Liquidity boost for firms: ESIC, EPFO deadline to be extended2 min read . Updated: 01 May 2020, 11:47 PM IST
The deadline extension to 15 June will give thousands of firms a liquidity boost of around ₹15,000 crore
The Union government is likely to further push back the deadline for depositing monthly statutory provident fund and employee health insurance deductions of millions of formal sector employees till 15 June, which gives thousands of companies a liquidity boost of a total of around ₹15,000 crore.
The Employees’ Provident Fund Organisation (EPFO) deadline extension will provide a liquidity boost of around ₹12,500 crore, while the extension of the deadline for depositing Employees’ State Insurance Corporation (ESIC) deductions will help establishments save nearly ₹2,500 crore in the short run, two government officials said.
“The lockdown has been extended by two more weeks and we have to extend the deposit deadline by another 30 days. A formal announcement on this is expected in the coming days," said one of the officials mentioned above requesting anonymity.
“The details will be out soon but the April payment deadline will be around 15 June instead of 15 May. Businesses have told the ministry about the cash flow situation and how the lockdown has impacted their businesses severely," said the other official, also seeking anonymity.
This means companies will not be required to deposit the 24% of basic and house rent allowance deductions as EPF contribution—12% as the employers’ share and 12% as the employees’ share—for April on their prefixed deadline of 15 May.
Under ESIC rules, industries deposit 4% of workers’ salaries (3.25% employers’ share and 0.75% employees’ share) as a statutory deduction to meet the healthcare needs of industrial workers.
The ESIC, which guarantees industrial workers health insurance, has already extended the deadline for depositing statutory deductions for February and March till May 15.
The April deduction deposit deadline is now set to be extended till 15 June.
Industry representatives who met Union labour minister Santosh Gangwar and labour secretary Heeralal Samariya on Friday over video conference highlighted their demands on the need for extending the deadline for depositing statutory deductions and urged the government to allow them to pay just 50% of the salary of April to workers as they are facing a cash crunch.
“The labour minister and the labour secretary listened to us. We need their support and requested them to take our grievance to the prime minister. How will we take care of the workers if the business does not survive?" asked Sanjay Bhatia, head of the micro, small and medium enterprises committee at the Federation of Indian Chambers of Commerce and Industry (Ficci).
The minister has invited all industry members to another meeting on 8 May, said Bhatia, the managing director of Hindustan Tin Works.
“Complete waiver of PF and ESI dues is what is required now. I strongly believe that a clear message is coming from the government in next few days related to the wage stimulus and other issues of the employers," said Michael Dias, secretary of the Delhi Employers’ Association. Industry representatives urged the labour ministry to incorporate changes in the labour codes, especially the work-from-home concept and the welfare of gig workers, added Dias.
A labour ministry spokesperson chose not to comment.