Sections 143 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 143 lets the appropriate Government exempt an establishment or its employees from any or all provisions of the Code or a scheme, on strict conditions. Section 144 lets the Central Government defer or reduce contributions for up to three months at a time in a pandemic, endemic or national disaster.
Exemption under s.143 is granted by notification, first for three years (s.143(3)), only if employees already receive benefits substantially similar or superior to the Code's (s.143(4)). The employer forms a board of trustees for the fund (s.143(5)), must file returns electronically (s.143(6)) and risks cancellation for non-compliance (s.143(7)). On cancellation, accumulations and surplus move to the statutory funds (s.143(8)). Section 144 lets the Centre defer or reduce contributions up to three months at a time in a pandemic, endemic or national disaster.
Why it matters
Large employers with their own provident fund trust or their own medical and sickness arrangements are the main users of s.143. The Code repeals the old exemption provisions along with the Acts, but s.164(2)(c) keeps exemptions granted earlier in force until their validity expires or they cease to operate under the Code. If your establishment runs an exempted trust, read the conditions below and the provident fund scheme. Our legal consultation service can help you assess eligibility, renewal or surrender. For older background see exemption of private PF trusts under the EPF Act and sections 20 to 23.
Section 143: exemption of establishments
Who grants it and from what (s.143(1))
The appropriate Government, by notification and subject to conditions (including eligibility conditions before exemption and compliance conditions after it, as prescribed by the Central Government), may exempt an establishment or class of establishments (including factories or establishments under the control of the Central Government, a State Government or local bodies), or employees or a class of employees, from any or all provisions of the Code or the scheme framed under it. The exemption may be renewed by like notification.
Two provisos require prior consultation:
- Central Board for exemption in respect of the Provident Fund Scheme, Pension Scheme and Insurance Scheme; and
- the Corporation (ESIC) for exemption in respect of Chapter IV.
The Board or Corporation forwards its view within the time the Government prescribes.
Key conditions in the section
| Sub-section | Requirement |
|---|---|
| (2) | The notification may specify post-exemption conditions (for PF, Pension and Insurance schemes the terms are in the schemes) |
| (3) | Exemption is initially for three years from publication of the notification; extension for the period the Central Government prescribes (for PF-type schemes, as the schemes specify) |
| (4) | Granted only if employees are otherwise in receipt of benefits substantially similar or superior |
| (5) | The employer constitutes a board of trustees, a legal entity that can sue and be sued, to administer the fund, manage investments and keep accounts |
| (6) | The employer furnishes returns electronically, allows inspection and pays inspection charges as the Central Government directs |
| (7) | On failure to comply, the appropriate Government may cancel the exemption |
| (8) | On cancellation, surplus, reserves and each employee's accumulations in the exempted fund go to the respective statutory fund within the time and manner set out in the conditions (or the schemes) |
| (9) | After a trustees' resolution, the employer may apply to surrender the exemption from a stated date; contributions then go to the statutory funds and accumulations are transferred as notified |
Central Rules, 2026: rules 65 to 68
Rules 65 to 68 apply where the Central Government is the appropriate Government. Where the State Government is the appropriate Government, the State's own rules apply.
Rule 65: eligibility before exemption. An establishment must show that:
- employees get benefits substantially similar or superior to the benefits in the Chapter III schemes or Chapter IV;
- it applies electronically or otherwise;
- it has complied with Chapter III or IV (or the old EPF or ESI Act) for three continuous years before applying, without default in contributions;
- it has at least five hundred contributory members (Chapter III) or five hundred employees (Chapter IV) on the date of application;
- for the PF or Pension Scheme, a cumulative balance in member accounts of rupees fifty crore or more;
- for Chapter III, the consent of a majority of employees;
- a positive net worth in each of the last three years;
- Aadhaar seeded for each member (or insured person and family members); and
- for Chapter III, online claim settlement and an online grievance portal linked to the Employees' Provident Fund Organisation within ninety days of grant.
Extension: apply on the specified portal at least six months before expiry; a Chapter IV exemption can be extended five years at a time, after consulting the Corporation (which has three months to give its views, failing which the Government decides as it deems fit).
Rule 66: the Central Board or Corporation forwards its views on an exemption application within six months of receipt; if it cannot, the Government may extend the time or act on the application.
Rule 67: a Chapter IV exempted establishment keeps records and files returns as the ESIC regulations specify; on a change of legal status by merger, demerger, acquisition, sale, amalgamation, or becoming a subsidiary, the exemption is deemed cancelled and a fresh application is needed. Chapter III exemptions follow the schemes.
Rule 68: the board of trustees has equal employer and employee representatives as the scheme specifies, the employer is Chairperson with a casting vote, meetings are at least once in three months, and the other terms are as the PF or Pension Scheme provides. Disputes on interpretation of the rule go to the Central Government.
Section 144: power to defer or reduce
Notwithstanding Chapters III and IV, the Central Government may by order defer or reduce the employer's contribution, the employee's contribution, or both, for up to three months at a time, for establishments covered by Chapter III or IV, for the whole of India or a part, in the event of pandemic, endemic or national disaster. Only the Centre has this power, and only for those two chapters. The text says nothing on how a deferred amount is later recovered, so read the specific order.
A worked example
A manufacturing company with 1,200 employees runs its own PF trust under an exemption. A merger changes its legal status. Under rule 67(1)(b) the exemption is treated as cancelled (this rule is spelt out for Chapter IV; for Chapter III, read the scheme), and the trust's accumulations must be moved to the statutory funds as s.143(8) and the scheme require. Separately, if the Central Government issued an order under s.144 after a national disaster, contributions for affected establishments could be deferred for up to three months at a time, but only as that order specifies. (Illustrative.)
Need help with exemption or deferral questions?
Exemption rests on detailed conditions, trust governance and timelines. Our legal consultation team can help you test eligibility against rule 65, plan renewal or surrender, and understand what a deferral order means for your payroll.
Key takeaways
- Exemption is by notification, initially for three years, only if benefits are similar or superior.
- Exempted funds are run by a board of trustees led by the employer; returns are electronic.
- Non-compliance can lead to cancellation and transfer of funds to the statutory funds.
- Rule 65 sets tests including 500 members or employees and three years' clean compliance.
- Section 144: the Centre may defer or reduce contributions up to three months at a time in a pandemic, endemic or national disaster.
Read next
- Sections 145 to 148: Transfer of establishment, public servants, protection and misuse of benefits
- Sections 20 to 23: Exempted establishments and appeal to Tribunal
- EPF exemption for private trusts, Section 17
- Sections 141 and 142: Social Security Fund and Aadhaar
Disclaimer: Based on the Code on Social Security, 2020 (as enacted) and, where noted, the Code on Social Security (Central) Rules, 2026 (G.S.R. 344(E), 8 May 2026), as on 30 September 2026. The Code is in force from 21 November 2025; some provisions may be notified later, and State Governments make their own rules for establishments where the State is the appropriate Government. Verify the current position before acting.