With an aim to provide more take-home salary for employees and to give relief to employers in payment of provident fund, Finance Minister Nirmala Sitharaman on Wednesday announced that the EPF contribution will be reduced for businesses and workers for three months, amounting to a liquidity support of Rs 6750 crores.
“Statutory PF contribution of both employer and employee will be reduced to 10% each from the existing 12% each for all establishments covered by EPFO for the next three months,” Sitharaman said while announcing the first tranche of Rs 20 lakh crore economic boosters declared last night by Prime Minister Narendra Modi to cushion the blows of Covid-19.
It has been decided to reduce statutory PF contribution of both employer and employee to 10% each from existing 12% each for next 3 months for all establishments covered by EPFO: Smt @nsitharaman #AatmaNirbharBharatAbhiyan pic.twitter.com/TVWYb6pGbt
— NSitharamanOffice (@nsitharamanoffc) May 13, 2020
The move is expected to provide relief to about 6.5 lakh establishments covered under EPFO and about 4.3 crore such employees.
This scheme will be applicable for workers who are not eligible for 24% EPF support under the PM Garib Kalyan package and its extension. CPSEs and State PSUs will, however, continue to contribute 12% as an employer contribution.
Separately, the government also decided to continue EPF support for business and workers for three more months, providing a liquidity relief of Rs 2,500 crore in order to ease financial stress as businesses get back to work. Under Pradhan Mantri Garib Kalyan package, payment of 12% of employer and 12% employee contributions was made into EPF accounts of eligible establishments. This was provided earlier for salary months of March, April and May 2020.
This support will be extended by another three months to salary months of June, July and August 2020. This will provide liquidity relief of Rs 2500 crore to 3.67 lakh establishments and for 72.22 lakh employees.
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