New EPFO Rules: In a major development, the Ministry of Labor and Employment introduced the decision to slash contributions from the Provident Fund of Employees (EPF) to 10% from the existing 12% for three months until July. It will raise the take-home pay of 4.3 crore coordinated sector workers and minimize the liability of 6.5 lakh employers who reel under a cash crunch to maintain COVID-19 under lockdown. The decision is projected at infusing Rs 6,750 crore liquidity over the next three months.
Labour Ministry’s Notification: Key Points to Know
- In a notice released on Monday, the Labor Ministry clarified that the reduction in EPF payments applies to the salaries it pays for the months of May, June, and July 2020.
- The take-home pay due in June, July, and August will also be increased.
- This would reduce the employers’ contributions due in June, July, and August.
Furthermore, providing reasons for the move, it claimed that, because of the COVID-19 pandemic, the lockdown is in place throughout the country and the central government is satisfied that the notification of 9 April 1997 needs to be revised to provide liquidity in the hands of employers and employees.
Reduction of Statutory PF: Nirmala Sitharaman’s Announcement
Finance Minister Nirmala Sitharaman declared last week that both employers and workers slashing the mandatory provident fund contribution for the next three months. However, Central Public Sector Enterprises (CPSEs) and Public Sector Enterprises (PSUs) will have to contribute 12% to the Employees Provident Fund Organization (EPFO) as an employer contribution. The reduction in EPF contributions would apply to staff who are not eligible for 24% EPF support under PM Garib Kalyan Package and its extension.
The government is contributing employers and employee’s contributions of 24% of basic wages for those establishments that have up to 100 employees and 90% of whom earn under Rs 15,000 monthly wage since March. Users can stay in touch with this page for the latest business news around the world.