EPFO Reduces The Contribution Rate To Ten percent From Existing Rate Of Twelve percent

EPFO Reduces The Contribution Rate To Ten percent From Existing Rate Of Twelve percent The Central Government has announced various measures from time to time to provide relief to the employers and employees of the establishments covered under the EPF & MP Act, 1952 distressed by Lockdown and other disruptions caused due to Pandemic. The reduction in statutory rate of contributions from 12% to 10% for wage months May 2020, June 2020 and July 2020 for all class of establishments covered under the EPF & MP Act, 1952 announced on 13.05.2020 by the Central Govt. 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 above reduction of the 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 Govt. or State Govt. 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 contribution (12% of wages), totaling 24% of the monthly wages is being contributed by the Central Govt. 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 the reduction in statutory rate of contributions from 12% to 10%, the employee shall have a higher take-home pay due to reduction in a deduction from his pay on account of EPF contributions and employer shall also have his liability reduced by 2% of wages of his employees. Last Updated: 25th May 2020 This article is contributed by:  Munesh Gaur Manager, Legal  

Tag: EPFO