Key Changes related to Provident Fund

 

The Government of India in its fight against the pandemic i.e. COVID-19, has come out with various measures in order to avoid the liquidity crisis as well as to prevent the disruption in employment of low wage-earning employees. The prominent features of these measures have been explained below: –

Particulars Revised Rate of EPF Contribution Pradhan Mantri Garib Kalyan Yojana
1. Scheme The statutory rate of contribution to Provident fund has been reduced from 12% to 10%. The Central Govt. shall contribute 24% (i.e. 12% Employee Share and 12% Employer Share) of the monthly wages into EPF accounts of the employees.
2. Objective To infuse liquidity in hands of both employer and employee. To prevent disruption in the employment of low wage-earning employees and support establishments employing up to 100 employees.

 

3. Period Wage months- May 2020 to July 2020 Wage months- March 2020 to August 2020
4. Eligibility All class of establishments covered under the EPF & MP Act, 1952, except;

–  the establishments like Central and State Public Sector enterprises, or

–  any other establishment owned or controlled by Central Govt. or State Govt. or both.

The reduced rate is applicable to exempted establishments also.

Not applicable to establishments eligible for PMGKY benefits, since the entire employees EPF contributions of 24% (i.e. 12% Employee Share and 12% Employer Share) is being contributed by the Central Govt.

Following establishments shall be eligible;

–  The establishment or factory should be covered and registered under the Employees’ Provident Funds & Misc. Provisions Act, 1952, and

–  Employing a total no of employees up to 100 with 90% or more employees drawing monthly wages less than Rs. 15,000.

Following employees shall be eligible;

–  Should be employed in any eligible establishment earning monthly wages of less than Rs.15,000/-.

–  The UAN of the employee should be seeded with his/her Aadhaar.

–  Employee should be a member of EPF Scheme, 1952 & Employees’ Pension Scheme, 1995 whose contributions are received for any period during last six months (September 2019 to February 2020) in the ECR filed by any eligible establishment against his/her UAN.

It is clarified that if any employee is already a registered beneficiary and his/her employer is availing benefits of payment of employer’s share by Central Govt. under PMRPY/PMPRPY 2016, no such benefit in respect of such employee shall be available under this Scheme of PMGKY.

 

5. Procedure to avail benefits Establishment has to remit dues at reduced rate while filing the Electronic-Challan cum Return (ECR) itself.

The rate of contributions shall be 10% for the three wage months- May, 2020, June, 2020 and July, 2020 irrespective of date of payment.

In other words, the benefit of reduced rates can be availed even in case of delay.

–  The employer shall disburse wages for the month to all employees and file ECR Online to avail the benefit under the Scheme.

–  The employer shall not make any deduction of employee’s share of EPF contributions from the monthly wages of any eligible employee.

–  The employer has to file only one valid ECR for each month.

–  After the ECR is uploaded, the employer has to remit the payment due from him for employer-contributions towards EDLI and administrative charges in respect of all employees as well as EPF & EPS contributions due in respect of ineligible employees.

–  While the submission of the ECR, the employer shall be required to certify correctness of information furnished electronically in ECR and in Form 5A with an undertaking that the employer is liable for penal and coercive consequence for submitting any incorrect or false information/declaration to avail the relief.

–  Once the payment is done, the EPF & EPS contributions in respect of eligible employees will be credited directly in their respective UAN by the Central Govt.