Page 160 - Group Insurance and Retirement Benefit IC 83 E- Book

Central Provident Fund Commissioner may recover penalty from the employer at varying

rates depending on the period of default. The penalty rates are as follows

Less than 2 months default period 17%

Between 2 to 4 months default period 22%

Between 4 to 6 months default period 27%

6 months and above default period 37%

These damages may be waived or reduced in certain cases. If the management changes,
or there is a merger or amalgamation, the damages may be waived completely. If the

Board for Industrial and Financial Reconstruction recommends a waiver, a waiver up to

100% may be granted. In other cases, depending on the merit of the claims for waiver, up
to 50% of damages may be reduced. If an employer deducts or attempts to deduct

contributions from the employees' remuneration, fails to submit a return, obstructs an
official in the discharge of duty or fails to produce records for inspection, he is

punishable with imprisonment up to one year, or a fine of up to Rs.4000, or both. In
2005, of a total of 14,748 prosecution cases, only 774 cases were disposed while the

remaining 13,974 cases were still pending. The top five states as of 2004-05 in terms of

prosecution cases lunched were Madhya Pradesh, Bihar, Maharashtra, Karnataka and
Gujarat.

Advantages of Employees’ Deposit linked insurance Fund Scheme
Advantages to the Employer:

The premium payable by the employer is usually less than the total contribution being
paid by the employer to R.P.F.C; particularly when the salary level is high and average

age of the group is low.
Settlement of claim is quicker; LIC requires only the death certificate and the Claim

Form from the employer. Premium paid by the employer is treated as normal business

expenses for Income-Tax purpose.