Government to pay EPF contributions of employees and employers till Aug 2020
The decision to extend EPF contribution will give further relief to small businesses who are facing a cash crunch. The move will benefit more than 72 lakh employees.
"Cabinet approves extension of EPF contribution 24% (12% employees share and 12% employers share) for another 3 months from June to August 2020 under PMGKY/Aatmanirbhar Bharat; with total estimated expenditure of Rs.4,860 crore, the move will benefit over 72 lakh employees," stated the PIB's official Twitter handle.
Cabinet approves extension of EPF contribution 24% (12% employees share and 12% employers share) for another 3 mont… https://t.co/BqG3XZkbZP— PIB India (@PIB_India) 1594202993000
The decision will give further relief to small businesses who are facing cash crunch due to ongoing novel coronavirus pandemic.
The decision to pay both employer and employee contribution was announced back in March under the Pradhan Mantri Garib Kalyan Yojana. As announced, the payment will be made for the organisations having up to 100 employees and up tp 90 per cent of the employees are drawing wage up to Rs 15,000 per month. The decision was done to ensure that nobody suffers due to loss of continuity in the EPFO contribution.
As per the current laws, an employee having monthly salary of up to Rs 15,000 is mandatorily required to join the EPF scheme. The employee every month makes a contribution of 12 per cent of his basic plus dearness allowance (if any) to the EPF account. The employer is required to make a matching contibution. Out of the total EPF contribution (12% plus 12%), the employee's share plus employer's share of 3.67% goes to the EPF account. The balance 8.33% of the employer contribution goes to the Employees Pension Scheme (EPS).
Apart from depositing money into the EPF accounts, the government has also amended the rules wherein EPF subscriber can withdraw money from accounts to meet financial emergencies caused due to COVID-19.