Rs 20-trn package: Govt reduces EPF contribution for companies for 3 months

At present, 24 per cent of a worker’s basic pay is deducted – with 12 per cent each counted as employer’s and employee’s share – towards the EPF savings

The National Democratic Alliance (NDA) government on Wednesday announced reducing the rate of contribution for private sector firms towards Employees’ Provident Fund schemes from a total of 24 per cent to 20 per cent of the wages for the next three months.

The government has also decided to extend the subsidy benefit provided to companies for their EPF contributions for three months, from June to August. Under the Pradhan Mantri Garib Kalyan Yojana (PMGKY), the government had announced funding the entire EPF contribution made by employers for companies with less than 100 workers. It applied to firms with at least 90 per cent of the workforce earning less than Rs 15,000 a month – a move that targeted smaller firms. However, industry executives said these measures would make only a “marginal impact” on wage bills, as the government didn’t go for the changes demanded to the PMGKY subsidy scheme, along with a steep reduction in the EPF contribution rates.

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At present, 24 per cent of a worker’s basic pay is deducted — with 12 per cent each counted as employer’s and employee’s share — towards the EPF savings. This is compulsory for employees earning up to Rs 15,000 a month. All establishments employing at least 20 workers are required to pass on the EPF benefits…