Policy

EPF contributions for smaller units to continue for 3 more months

Our Bureau New Delhi | Updated on May 13, 2020 Published on May 13, 2020

Employer and employee contribution reduced to 10 per cent each for establishments covered under EPFO

Employee can take away more cash while employer will have more liquidity as the government relaxed norms for contribution in the Employee Provident Fund Scheme (EPF). However, Central and State Public Sector Undertakings employer will continue to contribute based on the existing norm.

As a part of ‘Atamnirbhar Bharat’ package, Finance Minister Nirmala Sitharaman announced two measures --support under Pradhan Mantri Garib Kalyan Package (PMGKP) for payment of 12 per cent of employer and 12 per cent of employee contributions will continue for three more months i.e. June, July and August.

The other proposal states that statutory PF contribution of both employer and employee will be reduced to 10 per cent each from existing 12 per cent each for all establishments covered by EPFO for next three months. CPSEs and State PSUs will, however, continue to contribute 12 per cent as employer contribution.

According to the Finance Minister the first proposal will provide liquidity relief of ₹ 2,500 cr to 3.67 lakh establishments and for 72.22 lakh employees. The second proposal will provide relief to about 6.5 lakh establishments covered under EPFO and about 4.3 crore such employees, she said while adding that this will provide liquidity of ₹ 6,750 crore to employers and employees over 3 months.

Simply put, the government will continue to provide 24 per cent of amount comprising basic plus dearness allowance for employees and employers for a unit employing up to 100 persons and 90 per cent of those employees earning less than ₹ 15,000 a month. Earlier, this proposal was for the month of March, April and May.

Lohit Bhatia, President of Indian Staffing Federation (ISF) said that the Federation has been talking to the government regarding various non-cash/non-subsidy based announcements, among them reduction of employer and employee contribution was suggested as well for this financial year, thus reducing employment cost as well as increasing net take home salary for employees.

“While the government did announce the same its time bound for only three months , we would recommend this to be extended up to March 31, 2021 , as this is liquidity enhancing measure and has no bearing on Government finances directly,” he said.

Published on May 13, 2020

A letter from the Editor

Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Sincerely,

Support Quality Journalism
coronavirus
employee
EPFO
  1. Comments will be moderated by The Hindu Business Line editorial team.
  2. Comments that are abusive, personal, incendiary or irrelevant cannot be published.
  3. Please write complete sentences. Do not type comments in all capital letters, or in all lower case letters, or using abbreviated text. (example: u cannot substitute for you, d is not 'the', n is not 'and').
  4. We may remove hyperlinks within comments.
  5. Please use a genuine email ID and provide your name, to avoid rejection.
Covid-19 economic stimulus: Is the ₹90,000-crore liquidity support for discoms viable
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.