Clarification on Employees Provident Fund Deductions (EPF) Under Covid-19 Relief

On 13th May 2020, Government of India announced relief under Employees Provident Fund Act for all eligible establishments stressed due to Covid-19.

The relief announced was as under,

1. **For all those employees and establishment who are NOT covered under Pradhan Mantri Garib Kalyan Yojna (PMGKY) , the statutory EPF rate of contribution will be reduced from existing 12% to 10% till August 2020. (notified vide SO 1513(E) dated 18/05/2020 published in Gazette of India).

Central Public Sector Enterprises and State Public Sector Units will however continue to contribute 12% as employer contribution.

Employees Provident Fund

** Relief under PMGKY announced on 10th April 2020 – link – https://www.csrohitkudale.com/2020/05/covid-19-relief-measures-under-labour.html

After the announcement, several questions were raised by the stakeholders regarding voluntary contributions above 10% by employees as well as employers.

In this regard, EPFO has come u with the clarifications in the FAQs released on 20/05/2020.

Following points are clarified by EPFO,

1. The package as on date is applicable till August 2020 i.e. Salary payment of July 2020.

2. The establishment availing Pradhan Mantri Rojgar Yojna (PMRPY) benefit are also eligible to remit at reduced rate 10%.

3. The reduced rate will be applicable for all establishments which get registered with EPFO during wage months May 2020, June 2020 and July 2020.

4. The reduced rate of 10% is applicable to exempted establishments also.

5. The reduced rate will be applicable even if payment of wages are delayed. However, the benefit can be availed only for wage month of May 2020, June 2020 and July 2020.

6. The establishments which were already entitled to reduce rate of contribution (10%) through the SO 320 (E) dated 09/04/1997 are NOT eligible for any further reduction in rate of contribution.

7. The reduced rate of contribution (10%) is minimum rate of contribution during the period of package only i.e. wage month of May 2020, June 2020 and July 2020.

8. The employer or employee or both can contribute at higher rate also.

Following are alternatives for remittance of dues,

  • Employee and Employer both 10%
  • Employee and Employer both 12% (allowed, excess 2% will be treated as voluntary contribution.)
  • Employee 12 % and Employer 10% (allowed, excess 2% will be treated as voluntary contribution by employee. As announced in the relief package it is not mandatory for Employer to pay at higher rate if employee opts for voluntary contribution at higher rate)
  • Employee 10% and Employer 12% (NOT allowed, as per section 6, employees contribution shall be equal to the contribution payable by employer)

 The deduction rates of EPF challan for the wage month May 2020, June 2020 and July 2020 will be as under,

 1. Employee Cont – 10%

2. Employer Cont – 10% (Pension 8.33%, PF 1.67%)

3. Admin (Acc no 02) -0.5%

4. Inspection (Acc no 21) – 0.5 %

5.Total – 21%

Author Bio

Qualification: CS
Company: S R Kudale & Associates LLP
Location: Mumbai, Maharashtra, IN
Member Since: 13 Apr 2020 | Total Posts: 10
I am a Practicing Company Secretary located at Mumbai having specialization in Corporate Laws and Labour Laws. Follow my Blog: www.csrohitkudale.com for regular updates. View Full Profile

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