Employees Provident Fund Contribution brought down to 10%
The government today implemented its decision to reduce Employees provident from 12% to 10% for three months till July. The finance minister, last week, announced a set of measures to revive the economy. One such measure said last Monday was a reduction in EPF contribution contributions from employees which will increase cash in the hands of the employees who are in a liquidity crisis.
The ministry said the reduction in EPF contribution will be applicable for May, June, and July. This would ensure that the take-home salary of the employee goes up and the employer’s contribution liability to come down. In this way the government ensures cash increases in the hands of both employer and employee.
The labor ministry in its notification said “In exercise of powers conferred by first proviso to section 6 of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952), the central government, after making aforesaid inquiry, hereby makes the following amendments in the said notification number S.O. 320 (E) dated the 9th April, 1997,” and also stated the reason as”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 Central Public Sector Entreprises (CPSE’S) and Public Sector Undertaking (PSU’s) have anyway planned to contribute 12% as Employer’s contribution towards Employee’s provident fund organization (EPFO).
The reduction is also applicable for workers who do not apply to PM Gareeb Kalyan Package. The government is contributing the 24 percent of the contribution from the employer and employee towards EPFO. The finance minister also announced the extension of the scheme for three months.
The step is expected to infuse Rs. 6,750 crore liquidity into the system and provide relief to 6.5 lakh establishments covered under EPFO and 4.3 crore employees. The labor ministry share on its twitter page.
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