EPF Challan
There is a receipt that is generated when the payments are made by an employee.
It is important to know about the different aspects of the challan as this helps give clarity to you about your payments. It is best to know what the data represents.
Fields in the EPF challan
If you have seen the EPF challan, you may have some questions about what those fields actually stand for and how they are to be filled. What follows is an explanation of these fields and the data they represent.
- Establishment code no: This is the code that is assigned to the company to identify it. It is unique to each establishment and is generally mentioned in the PF account number.
- Paid by cheque/cash: This is a bit obvious as it refers to the mode of payment chosen by the employer.
- Dues for the month of: Here the employer can indicate the month or months for which they are making the payments on behalf of the employer and the employee.
- Total number of subscribers and total wages due: This will refer to the number of people who have actually signed up for the EPFO scheme.
- Account 1: Deposits made under A/c 1 refer to payments made towards EPF and is inclusive of both employer and employee contributions.
- Account 10: This is a section where contributions to pension funds are mentioned.
- Account 21: This is the part that deals with the Employee Deposit Linked Insurance and contributions made towards it.
Particulars in the EPF Challan
Particulars are the table where all the various amounts are mentioned in front of the appropriate heading.
- Employers share of cont : This is the total amount that the employer is paying for the specified period.
- Employees share of cont : This will be the total amount that is being contributed by the employee towards the EPF for the specified period.
- Admin charges : These are the administration charges for the EPF management.
- Insp charges : Inspection charges are those that are levied on contributions made towards the Employee Deposit Linked Insurance scheme.
- Penal damages : Penal damages refer to any penalties that the employer may have to pay as a result of late remittance of EPF contributions.
- Misc payments : This will contain the details of any miscellaneous payments that are being paid by the employer for the contributions for the period specified.
Below the particulars is the segment where the employer fills in details of the total amount that needs to be remitted, the name of the establishment and its address. It also contains the fields for the depositor to sign the challan and the details of the cheque or demand draft being used to make the payment.
The last bit of information is on the bottom right hand side of the challan and is meant for the bank to enter its acknowledgement of the payments.
Advantages of EPF
As you know, the Employee Provident Fund (EPF) is a scheme that has been put in place to help employees create some savings throughout the duration of their service years. This scheme requires that employees and employers contribute a specific sum towards PF.
For the employee it is not a matter of concern since the employers are tasked with deducting and depositing said amounts in EPF accounts but if you are an employer then you will need to know how to understand the receipt that is generated when the payments are made. It may look rather confusing at first glance but it is actually very easy to understand it.
FAQs on EPF Challan
- How is ‘Penalty Damages’ determined, and what is its purpose on an EPF challan?
Under Section 14B of the EPF & MP Act, penalty damages are charged for not depositing EPF contribution on time. Penalty rates for delayed deposits are 5% for 2 months, 10% for 3-4 months, 15% for 4-5 months, and 25% for 6 months.
- Why do administrative and inspection charges appear on the challan?
These charges are used by EPFO to pay administrative expenses and supervision charges. Inspection charges relate to the oversight of the EDLI system and administration charges relate to the maintenance of EPF accounts.
- What is the “Establishment Code” on the challan and why is it required?
Each employer receives a distinct code from EPFO so that contributions can be properly allocated to the correct body. The code must be typed precisely as it was given to properly record the payment.
- What is the reason that challan shows mode of payment?
Mentioning the payment method assures the bank to process the payment properly and also provide a valid receipt. With the banking procedures of EPFO, transparency regarding the payment method is essential to maintain clear records of transactions.
- What is the purpose of the bank acknowledgement section at the bottom of the challan?
This is the section where the bank will sign, date, and stamp the challan when the payment is received. It serves as the primary proof of payment.
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