New EPF rules rolled out: 5 things to know
The Ministry of Labour & Employment has notified new rules that allow for reduced employees' provident fund (EPF) contributions for three months till July. Finance Minister Nirmala Sitharaman on May 13 announced a reduction of statutory provident fund (PF) contribution by both employers and employees to 10 per cent of basic wages from the existing 12 per cent for the next three months (May, June and July). The decision was taken to offer more take home salary for employees and to give relief to employers in payment of the PF, amounting to liquidity support of Rs 6,750 crore. In line with FM Sitharaman's announcement, the labour ministry issued a circular on Monday which said that the reduction in EPF contributions will be applicable "in respect of wages payable by it for the months of May, June and July, 2020".
"Whereas due to Covid-19 pandemic, lockdown is in force across the country and the Central Government after making necessary inquiry is satisfied that to provide liquidity in the hands of employers and employees, there arises a need to amend the notification of the Government of India in the Ministry of Labour published in the Gazette of India, Extraordinary, Part II, section 3, sub-section (ii) vide number S.O. 320(E), dated 9th April, 1997," the Ministry of Labour notified.
Here are 5 things to know about new EPF rules:
1. The revised rule will be applicable for the three months - May, June and July.
2. The decision to reduce the EPF contributions is expected to benefit 4.3 crore employees and 6.5 lakh employers facing liquidity crisis due to coronavirus-led nationwide lockdown.
3. The benefit of cut in EPF contribution will be available to all establishments covered under the Employees' Provident Fund Organisation or EPFO, including the exempted PF trusts. This scheme will not be applicable for workers eligible for 24% EPF support under PM Garib Kalyan Package.
4. In March, FM had announced that the government will take care of EPF contribution of both the employer and the employee for the next three months, which was further extended till July. This scheme is applicable for organisation with up to 100 employees, where 90 per cent of employees draw less than Rs 15,000 salary.
5. The Central Public Sector Enterprises (CPSEs) and public sector undertakings (PSUs) will, however, continue to contribute 12 per cent as employer contribution to the EPFO.