Fri. Mar 29th, 2024
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The Ministry of Labour & Employment has implemented a cut in the employees’ provident fund (EPF) contributions to 10%. The 10% was reduced from the existing 12%, and is valid for May, June and July. The decision will most likely bring about cash liquidity of Rs 6,750 crores in the next 3 months.

The move could reduce liabilities of 6.5L employees trapped under cash crunches due to the COVID-19 lockdown. In addition to reducing liabilities, this could also help 4.3 crore organized sector employees’ take-home pay.

The reduction in EPF contributions was announced in a notification issues on Monday. The cut will be applicable “in respect of wages payable by it for the months of May, June and July 2020.”

Thanks to this, the average take-home pay shall increase in May, June and July. At the same time, employers’ contributions shall reduce in the same months.

Finance Minister Nirmala Sitharaman said the reduction of the statutory provident fund contribution. Announced last week, this would be applicable for both employees and employers for the next 3 months.

However, CPSEs and PSUs will continue to contribute the 12% as employer contribution to the Employees’ Provident Fund Organisation (EPFO).

The reduction of the EPF contributions are applicable only for workers who are not eligible for 24% EPF support under the PM Garib Kalyan Package.

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