There is positive news for salaried-individuals. The employees’ take-home pay in these days, when many face a cash shortage, should not be affected by this government’s recent decision. Under the Employees Provident Fund, the Union Cabinet chaired by Prime Minister Narendra Modi has given its approval to increase the contribution — both the 12 per cent share of workers and the 12 per cent share of employers — for another three months from June to August 2020, totalling 24 per cent.
The exemption does not extend to all workers and organisations, however. The PF advantage would extend to all organizations with up to 100 workers, 90 per cent of which earn less than Rs 15,000 per month. This benefit will only be available to workers of these establishments. Beneficiaries entitled to a 12 per cent employer contribution under Pradhan Mantri Rozgar Protsahan Yojana (PMRPY) for the months of June to August 2020 will be removed to avoid overlapping benefit.
Prime Minister Announcement on Employer Contribution
It announces earlier in March that the employee’s contribution. So, it is of 12 per cent plus 12 per cent of the employer’s contribution. It pays by the government for the next 3 months in the employee provident fund (EPF) account. But, after today’s announcement, this approval is in addition to the current scheme approval. It is on 15.04.2020 for the pay months of March to May 2020. Effectively, the employee and the employer do not need to contribute to the EPF from March. It is to August, i.e. for 6 months, and then the government puts the payment on the employee’s PF account.
Based on the employee’s minimum wage, both the employee and the employer pay 12 per cent equally. The interest rate charges on a certain monthly running balance. It continues to accumulate in the PF account of the employee. Each month, 8.33 per cent of the employer’s contribution as a pension contribution goes into the employee’s pension scheme (EPS). The relief is part of the package announces by the Prime Minister Modi government. It is under Pradhan Mantri Garib Kalyan Yojana (PMGKY)/Aatmanirbhar Bharat in the light of COVID-19, a pandemic. Approximately 72,22 lakh employees employed in 3,67 lakh establishments will benefit and will likely continue to pay amid disruptions.