Central Govt notifies cut in EPF contribution to 10% for May, June, July: Highlights with Details

Central Govt notifies cut in EPF contribution to 10% for May, June, July: Highlights with Deta
Central Govt notifies cut in EPF contribution to 10% for May, June, July: Highlights with Deta

Central Govt notifies cut in EPF contribution to 10% for May, June, July: Highlights with Details 

The Central Government has notified the reduction in statutory rate of contributions from 12 per cent to 10 per cent for wage months period from May to July, 2020 for all class of establishments covered under the Employees Provident Fund and Miscellaneous Provisions Act, 1952.

Earlier, the government had announced to reduce the rate as part of Atma-Nirbhar Bharat package. Ministry of Labour and Employment in a statement said that the notification in this regard is available on the home page of EPFO website. It said, reduction in rate of EPF contributions from 12 per cent to 10 percent of basic wages and Dearness allowances is intended to benefit both 4.3 Crore employees and employers of 6.5 lakhs establishments to tide over the immediate liquidity crisis to some extent.
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. If Rs.10000/- is monthly EPF wages, only Rs.1000/- instead of Rs.1200/- is deducted from employee’s wages and employer pays Rs.1000/- instead of Rs.1200/- towards EPF contributions.
In Cost to Company (CTC) model, if Rs.10000/- is monthly EPF wages, in CTC Model the employee gets Rs.200/- more directly from employer as employer’s EPF/EPS contribution is reduced and Rs.200/- less is deducted from his/her wages.

Under the EPF Scheme, 1952 any member has the option to contribute at a rate higher than statutory rate (10%) and employer can restrict his contributions 10% (statutory rate) in respect of such employee.

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