EPFO notified Lower rate of EPF subscription @ 10%

Numerous measures have been introduced from time to time to offer a reduction to the employers and employees of the establishments lined under the EPF & MP Act, 1952 distressed by Lockdown to stop the spread of COVID-19 and different disruptions on account of Pandemic.

The reduction in statutory rate of contributions from 12% to 10% for wage months May 2020, June 2020 and July 2020 for all class of institutions covered under the EPF & MP Act, 1952 announced on 13.05.2020 by the Central Govt. as a part of Atma-Nirbhar Bharat package has been notified vide SO 1513 (E) dated 18.05.2020 published within the Gazette of India. The notification is accessible under the TAB- COVID-19 on the home page of EPFO web site

The above reduction of the rate of contribution will not be applicable to institutions like Central and State Public Sector enterprises or another institution-owned or managed by or under the management of the Central Govt. or State Govt. These institutions shall proceed to contribute 12% of fundamental wages and dearness allowances.

The reduced rate can also be not relevant for PMGKY beneficiaries, because the entire workers EPF contributions (12% of wages) and employers’ EPF & EPS contribution (12% of wages), totaling 24% of the monthly wages is being contributed by the Central Govt.

Reduction in rate of EPF contributions from 12% to 10% of basic wages and Dearness allowances is meant to benefit both 4.3 Crore employees/members and employers of 6.5 lakhs establishments to tide over the instant liquidity crisis to some extent.

ALSO READ:  amid lockdown, EPFO Eases Compliance Process for Employers

Because of a reduction in statutory rate of contributions from 12% to 10%, the employee shall have a better take-home pay on account of reduction in a deduction from his pay on account of EPF contributions and employer shall even have his liability diminished by 2% of wages of his employees. If Rs.10000/- is monthly EPF wages, only Rs.1000/- as a substitute of Rs.1200/- is deducted from employee’s wages and the employer pays Rs.1000/- instead of Rs.1200/- in the direction of EPF contributions.

In Cost to Company (CTC) model, if Rs.10000/- is monthly EPF wages, in CTC Model the employee will get Rs.200/- extra straight from the 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 choice to contribute at a rate higher than the statutory rate (10%) and an employer can prohibit his contributions 10% (statutory rate) in respect of such employee.

Hii, want to get publish your article at www.bharatax.in, then submit your article here or send a mail to article.bt@gmail.com

Author: admin

BharaTax is an online Blog portal for reporting all the latest articles, judgments, Circulars, orders, and notifications relating to Taxation Laws in India.

Share on:

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.