There comes yet another relief to the employers and employees afflicted due to nationwide lockdown, under PM’s 20 lakh crore package for Atma Nirbhar Bharat.
Reduction in EPF contributions
The Ministry of Labour and Employment has lately announced to reduce the Employees’ Provident Fund contributions from 12% to 10% for three months. This would greatly benefit 4.3 crore employees of the organized sector by increasing their take-home pay and also reduce the liability of 6.5 lakh employees who were staggering under liquidy crunch under lockdown to participate in ceasing the spread of COVID-19.
This move is inferred to instill liquidity of Rs 6,750 crore till July.
Where is the reduction in EPF contributions applicable and where not?
Giving the reason for the move, the Ministry of Labour and Employment stated: “whereas due to COVID-19 pandemic, lockdown is in force across the country and the Central Government after making a necessary inquiry is satisfied that to provide liquidity in the hands of employers and employees, there arises a need to amend the notification of April 9, 1997.”
The 2% reduction in the EPF contributions that is 10% from the previous 12%, will be applicable in the wages payable by it in the month of May, June, and July, as said by Labour Ministry in a notification issued on this Monday.
As the government in the Central Public Sector Enterprises (CPSEs) and public sector undertakings (PSUs), is the employer, hence, will continue to contribute 12% to the Employees’ Provident Fund Organization (EPFO).
Also, this reduction in EPF contributions would not be applicable for the workers who are eligible for 24% EPF support under PM Garib Kalyan Package and its extension.
However, small establishments who have up to 100 workers only, out of which, 90% earn less than Rs 15,000 per month since March have government contributing their employers and employees contributions of 24% of basic wages.
Ms. Nirmala Sitharaman had also announced last week the extension of the benefits under c(PMGKY) for the next three months under which the government would be contributing entire 24% of EPF contributions till August, giving relief to 3.67 lakh employers and 72.22 lakh employees.