EPF rate cut to benefit employees, employers

Reduction will not be applicable to govt. establishmentsFile photo

Reduction will not be applicable to govt. establishmentsFile photo  

‘It will help with immediate liquidity crisis to some extent’

The Employees’ Provident Fund Organisation (EPFO) on Tuesday said the employees’ take-home salaries would increase while the employers’ liabilities would reduce for May, June and July as the Labour Ministry had notified a 2% cut in the EPF contribution rate on Monday.

Announced as part of the Centre’s economic relief package to deal with the COVID-19 pandemic, the contribution rates for employees and employers had been reduced to 10% of wages plus dearness allowance from 12%.

The reduction would not be applicable to the Central and State public sector enterprises or any other government-controlled establishment, the EPFO said in a statement.

“Reduction in rate of EPF contributions from 12% to 10% of basic wages and dearness allowances is intended to benefit both 4.3 crore employees/members and employers of 6.5 lakh establishments to tide over the immediate liquidity crisis to some extent,” the EPFO said.

‘Higher take home pay’

“As a result of reduction in statutory rate of contributions from 12% to 10%, the employee shall have a higher take home pay due to reduction in deduction from his pay on account of EPF contributions and employer shall also have his liability reduced by 2% of wages of his employees,” it added.

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