Chartered Accountant · ICAI M.No. 153926 · FRN 136869W · Reviewed on 7 October 2026
The EPFO meters
Section 7Q interest (12% p.a.) is automatic and cannot be waived — it runs from the due date (the 15th of the following month) to the date of deposit. Section 14B damages come by order after a hearing, on the slab above, capped at 100% of the arrears. Together a six-month delay costs roughly 18–19% of the dues — before tax effects.
The tax disallowance that dwarfs them
The employee’s share (12% deducted from salary) must reach EPFO by its own statutory due date; late payment means section 36(1)(va) disallows it permanently — the Supreme Court’s 2022 Checkmate Services ruling settled that section 43B offers no rescue. At a 25%–30% tax rate, a habitually late employer effectively donates a quarter of every employee contribution to the exchequer. The employer’s share stays claimable in the year actually paid (section 43B), if paid by the ITR due date.
And in serious cases
PF deducted from salaries but not deposited is treated gravely — EPFO can prosecute, attach bank accounts and recover as arrears of land revenue; directors’ personal exposure is real in wilful-default cases. The cure costs nothing: pay with the payroll run itself, not after it — a standing auto-debit and a calendar that treats the 13th as the deadline. That is standard operating procedure inside our payroll & labour compliance service.