In a significant escalation of a decade-long dispute, the Pune office of the Employees’ Provident Fund Organisation (EPFO) has directed Tech Mahindra Limited to remit a staggering ₹1,287.44 crore.
The order, issued under Section 7A of the EPF Act, 1952, follows allegations of large-scale defaults in provident fund contributions, specifically concerning employees on overseas deputation.
This ruling, delivered by Regional Provident Fund Commissioner Amit Vashist on December 17, 2025, has sent ripples through the Indian IT services sector, placing the complex cross-border employment arrangements of multinational giants under intense regulatory scrutiny.
The Core of the Dispute: May 2014 to March 2016
The EPFO split the current ₹1,287.44 crore demand into two major components:
- PF Contributions: ₹566.78 crore
- Interest Accrued: ₹720.66 crore
The EPFO’s investigation centers on the period between May 2014 and March 2016.
The authority alleges that Tech Mahindra failed to remit PF contributions for domestic employees and, more critically, for employees deputed to “non-SSA” countries—nations with which India does not have a bilateral Social Security Agreement (SSA).
Tech Mahindra: A Decade-Long Legal Battle
This is not the first time the company has faced such a demand.
The current proceedings are a continuation of a 2014 complaint. An earlier order in 2016 had quantified dues at roughly ₹2,448 crore for the period of 2013–2014, a matter that is still being contested before the Central Government Industrial Tribunal (CGIT) in Mumbai.
The EPFO argues that the default is “continuing in nature,” necessitating this fresh order for the subsequent 2014–2016 window.
Tech Mahindra has countered by submitting voluminous records, arguing that overseas allowances should not be classified as “basic wages” and that employees in SSA-covered jurisdictions were handled according to international treaties.
Implications for Global IT Mobility
The ruling challenges a long-standing industry practice in which IT firms provide “onsite allowances” to employees working abroad.
Companies have often excluded these payment components from their Provident Fund (PF) calculations.
The EPFO’s stance suggests that:
- Mandatory Coverage: Employees deputed abroad may still be covered under the Indian EPF Act regardless of their physical location.
- Wage Definition: Overseas components could be viewed as part of “full wages,” significantly increasing the liability for employers.
- Regulatory Reach: Companies cannot summarily dismiss PF obligations for staff in non-SSA countries.
Stance Taken by Tech Mahindra: “No Material Impact”
Despite the billion-dollar demand, Tech Mahindra has maintained a confident posture.
In its regulatory filing to stock exchanges on December 19, 2025, the company stated it plans to file a comprehensive appeal.
Management emphasizes that the company has already disclosed the amount as a contingent liability in its audited financial statements.
Consequently, they do not expect this to have a “material financial impact” on current operations or the bottom line.
However, with the company already facing pressure—including a 4.5% dip in net profit in Q2 FY25—the final outcome of the appeal remains a high-stakes variable for investors.
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