Aadhaar: Still Mandatory for PF


Employee’s provident Fund is one of the major social security schemes in India. It is administered by EPFO which notified linking of Aadhaar with provident scheme as mandatory. But recently, the Supreme Court of India in K.S. Puttaswamy, J and another vs. Union of India, has upheld the constitutional validity of Aadhaar scheme and struck down some of the contentious provisions on mandatory linking of the unique ID with various non-essential services. This Judgment gave rises to confusion whether Aadhaar is still necessary for PF Schemes; and Aadhaar linking with PF is mandatory or not. To clarify the confusion, we have to go through the judgment itself.

Benefits of linking Aadhaar with PF: For all the EPF Account holders it has become compulsory to link an individual’s PF account with their Aadhaar numbers. With linking your 12-digit Aadhaar with EPF account, details of the account holders can be directly verified with the help of Aadhaar number, which gives transparency to EPFO to confirm that a single person is holding only one EPF or UAN account. This will reduce the duplicity of accounts. Linking ensures that only you can access your EPF account for making EPF withdrawals and payments.

About the Judgment:

On Wednesday, 26th September 2018, the Supreme Court Ruled on the constitutionality of India’s controversial biometric identity project called Aadhaar. A five-judge bench struck down section 57 of the Aadhaar Act, which permitted corporate entities or even individuals to demand an Aadhaar card in exchange for goods or services. As a result, now no school office, or company can force anyone to reveal the unique 12-digit number. Aadhaar is not mandatory for opening bank account or for mobile connections.  On the other hand, it ruled that Aadhaar is still mandatory for filing tax returns and to access welfare schemes like PF and ESI. However, no person will be denied benefits under social welfare scheme because of the failure of authentication through Aadhaar. In the case of Aadhaar, the opposing concerns were “privacy” and the larger objective of “welfare.

Again, the Central Provident Fund Commissioners (CPFCs) by issuing a circular on 18th October 2018 urged to avoid any coercive action by way of prosecution in provident fund (PF)-Aadhaar linking cases till further order of the Supreme Court of India. Previously, EPFO was pressurizing companies to comply with the PF-Aadhaar linking rule by sending them prosecution notices. As till now, EPFO has not made any circular on withdrawing Aadhaar linking with PF, it would be a noteworthy relief for employers as many employers had been served with prosecution notices for failing to remit their PF contributions in time due to not being able to link their employees PF accounts with Aadhaar.

Significance of Aadhaar for social welfare Schemes in the Judgment:

In the event of the landmark Judgment, the Supreme Court said that Aadhaar for welfare schemes a ‘legitimate exercise’. The Supreme Court has cleared mandatory Aadhaar enrolment of recipients of government welfare benefits. Various social welfare schemes implemented by various ministries required possession of Aadhaar, the 12-digit unique identity document. These Schemes include the PF Scheme, Pension Scheme, ESI Scheme, MGNREGA Scheme, subsidised food-grains, social pensions, cooking gas subsidies, scholarships, etc.

Justifying the scheme, the Court said the state was using Aadhaar for providing deserving section of the society their “right to food, right to livelihood, right to receive pension and other social assistance benefits” to make them enjoy their right to life.

Need of Aadhaar emerged to ensure benefit to be given to  genuine beneficiaries. For efficient and transparent delivery of benefits and settlement of claims, it is very important to identify the right beneficiary. Here, Aadhaar serves as authentic document to identify the real beneficiary by preventing wrong/fake or duplicity of beneficiary. That is why Aadhaar is still relevant for PF purpose.

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