PF reduction will be applicable for 3 mths

PF reduction will be applicable for 3 mths

Tribune News Service

Jalandhar, May 23

Regional PF Commissioner Sunil Kumar Yadav has said the government has announced various measures to provide relief to employers and employees of the establishments covered under the EPF and MP Act, 1952, distressed by lockdown to prevent spread of Covid-19 and other disruptions due to pandemic.

The reduction in statutory rate of contribution from 12 per cent to 10 per cent would be applicable on May-June-July salary period for all class of establishments covered under the Act announced by the Central government as part of “Atma Nirbhar Bharat” package has been notified. The notification is available under the tab ‘COVID-19’ on the home page of EPFO website.

The above reduction of rate of contribution is not applicable to establishments like Central and state public sector enterprises or any other establishment owned or controlled by or under control of the Central government or the state government. These establishments shall continue to contribute 12 per cent of basic wages and dearness allowances.

The reduced rate is also not applicable for PMGKY beneficiaries, since the entire employees EPF contributions (12 per cent of wages) and employers’ EPF & EPS contribution (12 per cent of wages), totalling 24 per cent of the monthly wages is being contributed by the Central Government.

Reduction in the rate of EPF contributions from 12 per cent to 10 per cent of basic wages and dearness allowances is intended to benefit both 4.3 crore employees/members and employers of 6.5 lakh establishments to tide over the immediate liquidity crisis to some extent.

As a result of reduction in the statutory rate of contributions from 12 per cent to 10 per cent, the employee shall have a higher take home pay due to reduction in deduction from his pay on account of EPF contributions and employer shall also have his liability reduced by 2 per cent of wages of his employees. If Rs 10,000 is monthly EPF wages, only Rs 1,000 instead of Rs 1,200 is deducted from employee’s wages and employer pays Rs1,000 instead of Rs1,200 towards EPF contributions.

In cost to company (CTC) model, if Rs10,000 is monthly EPF wages, in CTC model the employee gets Rs 200 more directly from employer as employer’s EPF/EPS contribution is reduced and Rs 200 less is deducted from his/her wages.

Under the EPF Scheme, 1952, any member has the option to contribute at a rate higher than statutory rate (10 per cent) and employer can restrict his contributions 10 per cent (statutory rate) in respect of such employee.

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