On May 18, 2020, In order to retain more money in the hands of the employer and the salary payer, Ministry of Labour & Employment, Government of India (GoI), had decided to reduce the Employees’ provident fund (EPF) contributions to 10% from the existing 12% for three months till July 2020(i.e May, June, July ).
Key Points:
i.The government has taken this step to provide relief to companies and employees affected by the lockdown implemented to prevent the coronavirus (COVID-19).
ii.The move, taken in exercise of powers conferred by first proviso to section 6 of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952), comes after the announcement of reduction in PF rates by finance minister Nirmala Sitharaman as part of the government’s Rs 20 lakh crore stimulus package.
iii.However, this reduction in contribution will not be applicable to Central and State PSUs (public sector undertakings) or to establishments controlled by Government or State Governments.
iv.Government had also announced the extension of the benefit under Pradhan Mantri Garib Kalyan Yojana (PMGKY) for three months, where the government would contribute entire 24% of EPF contributions till August, giving relief to 3.67 lakh employers and 72.22 lakh employees
About Employees’ Provident Fund (EPF):
It is a popular savings scheme directed towards the salaried-class to facilitate their habit of saving money to build a substantial retirement corpus.
About Ministry of Labour and Employment:
Headquarters– New Delhi
Minister of State (Independent Charge)- Santosh Gangwar
