The Employees Provident Fund Organisation (EPFO) in India announced, via its circular dated 26 September 20251, the implementation of a new Electronic Challan-cum-Return (ECR) system for provident fund returns, effective from the wage month of September 2025. This regulatory update introduces significant changes to the return filing and payment processes under the Employees Provident Fund (EPF) Act.
WHY THIS MATTERS
The revised ECR system is expected to streamline the monthly return filing and contribution process for employers and payroll managers, with direct implications for globally mobile employees participating in India’s provident fund schemes.
Prior to this update, the ECR system combined return filing and payment processes, with limited system-based validation and restricted options for correcting errors post-submission. Pension contributions for employees past retirement age and those ineligible under EPS rules were often remitted incorrectly, leading to compliance concerns and operational inefficiencies.
Key Highlights
Changes in Return Filing and Payment Processes
- Employers must file returns first; payment is initiated only after return approval.
- The new system verifies data before submission, flagging errors such as ineligible pension contributions.
- Interest under section 7Q of the EPF Act is now calculated and paid through the ECR platform.
- The existing ECR file format remains unchanged.
- Employers receive a Due Deposit Balance Summary and can choose from various payment methods.
- Prompt marking of employee exits is mandatory to maintain accurate member records.
- Downward revision is allowed only before payment initiation; upward revision is permitted at any time.
Return Categories
- Regular Return: For monthly contributions of active employees.
- Supplementary Return: For employees not included in the initial regular return, typically new joiners.
- Revised Return: For correcting previously-filed returns.
Pension Contribution Restriction
Contributions beyond age 58 are restricted unless flagged; employees joining after 1 September 2014 and earning above INR 15,000 per month are not eligible for EPS as per the notification dated 22 August 2014.
KPMG INSIGHTS
In the light of these changes, entities and organisations affected by the revamped ECR system should consider the following:
- Confirming timely marking of employee exits and verifying pension eligibility before submitting contributions.
- raining payroll staff on the new system and consulting the EPFO User Manual (Version 3.0).
If employers and payroll professionals have any questions or concerns about the new system of electronic returns and payments compliance, they should consult with their qualified tax and social security professional or a member of the GMS tax and social security team with KPMG in India (see the Contacts section).
FOOTNOTE:
1 Employees Provident Fund Organisation (Ministry of Labour & Employment, Government of India), “Circular No. Compliance/ECR Revamp/2025/12997: Launch of the revamped Electronic Challan-cum-Return (ECR) for wage month September 2025 onwards,” dated 26.09.2025.
RELATED RESOURCE:
This article is excerpted, with permission, from "EPFO Launches New Electronic Challan-cum-Return System for EPF Remittance," in Tax News Flash (29 September 2025), a publication of the KPMG International member firm in India.
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Disclaimer
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