Penalty under incometax tax & rules

Hi Srividya,

As far as Income Tax Act, 1961 ('the Act') is concerned there is no penalty as such to Employer, however employer can claim deduction as business expenditure only upon actual payments of such (Employer +Employee's) contributions, as per Section 43B(b) of the Act .

As far as The Employees’ Provident Fund Scheme, 1952 ('the Scheme') is concerned, following penalty interest is applicable to Employer for delay/default in PF Contribution as per Section 32A of the Scheme. 

• Less than two months default  = 17 % per annum  

• Two months and above but less than four months =  22 % per annum 

• Four months and above but less than six months = 27 % per annum 

• Six months and above = 37% per annum 

The interset is calculated on the amount payable for the number of days of delay in making payment.