The EPFO had on March 4, 2021 said the interest rate for FY21 is unchanged at 8.5 percent.
It’s a much-needed relief for both employees and employers.
The Employee Provident Fund Organisation (EPFO) on June 15 extended the last date to seed Aadhaar number with the Universal Account Number (UAN) for filing electronic challan-cum-returns (ECR) by three months to September 1, 2021.
As per an earlier circular issued by the EPFO, the electronic challan-cum-returns were to be allowed to be filed only for those members whose Aadhaar numbers are seeded and verified with the UANs with effect from June 1, 2021.
EPFO in its June 15 circular asked all its field offices to ensure that employers are ready to implement the decision from September 1, 2021.
Moneycontrol explains why the retirement fund body made Aadhaar seeding mandatory, who all stand to get impacted by this decision, what are the concerns raised by the stakeholders and what the new deadline is.
Why did EPFO make it mandatory to seed the Aadhaar number with the UAN?
EPFO took this decision under Section 142 of the Social Security Code 2020. As per Section 142 of the Social Security Code, notified on May 5, 2021, employees and unorganised workers shall have to establish their identity or the identity of their family members/ dependents through Aadhaar for availing benefits like life insurance and disability insurance, health and maternity benefits and provident fund (PF) under the Code on Social Security 2020.
What would be the impact of this decision?
The EPFO had instructed the Employer (Company) that from June 1, if the PF account is not linked to Aadhaar or if the UAN is not Aadhaar verified, then its Electronic Challan-cum-Return will not be filed. This means that employees can get only their own PF account contribution but not the employer's share.
Moreover, it also laid down that EPF account holders will not be able to use EPFO services if they do not comply by the deadline.
How many stakeholders are expected to be impacted from the decision?
EPFO has almost 60 million active subscribers and is said to manage a retirement corpus of almost Rs 14 trillion.
As per the Employees' Provident Fund and Miscellaneous Provisions Act, 1952, an employee must pay a certain contribution (12 percent) towards the scheme, and an equal contribution is paid by the employer. The employee gets a lump sum amount, including self and employer's contribution with interest on both, at the time of retirement.
The Act is applicable to all establishments that have employed a minimum of 20 people. As per the rules, an employee earning less than Rs 15,000 per month must mandatorily become a member of the EPF. Hence all salaried employees earning less than Rs 15,000 per month are set to be affected by the decision to seed Aadhaar.
Why did EPFO defer the deadline?
After several employees and employers’ representatives said that a mismatch and non-compliance would result in delay of statutory deposits for the employees, the retirement fund body announced an extension of the deadline to September 1.
The stakeholders, according to several reports, even suggested that the EPFO decision would deprive several beneficiaries of their dues and may even lead to the misuse of funds.