The Employees’ Provident Fund Organization (EPFO) on 15th June 2021 announced an extension of 3 months to the time limit for the mandatory seeding (or linking) of Aadhar with the EPF’s Universal Account Number (UAN), until 1st September 2021. Prior to this extension, the EPFO had mandated the employers to link the Aadhar number with the UAN before filing the Electronic Challan-cum-Returns (ECR) by 1st June 2021.
This announcement by the EPFO comes as a relief to several employers as it now gives them more time to authenticate the Provident Fund Accounts with the Aadhar number of the employees.
Government Decision On Aadhar – Provident Fund Linking
Through a notification, the Ministry of Labour and Employment notified Section 142 of the Social Security Code , 2020, w.e.f 3rd May 2021.
As per Section 142, the employee or the unorganized worker can register as a beneficiary for the social security services or schemes and can establish his/her identity, or the identity of a family member or dependent as the case may be, through Aadhar. Further, this Section will enable the Ministry to collect the Aadhar details for the database of beneficiaries under various social security schemes, including those of migrant workers. However, it was clarified that no benefit will be denied to workers for want of Aadhar.
The remaining sections of the Social Security Code, 2020, are yet to be notified and brought into force.
Thus, with the coming into force of Section 142 on 03.05.2021, the EPFO informed the employers that remittance by filing of ECR is allowed only for those members whose Aadhar number is linked with the UAN from 1st June onwards. This is a step towards having a more transparent and robust PF system in place. Some of the benefits of Aadhar seeding include elimination of duplicate accounts, the process of PF withdrawal is simpler and the PF claims can be settled quickly.
Challenges With Aadhar Linking
Although the seeding of the Aadhar enables the members to transfer and withdraw money from their PF accounts seamlessly and also enhances transparency, it poses several difficulties to the employers. The mismatch in the details in the documents of the employees not only increases the hardships in linking but also causes a delay in uploading the ECR within the last date for making contributions, leading to unnecessary penalties on the employer.
Most of the employers could not remit PF on or before 15.06.2021, as per paragraph 38 of the EPF Scheme,1952. Owing to the hardships faced by the employers on account of the pandemic crisis, several employer associations and employers made representations to the EPFO and filed Writ Petitions[1] seeking an extension of the due date for remittance of the PF contribution for the month of May 2021.
Additionally, the EPFO has reconsidered the decision of mandating Aadhar seeing and has deferred Aadhar seeding, till 01.09.2021. This will ease the burden on employers who hold PF accounts as they will have sufficient time to comply with the EPFO requirement
The seeding of the Aadhar number with the UAN can be done online and offline.
-Nithya Krishnamurthy,
Advocate & Associate
[1] Writ Petition No.10358/2021 (before the High Court of Karnataka