The move is aimed at increasing the employees' take-home salary for the months of June, July and August.
The decision will aid 4.6 crore
organised sector employees
The Labour Ministry has implemented the decision to cut
employees' provident fund (EPF) contributions to 10 per cent from the
existing 12 per cent for three months till July. The move was announced last
week by Finance Minister Nirmala Sitharaman, while detailing upon the economic
measures under the Atma Nirbhar Bharat Abhiyan package. Ms Sitharaman had said
that the decision was aimed at increasing the take-home pay of 4.3 crore
organised sector employees, enrolled under the Employees' Provident Fund
Organisation (EPFO).
The decision is estimated to
infuse liquidity of Rs 6,750 crore in next three months.
The labour ministry in a
notification issued on Monday stated that the reduction in EPF contributions
shall be applicable "in respect of wages payable by it for the months of
May, June and July, 2020".
Therefore the take home pay due in June, July and August would increase, while
the employers' contributions due in June, July and August would reduce.
Giving reason for the move
it stated "whereas due to COVID-19 pandemic, lockdown is in force across
the country and the Central Government after making necessary inquiry is
satisfied that to provide liquidity in the hands of employers and employees,
there arises a need to amend the notification of April 9, 1997."
The Central Public Sector
Enterprises (CPSEs) and public sector undertakings (PSUs) will however continue
to contribute 12 per cent as employer contribution to the EPFO.
This reduction of the EPF contributions will be
applicable for workers who are not eligible for 24 per cent EPF support under
PM Garib Kalyan Package and its extension.
The government is
contributing employers and employees contributions of 24 per cent of basic
wages for those establishments that have up to 100 employee and 90 per cent of
whom earn under Rs 15,000 monthly wage since March.
Last week, Ms Sitharaman had
also announced the extension of the benefit under Pradhan Mantri Garib Kalyan
Yojana (PMGKY) for three months, where the government would contribute entire
24 per cent of EPF contributions till August, giving relief to 3.67 lakh
employers and 72.22 lakh employees.
Tags
Economy