The Employees’ Provident Fund Organization (EPFO) has made major changes to the ECR (Electronic Challan cum Return) file generation process effective from 15 November 2016.
Unique identifier to be UAN and not PF number
From now on (wef 15 November 2016), the unique identifier for PF remittance, transfer and withdrawal will be the Universal Account Number (UAN) and not the PF number. The PF department has denoted this new ECR version as ECR 2.0.
In 2014, the EPFO introduced UAN for each member. However, most employers have been using the PF number as the unique identifier for PF remittance as PF-ECR did not require UAN for remittance until now. Also, despite the EPFO’s repeated insistence, most employers did not complete their formalities related to UAN, such as:
- Not assigning UAN to their employees
- Not completing the KYC formalities for their employees
As UAN was required only for PF withdrawal and transfer, for many employers it was not a top priority to complete UAN formalities.
To address this situation, UAN has now been made mandatory for the ECR generation process.
We are covering below the topics related to generation of UAN and ECR Filing process.
Generate UAN when onboarding an employee
You must generate/ record UAN when onboarding an employee based on following criteria:
- Employees who are joining PF for the first time
The employer needs to logon to the PF portal, enter information such as name, name of father/ spouse, date of birth and generate the UAN online.
This UAN should be recorded, shared with the employee (generally in the payslip) and this should be used for PF remittance.
- Employees who were PF members prior to joining your organization
The employer needs to ‘link’ the existing UAN of the employee to the employee’s record on the portal.
Major changes to the ECR format
The ECR format has undergone major changes:
- Reduction in the number of fields
The earlier ECR format had 25 fields / data elements while the new format has only 11 fields / data elements. Major changes are as follows:
- The membership ID field has been removed since the UAN field has been introduced.
- Employee attributes, such as date of birth, gender, father’s name, date of joining and existing PF number have been removed from the ECR format, as such attributes are to be updated on the PF portal separately.
- Separate ECR for PF arrears
The EPFO has introduced a separate ECR format for PF arrears remittance. The arrear ECR contains eight fields / data elements, such as arrear wages, employee share and employer share.
- Introduction of Gross Wages
he EPFO has introduced a new field called ‘Gross Wages’ in the ECR. The term gross wages refers to ‘total emoluments payable to the employee in the wage month for which the ECR is being filed’.
From our understanding, this refers to the Gross pay of an employee, including all salary heads / components that are paid to the employee. In case, you include non-salary reimbursements as part of payroll, please deduct such amounts from the Gross pay to arrive at the Gross wage for the purpose of PF ECR.
Important note: Please note that the Gross wages amount cannot be lesser than the EPF wages amount.
- Non-Contributory Period (NCP) Days
According to the EPFO, the NCP days has to be in number of full days; half-day NCP is not permitted. At this moment, this too is a bit unclear because companies usually apply half-day loss of pay (LOP) on PF calculations.
If you have to round-off NCP days for uploading ECR, there would be no connect between the PF amounts and the NCP days in case of half-day LOP.
- No expiry date for ECR