EPFO launches Vishwas Scheme to cut litigation through rationalised penal damages

Vishwas Scheme

In a step towards reducing litigation and easing compliance, the Employees’ Provident Fund Organisation (EPFO) has introduced the Vishwas Scheme, aimed at resolving long-pending disputes related to penal damages for delayed remittances of provident fund (PF) dues.

One of the key sources of litigation under the EPF Act has been the imposition of high penal damages for belated remittances. As of May 2025, outstanding penal damages stood at Rs 2,406 crore, with over 6,000 cases pending across various forums, including High Courts, Central Government Industrial Tribunals (CGITs) and the Supreme Court. In addition, nearly 21,000 potential cases are pending under EPFO’s e-proceedings portal.

Also Read: EPFO 3.0 Explained: How PF withdrawals just got simpler for 30 crore members

Earlier, the rate of penal damages ranged from 5 percent to 25 percent per annum (and even 17percent  to 37 percent for delays before 2008), leading to a flood of litigations. Under the new Vishwas Scheme, these rates have been rationalised to a flat 1 percent per month, with a graded structure—0.25 percent per month for defaults up to two months and 0.50 percent per month for defaults up to four months.

The scheme will remain in force for six months, extendable by another six months, and covers:

Also Read: Aiming for higher returns: EPFO to form panel with RBI, FinMin to overhaul equity, debt investments

Ongoing litigation cases under Section 14B (pending before CGITs, High Courts, or the Supreme Court), finalised but unpaid orders under Section 14B and pre-adjudication cases where a notice has been issued but the final order is pending. Cases that comply under the Vishwas Scheme will be considered abated.

In another development, the EPFO Central Board has also amended the earlier flat rate of 1 percent per month notified on June 14, 2024, to align with the new graded penalty structure.

The scheme is expected to reduce litigation, lower legal costs, and promote timely compliance. Employers will benefit from simpler dispute resolution and reduced administrative burden, while members will see faster recovery of dues, quicker reinvestment, and better returns.