EPF contribution reduced, take-home pay to go up
1 min read 13 May 2020, 04:57 PM ISTThe government also announced an extension by another three months a scheme under which the government pays the EPF contribution of employees and employers.
PremiumTo increase take-home salary for employees and to give relief to employers in payment of provident fund, Finance Minister Nirmala Sitharaman today said that for next three months EPF or employee provident fund contribution will be 10% each for employees and employers as compared to the statutory obligation of 12%. Experts welcomed the move.
“The move by the government to reduce the 12% PF contribution to 10% will help increase the take home pay of employees. It will also reduce the cost to the employers, especially for international workers where the company picks up the cost," said Saraswathi Kasturirangan, partner at Deloitte India.
The finance minister today also announced an extension by another three months a scheme under which the government pays the EPF contribution of employees and employers. Under this scheme, the central government pays 24% of the monthly wages into EPF accounts below ₹15,000 per month, who are employed in establishments having up to one hundred employees, with 90% or more of such employees earning monthly wages less than ₹15,000. This scheme will be now available till August.
Nearly 3.6 lakh establishments and 72 lakh employees have benefited from this scheme, the finance minister said. The central government had launched this EPF contribution scheme under Pradhan Mantri Garib Kalyan Yojana (PMGKY) on March 26 to help the economically weaker sections cope with the COVID-19 pandemic.
The government had earlier announced a COVID-19 non-refundable advance scheme under which Employees Provident Fund Organisation or EPFO had allowed withdrawal of three months'' basic wages (basic pay plus dearness allowances).
Retirement fund body EPFO has also allowed employers to file monthly PF returns without making simultaneous payment of dues, giving a relief to about 6 lakh firms amid lockdown to combat the COVID-19 crisis.
Currently, the employers are required to file provident fund (PF) returns and make payment of dues simultaneously.
The PF returns have details about employees' and employers' contributions towards the social security scheme run by the Employees' Provident Fund Organisation (EPFO). (With Agency Inputs)
