The Employees’ Provident Fund Organization has made significant changes to the processes related to generation of the Electronic Challan cum Return (ECR) file. From now on, the Universal Account Number (UAN) shall be the unique identifier for PF remittance, transfer and withdrawal. The process of using the PF number as the identifier has been done away with. The PF department calls the new ECR version “ECR 2.0”.
The PF Department introduced the system of UAN for each member in 2014. However, employers have been using the PF number as the unique identifier for PF remittance since PF-ECR has not required UAN for remittance until now. Also, despite the PF Department’s repeated insistence, many employers have not been completing the formalities related to UAN – not assigning UAN to employees and not completing the KYC formalities for employees. Given that UAN was required only for withdrawal and transfer of PF, many employers have not been showing any urgency with regard to completing UAN formalities at the time of an employee joining the organization.
This has now changed.
Generate/record UAN at the time of employee onboarding
Given that PF remittance cannot be carried out without the UAN, employers need to record the UAN of an employee as soon as they join the organization.
a. Employees who are joining PF for the first time
The employer needs to log into the PF portal, enter information such as name, name of father/spouse, date of birth and generate the UAN online. The UAN shall be used for PF remittance.
b. Employees who were members of PF prior to joining your organization
The employer needs to “link” the existing UAN of the member to the employee record on the portal.
Changes to the ECR
The format for the ECR has undergone significant changes.
1. Reduction in the number of fields
The earlier ECR format had 25 fields while the new format has only 11 fields. The membership ID field has been discarded since the UAN has been introduced. Employee attributes such as date of birth, gender, father’s name, date of joining and exiting PF have been discarded from the ECR since such attributes are to be updated on the PF portal separately.
2. Separate ECR for arrear PF
The PF department has introduced a separate ECR format for remittance of arrear PF. The arrear ECR contains 8 fields such as arrear wages, employee share, and employer share.
3. Gross Wages
The PF department has introduced a new field called “Gross Wages” in the ECR. The term Gross Wages, as per the documentation released by the PF department, refers to “total emoluments payable to the employee in the wage month for which the ECR is being filed.” We presume this is nothing but the gross pay of an employee including salary heads such as HRA which are left out for PF calculation. In case you include non-salary reimbursements as part of payroll, please deduct such amounts from the gross pay in order to arrive at the Gross Wage for the purpose of PF ECR.
In case there is a significant difference between EPF wage and the Gross Wage for employees whose salary is below Rs 15,000, the PF department could seek an explanation for the same.
Please note that the Gross Wages amount cannot be less than the EPF wages amount.
4. EPF Wages
According to the documentation released by the PF department, EPF wages refer to the “wages on which the employer is supposed to remit the dues. (If the employer is restricting the dues on wage ceiling of 15000 and the employee is contributing on his full wages above 15000/- then 15000 should be shown as EPF wages. In case the employer is paying his dues on above wage ceiling, that wage should be entered.”
The definition of EPF Wage for the new ECR format is somewhat puzzling. Currently, we compare the 2 wages on which we calculate the employee and employer PF contribution and take the higher wage as the EPF wage for the purpose of ECR. For example, if the employee’s contribution is calculated as 12% of 20,000 (say, the employee’s basic wage) and the employer contribution is calculated on Rs 15,000 (restricted wage), we calculate the administration charges on Rs 20,000 and show Rs 20,000 as the EPF Wage in the ECR. As per the new ECR guidelines, the wage on which the employer contribution is calculated will have to be shown as EPF Wages (Rs 15,000 in the example). This is odd since if we show the employer PF wage as the EPF Wages, there will be no apparent relationship between the EPF Wages and the administration charges (at least in the example stated above).
5. NCP Days
According to the documentation, the NCP days figure has to be in number of full days and half day NCP is not permitted. This too is puzzling since organizations widely apply half day loss of pay on PF calculation. If we have to round-off NCP days for the purpose of ECR upload, there would be no connect between the PF amounts and the NCP days in case of half day loss of pay. We wonder why the department decided not to allow 0.5 days (or multiples of it) for NCP days.
6. ECR shall not expire
Earlier, ECR files had validity for a certain number of days after which they expired. In the new portal, ECR files do not expire. Here is an excerpt from the PF document.
Question 6: In how much time the uploaded ECR will lapse if payment is not made?
Answer: The ECR will not lapse now. You can make the payment after uploading the same through the online payment link. However for the delay beyond the due date the applicable rules on Damages and Interest will apply.