The government last month announced a reduction in Employment Provident Fund (EPF) from 12 per cent to 10 per cent for both employer and employees as part fo the Atmanirbhar Bharat stimulus package. The move was aimed at providing relief to employers and employees in order to increase the take-home salary of the latter.
Here’s a list of Frequently asked questions of the recent reduction in EPFO:
- What is revised rate of EPF contribution announced by the government? The Atmanirbhar package the statutory rate of EPF contribution of both employer and employee has been reduced to 10 per cent of basic wages and dearness allowances from existing rate of 12 per cent for all class of establishments covered under the EPF & MP Act, 1952.
- What is the objective of reduction in rate of contributions? Reduction in rate of EPF contributions from 12% to 10% is intended to benefit both 4.3 crore employees, members and employers of 6.5 lakhs establishments to tide over the immediate liquidity crisis to some extent during the pandemic.
- What is the period for which the reduced rate of contribution is applicable? The statutory rate of contribution will be 10% for wage months- May June and July this year.
- Who are eligible for the reduced rate of contributions? It is applicable to all class of establishments covered under the EPF & MP Act, 1952, except the establishments like central and states public sector enterprises or any other establishment owned or controlled by or under control of the central or state government. The reduced rate is also not applicable to establishments eligible for PMGKY benefits, since the entire employees EPF contributions (12% of wages) and employers’ EPF & EPS contribution (12% of wages), totalling 24% of the monthly wages is being contributed by the Central Govt.
Are exempted establishments eligible for reduced rate of contribution? Yes. The reduced rate is applicable to exempted establishments also…Read more>>