Payroll and Compliance - The Monthly Chronicle

January 2017

Clarification on Payment of Wages Act, 1936

There is a general impression that is being created that the government will be bringing an amendment to the Payment of Wages Act (1936) to make mandatory the payment of wages to the workers only through cheques or accounts transfers.

This is not the correct position. It has been clarified by the Labour Department that the government proposes to bring an amendment to ‘Section 6 of the Payment of Wages Act, 1936’, which will provide employers the additional option of crediting the wages in the bank account of the employees through account transfer or cheques along with the existing provisions of payment in current coin or currency notes.

Electronic Challan cum Return (ECR) gets a process-upgrade (Version 2)

The Employees’ Provident Fund Organization (EPFO) has moved towards the next phase in digitalization of processes. Earlier, the EPFO had released a new digitalized process for Pradhan Mantri Rojgar Protsahan Yojana (PMRPY) and Universal Account Number (UAN) 2.0.

On the 20th December, 2016, the Employees’ Provident Fund Organization (EPFO) launched the next version of the Electronic Challan cum Returns (ECR). Consequently, to carry out the migration to the newer version of ECR under unified portal, the portal was made inactive from 17th Dec to 20th Dec, 2016.

The EPFO has reduced the complexity of the existing process by revising the existing ECR file format and the ECR filing portal.

Previously, around 25 fields were required to be filled in order to file an ECR. The new ECR file format contains only 11 fields. It consolidates the existing ‘ECR filling portal’, ‘claim-status’ portal and ‘challan payment portal’ into one unified filing and payment portal.

The ECR (Version 2) will be a completely UAN based format so only the contribution of UAN registered employees can be uploaded.

In ECR (Version 2) the below fields have been omitted –

  • Member ID
  • Employee contribution due
  • Employer contribution due
  • Employee Pension Scheme contribution due
  • All arrear fields and other employee information fields

All ‘arrear related fields’ will now be a part of the new arrear file and all ‘employee information fields’ would be captured at the time of UAN generation. Furthermore, ‘UAN’ and ‘gross wages’ column have been added to the ECR.

Click here to find the ECR (Version 2.0) process flow with screenshots

Click here to go through the ‘Frequently Asked Questions (FAQs) on ECR (Version) 2.0

Employee's State Insurance Corporation (ESIC) raises wage threshold to Rs. 21,000 (Final Notification released)

Employee State Insurance Committee (ESIC) has released the final notification, wherein the wage limit for coverage of an employee under the ESIC has been enhanced from Rs. 15,000 to Rs. 21,000 per month.

Note: The above mentioned changes are applicable from 1st January 2017.

The procedure to be adopted incase this applies to your establishment:

  1. Registering your establishment: If the company is not already registered and If there are any employees receiving Rs. 21,000 or less as ‘monthly fixed gross wages’ as of January 2017; please apply for registration through the ESIC portal. Click here to understand the Employer Registration Workflow
    (This is provided your company reaches the threshold limit of 10 or 20 employees as per State Notification for coverage under the scheme)

2. Collect Declaration Form (Form 1) from employees that are newly covered under the ESIC scheme due to the enhancement in wages ceiling (Employees that received Rs. 21,000 or less as ‘monthly fixed gross wage’ as of January 2017)

3. Submit Form 1 through the ESIC portal to generate the ESIC number for the new employees and consequently procure the ESIC Challan.

To read the follow up on press release and draft communication please refer to our previous newsletters.

The Monthly Chronicle - November, 2016

The Monthly Chronicle - December, 2016

Employee's State Insurance Corporation (ESIC) raises wage threshold to Rs. 21,000 (Final Notification released)

The Employees' Provident Fund Organization (EPFO) is all set to streamline the Provident Fund settlement process for all members who have achieved ‘superannuation’ age. EPFO wants to make the settlement process hassle free, smooth and at a faster rate.

All companies are advised to follow the below instructions released by the EPFO:

  1. Employer are expected to prepare a monthly list of retiring EPF/EPS members, three months in advance and the same would be communicated to the concerned members and their respective employers.
  2. Employers have been requested to make payment of PF contributions, one month in prior to the date of retirement.
  3. A complete set of ‘PF’ and ‘pension claim forms’ (that retiring employees are expected to furnish and submit) will be sent by the employer at least 14 days prior to the date of retirement, to the respective retiring employees.

Note: To read more on this topic – Click here

Contract Labour Regulation Act (CLRA) of Tamil Nadu amended

The Tamilnadu Labour Department has notified to increase its efficiency with regards to the ‘CLRA registration’ process by 30 days.

How it applies?

Every 'Principal Employer' (PE) who employs twenty or more ‘workmen’ on any day of the preceding twelve months should mandatorily apply for CLRA registration to the Labour Department of their respective states, stating the maximum number of employees to be employed.

Earlier this registration process would take 60 days, whereas the Labour Department has notified to speed-up the process to 30 days. The Tamilnadu Labour Department has notified stating that the ‘Registering Officer’ shall grant ‘Certificate of Registration’ within 30 days (earlier 60 days) from the ‘Date of Receipt’ of application.

Employee's State Insurance Corporation reduced rate contribution

In October 2016, a new rule was introduced under the Employee's State Insurance Scheme (ESIC) which stated the following –

In the areas where the ESIC scheme is implemented for the first time, the employer’s contribution and employee’s contribution would be as follows for the initial period of 24 months (from the day it’s been implemented):

Employer: 3% of wages payable to the employee, such sum rounded to next higher rupee.

Employee: 1% of wages payable to employee, such sum rounded to next higher rupee.

However, the ESIC department recently followed up on the previous notification stating the following, "Due to technical reasons, the above said modification in the software is taking sometime".

Thus ESIC department has informed that, employers who are eligible for the reduced rate of contribution should file monthly contribution at the rate of 1.75% for employees and 4.75% for employer but must calculate and pay actual contribution at reduced rate i.e. 1% and 3%.

These employers are advised to inform Regional/Sub Regional offices regarding their eligibility for ‘reduced rate of contribution’. This might further be examined by the Regional/Sub Regional office. Once verified and confirmed, no default action may be taken against such employers for reduced payment.

Online filing of Returns by Exempted or Relaxed Establishment

The online portal for filing PF returns by exempted and relaxed establishments would be unavailable for a (currently) unspecified period due to the revamping of Electronic cum Challan Return (ECR) portal. The EPFO is in the processing of developing a unified portal for Universal Account Number (Version 2.0) and ECR (Version 2.0).

While the portal is active, the functionality of filing of online returns for ‘Exempted Establishments’ is expected to be deployed on the ‘unified portal’ once the development and testing is completed. Till such time, the ‘exempted return’ and MIS Dashboard will not be available.

Therefore, employers of all establishments who are currently exercising ‘exemption’ and maintaining private PF trusts are requested to keep the data ready. This would be the data pertinent to the months in which ‘online return filing’ could not be done due to the non-availability of the portal. On deployment of the ‘return filing’ function, employers are expected to file the same for all such pending months.

Payment of Bonus Act, 1965 - Annual Return Rules, amended

Based on the notification published on 10th November, 2014, (under Payment of Bonus Rules), every employer was expected to send an ‘annual return’ in the amended ‘Form D’ to the Inspector. This is so that it reaches the Inspector within 30 days after the expiry of the time-limit specified in 'Section 19' of Payment of Bonus Act, 1965.

Many of the establishments had expressed their difficulty in filling/completing of a tedious, complicated and unrealistic ‘Form D’ and consequently, the issue was taken up with the authorities for its omission. As a result, the Labour Department has replaced the existing ‘Form D’ with the previous ‘Form D’ which was simple and the same needs to be submitted on or before the 1st of February, each year.

To read more, please: Click Here.

Next Version of UAN (UAN 2.0)

The new version of UAN 2.0 has been released and under this new version, the UAN would be allotted upfront and consequently, the ECR can only be filed for employees with UAN numbers. Seeing how this is an on-going process we’ve mentioned some prominent features of the EPFO’s unified portal to support UAN (2.0):

  • Employer eSewa and Online Transfer Claim portal (OTCP) are to be combined into one unified portal and consequently, there would no longer be separate portals for challan and UAN generation.
  • The PF number is replaced with UAN for challan generation.
  • Upfront generation of UAN and seeding of KYC by individuals and as a bulk option.
  • A previous UAN can be linked under one’s present establishment even if the same was not verified by the previous employer. Hence, there would not be any issues in UAN linkage with existing company's PF code.
  • An option has been provided for international workers to update their status with their respective nationalities.
  • The date of leaving can be updated for employees who exit on the previous month.
  • The ECR generation template has been modified to 11 fields from the previous 25 fields
  • Gross wages have been included as one of ECR 'challan fields'
  • The ECR will be made available for all payments; hence there is no validity/expiry of an ECR challan for payment and consequently there wouldn’t be any regeneration request from members.
  • Incentive towards pension would be automatically accounted for by the EPFO based on returns filed through the Shram Suvidha Portal under PMPRY Scheme.
  • An edit option is provided in the ECR challan in case any final correction of details is necessary before submission. Once submitted, members would be unable to alter any information or make any corrections.
  • Another 5 banks have been added to the core bank list to facilitate PF payments.
  • The salary payment date is mandatory while generating a PF challan for payment.

To read further on this topic, refer to our previous newsletters

The Monthly Chronicle - November, 2016

The Monthly Chronicle - December, 2016

Compliance Calendar for the month of January, 2017
Due date Nature of transaction Existing rules Mode
Professional Tax - States - Remittances
10th January 17 Andhra Pradesh & Madhya Pradesh State-wise regulations By Challan
15thJanuary 17 Gujarat Gujarat PT regulations By Challan
20th January 17 Karnataka Karnataka PT regulations By Challan & Online
21st January 17 West Bengal West Bengal PT regulations By Challan
30th January 17 Assam & Orissa State-wise regulations By Challan
30th January 17 Maharashtra Maharashtra PT regulations Online
PF Central
15th January 17 Remittance of Contribution EPF & MP Act, 1952 Online
ESI Central
15thJanuary 17 Remittance of Contribution (Main code and Sub codes) ESIC Act, 1948 Online
7thJanuary 17 TDS Payment Income Tax Act, 1961 Online
31stJanuary 17 TDS Return Income Tax Act, 1961 Online
Labour Welfare Fund Remittances
5thJanuary 17 Kerala (Labour Welfare Fund Act) Kerala State Labour Welfare Fund Offline
Years of experience
Global clients
49 million
Active users on the cloud

Sources: Government Notifications, Circulars, Press releases.


The information provided herein is general and not intended as legal, regulatory, tax or accounting advice and you should obtain your own independent advice regarding the matters dealt with herein. ADP assumes no liability or responsibility for any errors or omissions in the content of this document or publication and for your use of any information provided. The information contained in this document is provided “as is” without warranty of any kind, either express or implied, including without warranties of merchantability or fitness for a particular purpose, and non-infringement. All materials contained in this are protected by copyright laws, and may not be reproduced, republished, distributed, transmitted, displayed, broadcast or otherwise exploited in any manner without the express prior written permission of ADP. ADP’s names and logos and all related trademarks and other intellectual property are the property of ADP and cannot be used without its express prior written permission.


This Newsletter is not for commercial or solicitation purposes