When EPF Is Deducted but Not Deposited: Why It Is a Serious Criminal Offence, Not a Compliance Lapse

When EPF Is Deducted but Not Deposited: Why It Is a Serious Criminal Offence, Not a Compliance Lapse

Blogs
January 19, 2026

EPF Compliance • Employee Awareness • Employer Liability • Legal Risk

EPF Deduction Done, Employer Share Missing: Why It Is Treated as a Serious Offence

On the question of an employer deducting the employee’s share of EPF but not contributing its own share, Pratik Vaidya highlights that such conduct is not a minor lapse. Once EPF is deducted, the employer is legally bound to deposit both contributions—along with applicable charges—within the prescribed timelines.

Immediate principle

Deduction of EPF triggers a clear duty to deposit both the employee and employer shares.

Risk classification

Retaining or diverting deducted EPF is treated as misappropriation of trust and money.

Why it matters

EPF violations are increasingly viewed as financial misconduct affecting retirement security.

Pratik Vaidya’s key message

“This is treated as a serious criminal offence, not a technical lapse.”

Once an employer deducts PF from an employee’s wages, it is legally bound to deposit:

Employee contribution: 12% (deducted from wages)

Employer contribution: 12% (matching share)

Applicable administrative and allied charges

Retaining, diverting, or not depositing deducted EPF is treated as misappropriation and breach of trust. Pratik further notes that such offences are punishable under Section 14 of the EPF law framework, and enforcement action can be stringent, including prosecution and recovery measures.

Enforcement signal (as referenced in the discussion)

The key point is that EPF violations are no longer treated as routine compliance gaps. They are increasingly approached as financial misconduct impacting an employee’s long-term security, especially in cases where deductions were made but deposits were not completed.

Note: The figures and enforcement observations above are captured as provided in the content shared for this blog.

The host concluded by thanking Pratik Vaidya for the insight and clarity on the seriousness of such defaults.

Employee guide

How employees can check whether both EPF shares are being deposited

Step 1: Verify contributions

Check your Annual PF Statement of Account or Member Passbook to confirm month-on-month deposits. Ensure your UAN is active and your KYC is updated.

Step 2: Watch for deposit alerts

If your mobile number is registered with EPFO, you may receive SMS alerts upon credit of monthly contributions. Keep your registered number active.

Step 3: Raise a grievance

If deposits are missing or short, file a grievance on the EPF Grievance Management System (EPFIGMS) portal or submit a written complaint to the PF authorities.

Step 4: Follow through for recovery

If default is confirmed, the employer may be required to pay dues with interest and can face penal consequences, including recovery actions by EPFO.

Step 5: Contact EPFO for guidance

Reach out to the nodal officer overseeing your zone (as listed on the official EPFO website) for next steps and support on complaints or verification.

Employer default consequences

Typical recovery and enforcement measures referenced in the framework

The EPFO has multiple mechanisms available for recovery and enforcement in cases of default, including attachment of bank accounts, recovery from debtors, attachment and sale of property, prosecution, and other legal actions as applicable. The objective is to secure employee dues and deter deliberate non-deposit behaviour.

Member passbook indicates employer-paid amounts and highlights default periods.

With an active UAN, monthly verification is possible via e-passbook.

Employer PF contribution must be paid until the date of leaving service, irrespective of age.

Important note captured in the content: If the employer does not pay its share, PF dues payable to a member may be limited to the amount realised from the employer through recovery processes.

Support

For compliance guidance and implementation support, write to marketing@karmamgmt.com

When EPF Is Deducted but Not Deposited: Why It Is a Serious Criminal Offence, Not a Compliance Lapse