The Labour Ministry has notified new rules that allow for reduced EPF or employees’ provident fund contribution for three months. Last week, Finance Minister Nirmala Sitharaman had announced reduction of statutory provident fund contribution by both employers and employees to 10% of basic wages from the existing 12% for the next three months. The decision was taken to increase take-home salary for employees and give some relief to employers in payment of provident fund dues. It will inject liquidity of ₹6,750 crore to employers and employees over three months.
“Whereas due to Covid-19 pandemic, lockdown is in force across the country and the Central Government after making necessary inquiry is satisfied that to provide liquidity in the hands of employers and employees, there arises a need to amend the notification of the Government of India in the Ministry of Labour published in the Gazette of India, Extraordinary, Part II, section 3, sub-section(ii) vide number S.O. 320(E), dated 9th April, 1997,” the Ministry of Labour said in a May 18 notification.
Here are 5 things to know about new EPF rules:
1) The decision is expected to benefit 4.3 crore employees and 6.5 lakh employers reeling under liquidity crunch due to COVID-19 lockdown.
2) This will be applicable for the three months – May, June and July.
3) The cut in EPF contribution will be applicable to all establishments covered under the Employees’ Provident Fund Organisation or EPFO, including the exempted PF trusts.
4) However, central public sector enterprises and state PSUs will, however, continue to contribute 12% as employer’s contribution towards EPF.
5) The cut in EPF contribution will not be applicable for workers eligible for 24% EPF support under PM Garib Kalyan Package.
Under the Pradhan Mantri Garib Kalyan Package (PMGKP), the government supported the payment of 12% of employer and 12% employee contributions into EPF accounts. This was extended for another three months – June, July and August.
This extension of the benefit will provide a liquidity relief of ₹2,500 crore to 3.67 lakh establishments and for 72.22 lakh employees…Read more>>