The Ministry of Labour & Employment, Government of India on 18th May 2020 issued an official gazette to notify the reduced employees' provident fund (EPF) contribution from 12% to 10% for three months May'20, Jun'20 and Jul'20.
Who are all covered?
All establishments except the following:
- Central and State public sector enterprises and other establishments owned by or under the control of the the Central or State Governments
- Establishments who are eligible for relief under the Pradhan Mantri Garib Kalyan Yojna - establishments with less than 100 employees with 90% or more of such employees earning monthly wages less than INR 15,000 - where both employers' and employees' share of PF contribution is payable by the Central Government.
Period covered
PF contributions for the wages/salaries payable for the months of May, Jun and Jul 2020.
Rates of deduction and contribution
10% instead of the 12% - this is applicable only for the above 3 months.
Is this optional?
NO. It is mandatory and not optional. Both for employee and employer.
Points to note
This is applicable for international workers too
This is applicable to Private PF trust too (Sec 17 of PF Act)
If PF is part of your Cost to Company (CTC), then the 2% will come as a allowance (taxable / non taxable depending on the gross salary)
This was announced to create some more liquidity in the hands of the employee and reduce the burden of the employers.
