Intending to deliver more take-home salary for employees and to give assistance to employers in payment of provident fund, India’s Finance Minister, Nirmala Sitharaman, in her press conference on Wednesday declared that the EPF (Employees’ Provident Fund) involvement would be condensed for businesses and workers for three months, amounting to support of Rs 6,750 crore.
Sitharaman said that it was essential to deliver more take-home salary to staffs and also to give relief to employers in the reimbursement of provident fund dues.
The Finance Minister said, “Statutory PF contribution of both employer and employee will be reduced to 10 per cent each from the current 12 per cent for all establishments covered by EPFO for the next three months.”
For state-run companies, it will last to pay 12 per cent as an employer contribution. This, as per the administration, will deliver relief to about 6.5 lakh formations enclosed under EPFO and about 4.3 crore employees.
The Ministry of Finance also said it would pay the EPF involvement for employees of businesses to help them recover from the coronavirus outbreak.
To ease financial stress as businesses, get back to work, the administration will continue EPF support for business and workers for three more months, giving a liquidity relief of Rs 2,500 crore.
“The EPF of two quarters will be paid by the government for companies with up to 100 employees where 90 per cent of the staff is paid up to Rs 15,000 a month,” the Ministry explained.
The government had made payments of 12 per cent of employer, and 12 per cent of employee contributions into EPF accounts for three months (March, April and May).
Due to this big relief, the employee’s take-home pay will be squeezed as a portion of the gross salary will not be subtracted from the Provident Fund.