VISHWAS 2026: Settling Old PF Damages Disputes at Reduced Rates

What changed

Section 14B of the EPF Act lets EPFO levy damages on contributions paid late, at a slab rate that climbs with the length of the delay. For a default that is several years old, the damages can approach the size of the contribution itself, and a lot of employers have been carrying such demands through 7A assessments, appeals and recovery notices for years.

VISHWAS 2026 is the one-time settlement window written into the Employees' Provident Funds Scheme, 2026 (Part B of its special provisions, notified as G.S.R. 525(E) on 29 June 2026). According to the gazette text, it applies to damages for default in payment of contributions for the period before 14 June 2024. Instead of the rate that applied at the time of the default, the damages are charged at the 2026 Scheme's own rate in paragraph 23: 0.25% of the arrears per month for a default of under two months, 0.5% a month for two to four months, and 1% a month beyond four months, never exceeding the arrears. The old slabs were 5%, 10%, 15% and 25% a year. On payment, any appeal or order on that notice stands abated. Cases where the full damages have already been deposited are outside it, and so are cases of fraud or misappropriation.

The scheme is valid for six months from 29 June 2026, which takes it to the last days of December 2026. The Central PF Commissioner can extend it by up to six months on recorded reasons, but I would not plan around an extension. EPFO issued its operational circular on 9 July 2026.

Who is affected

Three kinds of employer should look at this seriously:

• Those with a live 14B demand. A notice or order for damages on old defaults, paid or unpaid.
• Those with an appeal pending. Many employers filed appeals against 14B orders years ago and the matter has sat there since. The gazette lists orders under dispute before any judicial forum as the first covered category, and says the appeal stands abated once the scheme amount is paid.
• Those who know a default exists but haven't been assessed yet. If contributions for some old period were paid late and the damages were never levied, settling under the scheme can be cheaper than waiting for the inquiry.

The comparison that matters is the scheme amount against the levy that applied when the default happened:

The shape is clear: a 1% a month ceiling is 12% a year against the old 25% top slab, and the scheme is a discount on damages, not on the money that was owed to employees or on the interest.

What to do before the deadline

1. Collect every piece of paper. 7A orders, 14B and 7Q notices, recovery notices, appeal memos and any stay orders. Make a single table: period, contribution, damages demanded, interest, status.
2. Reconcile the principal. Check your challans and TRRNs against what EPFO says was paid late. If the assessment itself is wrong, say so before you settle the damages on it. A 7A inquiry reply and a PF notice reply are different jobs from a settlement.
3. Separate the pre and post 14 June 2024 periods. Only the earlier one can go into the scheme. The later one stays on the normal route.
4. Work out the two numbers: the scheme amount and the full levy. Then decide. For most old, undisputed late payments the scheme wins; for a contested assessment it may not.
5. Pay the section 7Q interest first. The gazette makes full payment of the interest for the delayed months a condition of the scheme.
6. Pay the scheme damages inside the window through the route in EPFO's operational circular, and keep the acknowledgement.
7. Give the undertaking and close the appeal. The gazette requires an undertaking that no further appeal will be filed; the pending appeal or order then stands abated.

What this does not change

• The contributions. Employees' money is paid in full, with interest. The scheme does not touch it.
• Defaults after 14 June 2024. They are assessed and levied as usual.
• Fraud findings. If EPFO has recorded falsification or concealment, the scheme is unavailable and the normal route, including prosecution, continues.
• Your ongoing compliance. A settlement cleans up the past. It does nothing for the October ECR that is due on 15 November.

What you can do yourself for free

When specialist help may be useful

• You have several periods, several notices and an appeal, and nobody has reconciled them against your own payments.
• You suspect the 7A assessment overstates the principal and aren't sure whether to contest it or settle.
• The default involves contractor workers and the contractor's records are gone.
• You want the settlement, the notice reply and the appeal withdrawal handled as one piece of work, with the evidence kept for later.

Send me the notices and your challan list for the periods involved. I'll tell you which route is cheaper and whether you need me for any of it.

Carrying a 14B notice or an appeal you'd like to close?

A damages settlement sounds simple until you line up the papers: the 7A assessment, the 14B order, the 7Q interest, the appeal filed three years ago, and the question of whether the underlying contribution was ever fully paid. Settling the wrong item, or settling before the contribution is cleared, leaves the dispute half-open.

I help employers reconcile what EPFO says is due against their own challans, work out what the scheme amount would be against the full levy, and file the application with the evidence in order. NidhiSetu is independent and not affiliated with EPFO; the scheme is applied for on EPFO's own portal at no cost, and if the numbers say it isn't worth it, I'll tell you.

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