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The central government has announced assistance related to the Employee Provident Fund (EPF) for companies and individuals employed in the private sector by extending its contribution to the EPFO for an additional three months for small businesses and reducing the mandatory contributions of the employers’ EPF and employed by two percentage points for others.
Sitharaman said the government would extend it for another three months, the relief measure announced last month to fund three-month PF contributions, by both employee and employer, which amounts to 24% of members’ wages. from EPFO who earn less than Rs 15,000 a month in establishments that have up to 100 workers. The plan was previously valid from March to May, but the finance minister said it was now running from June to August.
“The measure will benefit almost 3.67 lakh establishments and 72.22 lakh employees, as the government pays 12% of the employer and 12% of the employee contribution to the EPF,” he said, adding that the previous extension added to the support of Rs 2.5 billion.
In another PF-related relaxation aimed at providing more liquidity to employers and employees not covered by the previous scheme, the government decided to cut the mandatory PF contribution rate for employees and employers by two percent from 12% to 10%. This move is likely to provide additional liquidity of Rs 6.75 crore, he added.
“The legal PF contribution from both employer and employee will decrease to 10% each from 12% each for all establishments covered by EPFO over the next three months,” he said.
Sitharaman said this was being done as companies needed liquidity support to increase production and employees needed more wages to take home. This scheme is likely to provide relief to around 6.5 lakh of establishments and around 4.3 million covered employees. He added that the government will continue to pay 12% PF as employer contributions during this period.
This was part of the 15 relief measures Sitharaman announced to revive the economy and ease liquidity pressure.
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