To allow more cash-in-hand of people so they could spend more, the government yesterday decided to reduce the employers’ and workers’ contribution to EPF. The revised percentage will be liable for three months. This will amount to liquidity support of Rs 6,750 crores and was one of the many steps announced to revive the economy amidst coronavirus pandemic.
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“Statutory PF contribution of both employer and employee will be reduced to 10 per cent each from the existing 12 per cent for all establishments covered by EPFO for the next three months,” the Finance Minister said in a press conference.
However, she also said that state-run (related to government) firms will continue to pay 12 percent as an employer contribution.
The government went on to add that this scheme will benefit over 4.3 crore employees and will provide relief to about 6.5 lakh establishments covered under EPFO. The more cash in hand might also increase the demand for goods which have been severely affected in recent times.
The government also said it would pay the EPF contribution for employees of businesses to help them recover from the virus crisis.
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Finance Minsiter has extended the EPF support for several firms and their workers. The government had earlier contributed to the EPF of business and workers of firms with up to 100 employees and wherein 90% of staff is paid less than 15,000.
Now, “The EPF of two quarters will be paid by the government for companies with up to 100 employees and where 90 per cent of the staff is paid up to Rs 15,000 a month,” said Nirmala Sitharaman.
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The government had made payments of 12 per cent of employer and 12 per cent of employee contributions into EPF accounts in March, April and May. This will now be extended by another three months to the salaries of June, July and August.