India implements cut in EPF contribution to 10 per cent for May, Jun, July

India implements cut in EPF contribution to 10 per cent for May, Jun, July

NEW DELHI: India’s Ministry of Labour & Employment has implemented the decision to cut employees’ provident fund (EPF) contributions to 10 per cent from the existing 12 per cent for three months till July.nnThis would increase 4.3 crore organised sector employees’ take home pay and reduce the liability of 6.5 lakh employees reeling under liquidity crunch under lockdown to contain COVID-19.nnThe decision is estimated to infuse liquidity of Rs 6,750 crore in next three months.nnThe labour ministry in a notification issued on Monday stated that the reduction in EPF contributions shall be applicable “in respect of wages payable by it for the months of May, June and July, 2020”.nnTherefore the take home pay due in June, July and August would increase, while the employers’ contributions due in June, July and August would reduce.nnGiving reason for the move it stated “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 April 9, 1997.”nnLast week, Finance minister Nirmala Sitharaman had announced reduction of statutory provident fund contribution by both employers and employees for next three months.nnThe Central Public Sector Enterprises (CPSEs) and public sector undertakings (PSUs) will however continue to contribute 12 per cent as employer contribution to the Employees’ Provident Fund Organisation (EPFO).nnThis reduction of the EPF contributions will be applicable for workers who are not eligible for 24 per cent EPF support under PM Garib Kalyan Package and its extension.nnThe government is contributing employers and employees contributions of 24 per cent of basic wages for those establishments that have up to 100 employee and 90 per cent of whom earn under Rs 15,000 monthly wage since March.nnLast week, Sitharaman 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 per cent of EPF contributions till August, giving relief to 3.67 lakh employers and 72.22 lakh employees.nnSource: Press Trust of India

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