Dimapur, May 22 (MExN): Various relief measures has been announced for the employers and employees of the establishments covered under the EPF and MP Act, 1952 distressed by lockdown to prevent spread of COVID-19 and other disruptions due to pandemic.
The reduction in statutory rate of contributions from 12% to 10% for wage months of May, June 2020 and July for all class of establishments covered under the EPF & MP Act 1952 announced on May 14 by the Central Government as part of ATMA-Nirbhar Bharat package has been notified vide SO 1513 (E) dated 18.05.2020 published in the Gazette of India. The notification is available under the TAB-COVID-19 on the home page of the EPFO website.
The above reduction of rate of contribution is not applicable to establishments like Central and State Public Sector Enterprises or any other establishment owned or controlled by or under control of the Central Government or State Government. These establishments shall continue to contribute @ 12% of basic wages and dearness allowances.
The reduced rate is also not applicable for PMGKY beneficiaries, since the entire employees EPF contributions (12% of wages) and employers’ EPF & EPS contributions (12% of wages) totalling 24% of monthly wages is being contributed by the Central Government.
Reduction in rate of EPF contributions from 12% to 10% of basic wages and Dearness allowances 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.
As a result of reduction in statutory rate of contributions from 12% to 10%, the employee shall have a higher take home pay due to reduction in deduction from his pay on account of EPF contributions and employer shall also have his liability reduced by 2% of wages of his employees. If Rs 10000/- is monthly EPF wages, only Rs 1000 instead of Rs 1200 is deducted from employee’s wages and employer pays Rs 1000 instead of Rs 1200 towards EPF contributions.
In Cost to Company (CTC) model, if Rs 10000 is monthly EPF wages, in CTC Model the employee gets Rs 200 more directly from employer as employer’s EPF/EPS contribution is reduced and Rs 200/- less is deducted from his/her wages.
Under the EPF Scheme, 1952 any member has the option to contribute at a rate higher than statutory rate (10%) and employer can restrict his contributions @ 10% (statutory rate) in respect of such employee.
