The newly amended EPF norms-2020 will provide much-needed relief to the employers, employees, PF members, and NPS subscribers under duress owing to the COVID-19 pandemic. India’s Ministry of Labour and Employment put the new norms into force, reducing employees’ provident fund contribution for three months, from May 2020 to July 2020. The Finance Minister has also announced a reduction of statutory provident fund contribution by both employers and employees to 10% of basic wages from the existing 12%. The statutory rate of contribution is now 10% for wage months May 2020, June 2020, and July 2020. This effort made by the government to reduce the 12% PF contribution to 10% will help to increase the take-home salary of employees.
The PF withdrawal rules have also been amended. Any person who is in need of funds owing to the COVID pandemic can withdraw an amount equivalent to three months’ worth of basic and dearness allowance (DA) or 75% of the credit balance in the account, whichever is lower. The central public sector enterprises and state PSUs are not subject to the newly amended EPF norms 2020. They will continue to contribute 12% to the employer’s contribution.
Newly amended EPF norms-2020 allow PF members and NPS subscribers to have partial withdrawals. At the same time, it does not apply to workers who are eligible for 24% EPF support under Pradhan Mantri Garib Kalyan Package (PMGKP). This is because the government is covering the employee and employer contributions for these workers with a monthly salary of up to Rs.15,000.
The Financial Minister had also announced that the benefit under Pradhan Mantri Garib Kalyan Yojana will be extended for three months. The government would fund 24% of EPF contributions until August, which will give relief to 3.67 lakh employers and 72.22 lakh employees.
Due to the unprecedented outbreak of COVID-19 and lockdown, a grace period of 30 days from 16 April 2020 to 15 May 2020 has been granted for the filing of the Electronic Challan cum Return to employers who have disbursed wages for March 2020 to their employees. So, the employers can deposit the PF contributions and file the ECR for March 2020 by the extended due date.
The newly amended EPF norms-2020 will help 4.3 crore employees and 6.5 lakh organizations to overcome the need for liquidity.