To boost the confidence of EPF subscribers, the government is mulling amendments to some sections of The Employees' Provident Funds And Miscellaneous Provisions Act, 1952 for bringing in more clarity in respect of the law. As per the new proposals, it shall be the topmost priority of companies' to clear off the PF dues of its employees. This will be a great booster at a time when due to several companies are downsizing or going bankrupt.
The government has put the draft 'The Employees' Provident Funds and Miscellaneous Provisions (Amendment) Bill, 2019' for discussion. It has proposed to make changes to the Section 11 of the EPF Act. Upon Amendment, it would read, "11. Priority of payment of contribution over other debts. Notwithstanding anything contained in any other law for the time being in force, any amount due under this Act shall be the first charge on all assets of the establishment and shall be paid in priority to all other debts."
So, with the change, the clarity will be rendered that the PF contribution is the prior obligation of the employer and it cannot be compromised under any circumstance.
Also, there is proposed that the penalty amount shall be increased for companies that tend to avoid on such payments. There shall also be given a window to switch from the EPS scheme to NPS.
Notably, 12% each is contributed by both the employer and employee towards the employee's account and of it 8.3% goes towards the EPS scheme.