The Ministry of Labour and Employment has implemented the decision to reduce the Employee's Provident Fund (EPF) contribution from 12% to 10% for three months by July. This will provide increased salaries to 4.3 crore organized sector employees and provide some liquidity relief to 6.5 lakh employers amid coronavirus crisis and lockdown. The decision will provide liquidity relief of Rs. 6,750 crore in the next three months. The implementation of this decision by the Ministry of Labour will enable the employees to reach increased salaries in the month of June, July, and August. With this, the EPF contribution of June, July, and August will be reduced in the EPF account of the employees. Citing the reason behind the move, the ministry said, "The lockdown has been in place in the country since March 25 to prevent the infection of the Coronavirus epidemic. The central government has decided to amend the notification dated April 9, 1997, to provide more liquidity in the hands of employees and employers after necessary inquiries."
Last week, Finance Minister Nirmala Sitharaman made a major announcement under the Self-reliant India package. She had announced a reduction in EPF contribution to provide more salaries in the hands of employees and also to provide relief to employers in outstanding PF payments. The finance minister had announced to reduce the contribution of both employees and employers from 12-12% to 10-10%. However, the employer's contribution to CPSEs and STATE PSUs has been kept at 12%.
The finance minister had stated that the scheme of reduction in EPF contribution is also for the employees who are not eligible to avail benefits under 24% EPF support and Pradhan Mantri Garib Kalyan package and its expansion. He had said that the scheme to cut EPF contributions would benefit 6.5 lakh employers and 4.3 crores, employees. With this, the finance minister had also announced three months extension of the scheme to be given by the Government to contribute EPF to employees who paid less than 15,000 small companies.
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