The Employees’ Provident Fund Organisation (EPFO) is contemplating an increase in inspection fees for exempted provident fund trusts, proposing a rise to 0.28% of the total contributions. Presently, these exempted trusts pay an inspection charge of 0.18%.
Sources have indicated that this proposal is part of the agenda for the upcoming meeting of the EPFO's Central Board of Trustees (CBT) scheduled for October 31.
This fee is applicable to both exempted and unexempted organizations, aiming to cover the costs associated with administering the Employees’ Provident Fund. The CBT recommends the rate at which this fee should be levied, taking into account the Fund's resources and the expenses of running the scheme.
As of now, administrative charges for unexempted establishments stand at 0.5% and were last revised in 2018. In contrast, the inspection charge for exempt PF trusts has not been updated since 1998.
The rise in administrative charges is expected to have no direct impact on members' contributions, as these costs are covered by employers, who would bear the increased expenses if the proposal is approved.
The anticipated higher fee is aimed at assisting the EPFO in meeting the expenses associated with the enhanced pension benefits provided under the Employees Pension Scheme. To process the 1.74 million applications for increased pension, the EPFO plans to augment the number of officers assigned to the Employees' Pension Scheme and create additional positions at both its headquarters and field offices. The Central Board of Trustees (CBT), which serves as the EPFO's highest decision-making body, is set to convene on October 31.
Exempted PF trusts are affiliated with the EPFO but are independently managed by companies for their employees. Currently, there are approximately 1,350 such trusts, including those established by companies such as Indian Oil Corporation, HDFC Bank, Tata Consultancy Services, and Reliance Industries Ltd. According to the EPFO's Annual Report for 2021-22, there were 23.8 million active member accounts associated with exempted PF trusts.
The lower inspection charges for exempted establishments, combined with higher returns and operational convenience, are often viewed as advantages that prompt many companies to establish their own PF trusts.
