EPFO makes filing of ECR easier for business

In the current scenario of lockdown announced by the Govt. to control the spread of COVID-19 pandemic and other disruptions, the businesses and enterprises are not able to function normally and are facing liquidity / cash crunch to pay their statutory dues even though they are retaining the employees on their rolls.

Keeping in view the above situation and to further ease the compliance procedure under EPF & MP Act, 1952, the filing of monthly Electronic-Challan cum Return (ECR) is separated from Payment of the statutory contributions reported in the ECR.

The ECR can now onwards be filed by an employer without the need of simultaneous payment of contributions and contributions may be paid later by the employer after filing the ECR.

The above change will entail convenience to the employers as well as the employees covered under the Act and Schemes.

Filing of ECR by the employer in time is indicative of employer’s intent to comply will not therefore attract penal consequences if the dues are paid within the extended time as announced by the Govt.

Filing of ECR in time shall help in credit of employer’s and employee’s share of contributions, totalling 24% of wages by Central Govt. in EPF accounts of low wage earners in establishments eligible under Pradhan Mantri Garib Kalyan Yojana package.

The current ECR data shall also help in policy planning and decisions making for further relief to the businesses and EPF members adversely impacted by the Pandemic. 

Know all about Electronic Challan cum Return (ECR)

What is ECR in EPF?

• ECR stands for Electronic Challan cum Return. It is a digital monthly return that employers registered under the EPFO must upload via the Unified Portal.
• Return: It provides member-wise details of wages and contributions, including information about new and exiting employees.
• The ECR integrates the submission of employee and employer contributions with the payment process, eliminating the need for separate paper-based returns like Forms 5, 10, 12A, 3A, and 6A.

Key Features of ECR

• Electronic Submission: Employers upload the ECR file in a specified electronic format (a text file) through the EPFO’s Unified Portal.
• Member-Wise Details: It includes individual employee details such as Universal Account Number (UAN), wages, and contributions.
• Challan Generation: Once the ECR is uploaded and approved, a challan is generated for the employer to remit the dues.
• Unified Process: Combines return filing and payment into a single streamlined process.
• Real-Time Updates: Contributions are credited to employees’ EPF accounts monthly upon payment confirmation.
• No Paperwork: Eliminates the need for physical forms, reducing administrative burden and storage costs.
• No need to file returns in Form 5,10,3A,6A,12A by un-exempted establishments and Form 3PS,4PS,5PS,6PS,7PS,8PS by exempted establishments.

Components of ECR file

In the updated ECR Version 2.0 (introduced in December 2016), the format was simplified. ECR file contains 11 fields. Here are the key 11 fields in ecr file:

1. Universal Account Number (UAN): A unique identifier for each employee, mandatory since ECR 2.0 replaced the earlier PF member ID.
2. Employee Name: Name of the employee as registered with EPFO.
3. Gross Wages: Total emoluments payable to the employee for the wage month (including salary components like HRA, even if not part of PF calculation).
4. EPF Wages: Wages on which PF contributions are calculated (e.g., basic salary + dearness allowance, capped at ₹15,000 unless voluntarily higher).
5. EPS Wages: The present wage ceiling is 15000/-.
6. EDLI Wages: The EDLI wages should be equal to EPF wages but maximum 15000/-. Cannot be more than 15000/-
7. Employee PF Contribution: The employee’s share (12% of EPF wages, unless restricted).
8. Employer PF Contribution: The employer’s share (3.67% to EPF, subject to wage ceiling).
9. Employer EPS Contribution: Contribution to the Employee Pension Scheme (8.33% of EPF wages, up to ₹15,000).
10. NCP Days: Non-contributory period days (e.g., unpaid leave), affecting contribution calculations. Half day NCP is not permitted.  In case the wages declared is 0, due to reason that the member did not earn wages, the NCP should be equal to the number of days of the month
11. Refund (if applicable)

EPF Payment and Contribution Account Head Details

Accounts in ECR:

• A/c 1: EPF contributions (employee + employer share, 12% each).
• A/c 2: Administrative charges (0.5% of EPF wages, minimum ₹500/month).
• A/c 10: Employee Pension Scheme (EPS) contribution (8.33% of employer’s share, capped at ₹15,000).
• A/c 21: Employees’ Deposit-Linked Insurance (EDLI) contribution (0.5% of wages, capped at ₹15,000).
• A/c 22: EDLI administrative charges (currently nil).

Due Date: ECR filing and payment are due by the 15th of the following month (e.g., April wages due by May 15). A 5-day grace period may apply, but delays incur penalties.