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Wednesday, September 29, 2021

Coronavirus package: Govt to pay 24% EPFO contribution for three months

Union Finance Minister Nirmala Sitharaman made a slew of announcements as part of the government's Rs 1.7 lakh crore relief package to combat COVID-19.

By: ENS Economic Bureau | New Delhi |
Updated: March 26, 2020 3:41:44 pm
Coronavirus package: Govt to amend Provident Fund regulations to aid EPFO members The announcement was part of the government’s Rs 1.7 lakh crore relief package to combat COVID-19. (File Photo)

As part of the financial package worth Rs 1.7 lakh crore to deal with the COVID-19 pandemic, the government on Thursday announced measures for organised workers by bearing the contribution to the Employees’ Provident Fund for low-income workers, relaxing withdrawal conditions from the EPF account for its members along with an insurance scheme for health workers.

Safai karamcharis, ward boys, nurses, paramedics, technicians, doctors and specialists and other health workers would be covered by a special insurance scheme, wherein if while treating COVID-19 patients they meet with some accident, then compensation of Rs 50 lakh would be given.

All government health centres, wellness centres and hospitals of Centre and States would be covered under this scheme with approximately 22 lakh health workers expected to be provided insurance.

For the organised sector under EPFO, the government announced that it’ll pay both employees’ and employers’ monthly contribution under the Employees’ Provident Fund (EPF) for workers earning below Rs 15,000 a month in establishments having upto 100 employees. This is estimated to have a financial outgo of around Rs 5,000 crore.

The government has also allowed workers a non-refundable advance of up to 75 per cent of their credit or three months of wages, whichever is lower.

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Finance Minister Nirmala Sitharaman said the government will pay 24 per cent, including 12 per cent of the employers’ contribution and 12 per cent of the employees’ contribution, of the monthly EPF contribution for the next three months. “This may benefit 80 lakh employees and expected to incentivise 4 lakh establishments,” she said.

Sitharaman further said that the EPF scheme regulations would be amended because of the prevailing pandemic situation to allow a non-refundable advance of up to 75 per cent of the amount standing to the credit to the member or three month of wages, whichever is lower. “This is expected to benefit 4.8 crore workers registered with EPFO,” she said.

Under the EPF scheme, employees and employers have to contribute an equal amount of 12 per cent of the employees’ basic salary plus dearness allowance. From the employer’s EPF contribution, 8.33 per cent is marked for the Employee Pension Scheme and the remaining to the PF account of the employer. The EPS component is subject to a wage cap of of Rs 15,000, or actual basic pay, whichever is lower.

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