Cabinet approves the proposal to extend the EPF contribution 24% (12% employees share and 12% employers share) till August 2020
The total expenditure of the EPF contribution plan is estimated at Rs.4,860 crore
New Delhi: The government has decided to continue paying EPF of both employee and the employer till August 2020. The decision was taken in the cabinet meeting held on July 8. "The Union Cabinet chaired by Prime Minister Narendra Modi on Wednesday has given its approval for extending the contribution both 12% employees' share and 12% employers' share under Employees Provident Fund, totalling 24% for another 3 months from June to August 2020. The decision is part of the package announced by the Government under Pradhan Mantri Garib Kalyan Yojana (PMGKY) and Aatmanirbhar Bharat in the light of COVID-19" an official statement issued by the government mentioned.
This approval is in addition to the existing scheme for the wage months of March to May 2020 approved on April 15, 2020. The total estimated expenditure for the scheme is of Rs 4,860 crore. The government expects over 72 lakh employees in 3.67 lakh establishments will get benefitted of this decision. The government will provide Budgetary Support of Rs 4800 crore for the year 2020-21 for this purpose.
"For the wage months of June, July and August 2020, the scheme will cover all the establishments having upto 100 employees and 90% of such employees earning less than Rs 15,000 monthly wage. About 72.22 lakh workers working in 3.67 lakh establishments will be benefited and would likely to continue on their payrolls despite disruptions" mentioned the statement. The beneficiaries entitled for 12% employers' contribution for the months of June to August 2020 under Pradhan Mantri Rozgar Protsahan Yojana (PMRPY) will be excluded to prevent overlapping benefit.
"Due to prolonged lockdown, it was felt that businesses continue to face a financial crisis as they get back to work. Therefore, the Finance Minister Nirmala Sitharaman, as part of Aatmanirbhar Bharat, announced on May 13, 2020, that the EPF support for business and workers will be extended by another 3 months viz. for the wage months of June, July, and August 2020" the statement added.
As per the current laws, an employee having a monthly salary of up to Rs 15,000 is mandatorily required to join the EPF scheme. The employee every month makes a contribution of 12 percent of his basic plus dearness allowance (if any) to the EPF account. The employer is required to make a matching contribution. Out of the total EPF contribution (12% plus 12%), the employee's share plus the employer's share of 3.67% goes to the EPF account. The balance of 8.33% of the employer contribution goes to the Employees Pension Scheme (EPS).
(PSU Watch- India's Business News centre that places the spotlight on PSUs, Bureaucracy, Defence and Public Policy is now on Telegram. Join PSU Watch Channel in your Telegram and stay updated)