The Central Government of India has approved the extension of government support on EPF contributions (both employer & employee) until August 2020.
This will provide immense relief to small & medium businesses severely impacted owing to the COVID-19 crisis. The Central Government has been making the EPF contributions under the Pradhan Mantri Garib Kalyan Yojana from March 2020. These Employees’ Provident Funds contributions would be made out only to those businesses with less than 100 employees and out of which up to 90% of them are earning less than Rs 15,000 a month. The government had also reduced EPF contribution for business entities and workers to 10 percent from 12 percent till August 30, 2020.
In EPF accounts, employees contribute 12% of their salaries, and an equal amount is contributed by the employers. Of the employee’s 12% contribution, 3.76% goes towards their Employees’ Provident Funds account while the remaining 8.33% goes towards Employee’s Pensions Scheme (EPS). This move by the government to make EPF contributions for the next three months is beneficial for both employees and employers.
Employees’ Provident Fund Organization (EPFO), the retirement fund body, looks after the Employees’ Provident Fund. With a total estimated expenditure of Rs. 4,860 crore, the move will benefit over 72 lakh employees.