With reduced EPF contribution, your take-home salary will now increase
Union Finance Minister Nirmala Sitharaman on Wednesday presented the details of the Rs. 20 lakh crore stimulus package to help revive the economy. As part of the plan, Sitharaman announced that the Employee Provident Fund (EPF) contribution for businesses and workers will be reduced for the next three months. This would effectively increase the take-home salary for employees and hopefully boost consumer spending.
PF contribution reduced from 12% to 10% for 3 months
Addressing a press conference on Wednesday, Sitharaman said the statutory PF contribution of both employers and employees will be reduced from 12% to 10% for all establishments covered by the Employees' Provident Fund Organisation (EPFO) for the next three months. However, Central Public Sector Enterprises (CPSEs) and state public sector undertakings (PSUs) will continue to pay 12% as the employer's contribution.
Scheme will provide relief to 4.3 crore employees
The scheme will help provide relief to about 6.5 lakh establishments covered under EPFO and around 4.3 crore employees. It will provide liquidity up to Rs. 6,750 crore to employers over the next three months. Sitharaman said it is also applicable to workers who are not eligible for 24% EPF support under the Pradhan Mantri Garib Kalyan Package (PMGKP) and its extension.
Under PMGKP, EPF relief extended by 3 months
Sitharaman said, "Under the Pradhan Mantri Garib Kalyan Package, payment of 12% of employer and employee contributions was made into EPF accounts of eligible establishments. This was provided for March, April, and May 2020." She added, "This support will be extended for June, July, and August. This will provide liquidity relief of Rs. 2,500 crore to 3.67 lakh establishments and 72.22 lakh employees."