Starting this month, your employer will be able to make provident fund remittances only if your PF UAN (universal account number) is linked to your Aadhaar.
The linkage has become mandatory since section 142 of the Code of Social Security 2020 comes into force, the Employees’ Provident Fund Organisation (EPFO) has said, in a notification, effective June 1, to employers.
“This includes monthly employer as well as employee PF contributions. The employer will not be able to upload electronic challan-cum-return (ECR), which contains employee’s PF details, for such employees if their UANs are not linked to Aadhaar,” explains Saraswathi Kasturirangan, Partner, Deloitte India.
While many employers do ask for Aadhaar details at the time induction of employees, it was not mandatory for registration as an EPF member. “Under the current legal framework with respect to EPF and ESI (employees’ state insurance), Aadhaar is not required for registration as member but is required for making withdrawals from the provident fund and availing benefits from ESIC. Under the social security code, Aadhaar linking is a pre-requisite for registration as member and being a beneficiary as well,” says Pooja Ramchandani, Partner with law firm Shardul Amarchand Mangaldas.
Therefore, it is best to ensure that you complete the seeding process as soon as possible this month. You can do this by logging into to www.epfindia.gov.in with your username and password. “The circular is effective June 1, 2021, which means that remittances due on June 15, too, could be affected. Employers have started reaching out to their employees to complete the Aadhaar-UAN linking process,” says Kasturirangan.
It’s not only the remittances to your account that will be affected. Your access to EPF benefits will be suspended until the process is completed. “Employees will not be able to make withdrawals, take loans or avail any other benefits under the EPF Act until their Aadhaar is seeded into their UAN,” says Archit Gupta, Founder and CEO, Cleartax. This includes taking COVID-19 advances announced last year during the first wave of the pandemic and extended again last month.
Name mismatch, lockdowns: overcoming challenges
Some employees are likely face issues while seeding their Aadhaar due to mismatch in names, spelling or date of birth and this poses a challenge. “While the EPFO portal allows some flexibilities to make rectifications, the process will not be easy if your Aadhaar information is erroneous. Modifying the Aadhaar data can be challenging, particularly when there are restrictions on movements in force in many states currently,” explains Kasturirangan. In such cases, employers are likely to be in a quandary over whether or not they should continue deducting the contribution this month onwards. Clarity is awaited on this issue, say industry-watchers.
Employers are also bracing themselves to tackle the issue of employees without Aadhaar. “It will create challenges on the ground, particularly in the backdrop of the pandemic. Many first-time employees and those in the informal sector who are trying to get into the formal sector may not have Aadhaar. So employers who induct such employees would be stuck and will be deemed non-compliant. Even if they deduct the contributions, they will not be able to deposit it in EPF accounts,” says Rituparna Chakraborty, Co-founder and Executive vice-president, Teamlease Services. Employers could also face a catch-22 situation as they do not have the authority to demand Aadhaar details. “Ideally, EPFO should allow UANs to be created and put the onus on employees to update their Aadhaar details,” she adds.
If you are a fresher seeking employment, ensure that there is no mismatch between the name, date of birth and parents’ names being shared with employers and the information in Aadhaar. “People need to become more conscious of the fact there needs to be more consistency in their identity details across databases,” says Chakraborty.
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