The government yesterday says to reduced EPF contributions for businesses and workers for three months. Its main focus to provide more take-home salaries for employees and provide relief to employers.
“For the next three months, the EPF contributions will reduce by 10 percent. It is reducing from the current 12 percent for all entities covered by the EPFO,” the minister said. This will provide relief to about 6.5 lakh companies covered by EPFE and about 4.3 million such employees.
However, state-run firms will continue to pay the employer contribution of 12 percent.
Reduced EPF contributions, how to affect to the employers and employees
The Minister of Finance Nirmala Itharaman said this. It was necessary to provide relief to the employers in the payment of provident fund arrears. And also it will provide higher salaries to the employees.
The government also said that the EPF was contributing to help employees in the business overcome the virus crisis.
The Government will provide EPF assistance to businesses and workers for another three months to ease financial stress as businesses return to work.
Nirmala Sitharaman said yesterday, “Rs 15,000 per month paid to the 90 percent of the staff. And also the government paid the two-quarter EPF for companies with 100 employees.” The government says this will help businesses facing financial stress when they go back to work. It will also increase the disposable income of employees.
Through Reduce EPF Contribution, What are the Government Expects
The government expects to provide a liquidity relief of Rs 2,500 crore. This will benefit 72.22 lakh employees. The Government stated that yesterday, this will amount to a liquidity support of Rs 6,750 crore.
In March, April and May, the government paid 12 percent of employers and 12 percent of employee contributions to EPF accounts. This extended for another three months in June, July, and August.
The relaxation of the EPF contribution is part of a massive stimulus package of Rs.20 lakh to restart the virus-hit economy.
The purpose of the EPF fund
The purpose of a provident fund is to save employees a percentage of their monthly salary. Under the Employees Provident Fund Scheme, an employee contributes to the scheme and the employer makes an equal contribution. The employee gets a lump sum on retirement.