment Code Number, which acts as a unique identifier for future filings.
Every employee covered under the scheme must have a Universal Account Number (UAN), which is a permanent identification number that links all of their PF accounts across jobs.
Monthly Compliance Duties
Once the business is registered, employers must carry out the following actions every month:
- Calculate Contributions: The standard rate is 12% of the employee’s basic wages + dearness allowance. The employer contributes the same amount, though part of it goes toward the Pension (EPS) and Insurance (EDLI) schemes.
- Deposit the Amount: Contributions for each month must be deposited with the EPFO by the 15th day of the following month. Any delay attracts interest and penalties.
- File the ECR (Electronic Challan-cum-Return): The ECR is an online return that contains employee-wise details like name, UAN, wages, and contribution amount. It must be filed every month on the EPFO portal.
- Maintain Employee Data: Employers must maintain accurate and verified employee details, including UAN, Aadhaar, PAN, and bank account numbers.
- Reconciliation: Before submitting the ECR, cross-check payroll records with contribution data to avoid mismatches or rejections.
Annual and Periodic Requirements
Apart from monthly compliance, employers have to file specific reports annually:
- Form 3A: It is a detailed statement showing monthly contributions for each employee during the year.
- Form 6A: It is a consolidated statement for the entire establishment.
- Form 11: It is a declaration form for all new employees to confirm their previous membership status.
Employers must also process transfer or withdrawal requests when employees leave or change jobs, ensuring that their PF account is updated with an exit date.
Record-Keeping and Inspection Readiness
EPF compliance doesn’t end with filing returns. Employers have to keep all relevant documents ready in case of inspection by EPFO officers. These include:
- Attendance and wage registers
- Payment proofs of the monthly challans
- Employee nomination forms
- Copies of filed returns
- Details of any inspection reports or correspondence
Timelines and Penalties
Deadlines in compliance are as important in a job.
- Deposit deadline: 15th of the following month.
- Late payment: Interest at 12% per annum on delayed contributions.
- Damages: Can range between 5% and 100% of the unpaid amount, depending on the period of default.
Employees’ Mini Checklist
While employers handle compliance, employees should also keep a close eye on their own accounts.
- Check that your employer has registered under EPFO and that you’ve been allotted a UAN.
- Link your Aadhaar, PAN, and bank account with your UAN to prevent claim delays.
- Log in to the EPFO portal periodically to ensure that monthly contributions are being credited.
- Update your nomination details online so that your family members are protected.
- When you change jobs, transfer your EPF account rather than opening a new one — it keeps your savings and pension benefits continuous.
How to File EPF Compliance – Step by Step
Step 1: Register Your Establishment
Start by creating an account on the EPFO Employer Portal or through the Unified Shram Suvidha Portal. Enter your establishment’s details, upload the required documents, and authenticate using a digital signature. Once the application is approved, you will receive an Establishment Code Number that allows you to log in to the EPFO system.
Step 2: Add Employee Details
For every new hire, check whether they already have a UAN from a previous job. If yes, link that UAN to your establishment. If not, generate a new one. Collect all relevant KYC documents, such as Aadhaar, PAN, bank details, and a filled-in Form 11 for declaration and nomination.
Step 3: Calculate Contributions and Deductions
At the end of each month, calculate the EPF contribution based on each employee’s basic salary plus dearness allowance. Deduct 12% from the employee’s salary and contribute an equivalent amount as the employer’s share.
Of the employer’s 12%, 8.33% goes toward the Employees’ Pension Scheme (EPS), and the remaining 3.67% is deposited into the EPF account. Additional administrative charges may also apply.
Step 4: Generate and Upload the ECR
After verifying all data, generate the Electronic Challan-cum-Return file in the prescribed format. This file includes employee UANs, wages, and contribution amounts. Upload it on the EPFO portal, verify, and make the payment online through Net Banking, NEFT, or RTGS.
Once the payment is completed, download the receipt or acknowledgement and store it with your monthly records.
Step 5: File Annual Returns
At the end of the financial year, prepare and submit Forms 3A and 6A. These serve as a summary of the total contributions made for each employee and the organization as a whole. Always verify data before submission to avoid discrepancies during audits.
Step 6: Manage Exits and Transfers
When an employee leaves the organization, update their exit details on the portal immediately. If they join another company, ensure the transfer of their EPF account using Form 13 or the online transfer facility. A prompt update prevents delays in pension or withdrawal processing.
Step 7: Conduct Periodic Internal Audits
Establish a compliance calendar to remind the HR or accounts team of monthly and annual deadlines. Reconcile EPFO data with internal payroll regularly. Any errors in UAN, Aadhaar, or contribution figures should be corrected immediately to avoid future disputes.
What Happens if You Don’t Comply?
Ignoring EPF obligations can lead to serious consequences. Late payments attract not just interest but also damages. Persistent defaulters may face legal prosecution under the EPF Act. Beyond penalties, non-compliance damages an organization’s credibility and employee trust.
For employees, the impact is even more direct; the delayed or missing contributions mean a smaller retirement corpus and possible loss of pension benefits. Hence, both parties must treat EPF obligations as a shared responsibility rather than a mere formality.
Conclusion
EPF compliance may sound technical, but it is actually a well-structured system once you understand the routine. For employers, it is about discipline in registering on time, making accurate deductions, and submitting reports within the deadline. For employees, it’s about staying informed and ensuring that your savings are growing month after month.
By maintaining transparency and consistency, both employers and employees can make the most of the EPF system. It not only secures your financial future but also builds a culture of responsibility and trust within the workplace.
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