The Employees’ Provident Fund Organisation has published a set of FAQs related to the recently announced reduction of EPF contribution from 12 % to 10 % for both employers and employees. The EPFO has published an FAQ on the Reduction.
Key highlighted answers from the FAQ.
- The statutory rate of EPF contribution announced by the Central Govt. under Atmanirbhar Bharat package for both employer and employee has been reduced to 10 percent of basic wages and dearness allowances from the existing rate of 12 percent for all class of establishments.
- The objective of reduction in the rate of contributions 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 during the Pandemic situation.
- The statutory rate of contribution will be 10% for wage months- May 2020, June 2020, and July, 2020.
- The reduced rate is also not applicable to establishments eligible for PMGKY benefits, 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.
- The reduced rate of contribution (10%) is the minimum rate of contribution during the period of the package. The employer, employee, or both can contribute at a higher rate also.
Click here to read the FAQ