An Overview of announcement by honorable finance minister Nirmala Sitharaman on Wednesday 13/05/2020 regarding EPF contribution by which EPF Contribution was reduced for Employers and Employees for 3 months to 10% from 12% for all establishments covered by EPFO for next 3 months i.e. May 20, June 20 & July 20.

Union finance minister Nirmala Sitharaman on 13.05.2020 announced the statutory provident fund or PF contribution of both employer and employee will be reduced to 10% each from existing 12% each for all establishments covered by EPFO for the next three months i.e. May 2020, June 2020 & July 2020.

Let’s understand with charts:- 

Account Head Upto wage month April 2020 From wages months May 2020 to July 2020
Employee’s PF Contribution – A/c No: 1 12% 10%
Employer’s PF Contribution – A/c No: 1 3.67% (12%-8.33%) 1.67% (10%-8.33%)
Employer’s EPS Contribution – A/c No: 10 8.33% 8.33%
EDLI Contribution – A/c No: 21 0.50% 0.50%
Administrative Charges –  A/c No: 2 0.50% (Minimum Rs. 500/-) 0.50% (Minimum Rs. 500/-)
No change in inspection charges in A/c No. 22 in respect of EDLI exempted establishments.

Example for PF Wage Rs.10,000/-

Account Head April 20 May to July 20
EE PF (A/c # 1) 1,200/- 1,000/-
ER PF (A/c # 2) 367/- (1200-833) 167/- (1000-833)
ER EPS (A/c 10) 833/- 833/-
ER EDLI (A/c 21)* 50/- 50/-
ER ADMIN (A/c 21)* 50/- 50/-
Effective CTC 11,300/- 11,100/-
Effective % 25% 21%

*EDLI & Admin are notional only as they are calculated on overall challan value.

*Take Home Salary increase for employee but CTC reduces.

Some Frequently Ask Questions (FAQ):-

Q 1. Applicability of the announcement?

Ans: Applicable on all establishment except

a) Central and State Public Sector enterprises

b) Establishments owned or controlled of Central Government or State Government.

c) Establishments eligible for PMGKY benefits i.e. Where employees and employers contribution to be paid by Government

Q 2. Applicable in the months of?

Ans:

a) May 2020 paid in June 2020

b) June 2020 paid in July 2020

c) July 2020 paid in August 2020

Q 3. For Fixed CTC what needs to be done?

Ans: The difference in employer share (2%) needs to be paid to employees.

Q 4. Can Employer / Employee pay at higher rate?

Ans: Yes

Q 5. Will it impact pension?

Ans: No, Pension remains 8.33%

Q 6. What if ECR not submitted on time?

Ans: No Problem

Also Read-

Atma Nirbhar Bharat: Part-1: Businesses including MSMEs Text of Press Release by FM on 13th May 2020
Atma Nirbhar Bharat: Part-2: Poor, including migrants and farmers Text of Press Release by FM on 14th May 2020
Atma Nirbhar Bharat: Part-3 – Agriculture Text of Press Release by FM on 15th May 2020
Atma Nirbhar Bharat Part-4: New Horizons of Growth Text of Press Release by FM on 16th May 2020
Atma Nirbhar Bharat- Part-5: Government Reforms and Enablers Text of Press Release by FM on 17th May 2020

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Company: ANUJ CONSULTANCY SERVICES
Location: VIRAR EAST, Maharashtra, IN
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4 Comments

  1. anil tiwari says:

    sir. pl. send my mail id pf contribution march-2020 to august – 2020 march to may 12×2=24% and jun to august 10×2 =20% passed by gov. approved copy pdf file cercullar send my mail id pl.. sir

  2. AGRAJ1991 says:

    Let’s understand with charts:-

    Employee’s PF Contribution – A/c No: 1 – 12%
    Employer’s PF Contribution – A/c No: 1 – 3.67% (12%-8.33%)
    Employer’s EPS Contribution – A/c No: 10 – 8.33%
    EDLI Contribution – A/c No: 21 – 0.50%
    Administrative Charges – A/c No: 2 – 0.50% (Minimum Rs. 500/-)
    No change in inspection charges in A/c No. 22 in respect of EDLI exempted establishments.

  3. AGRAJ1991 says:

    Hi……
    Babasaheb…Pls read carefully from the starting.

    Let’s understand with charts:-

    Account Head Upto wage month April 2020 From wages months May 2020 to July 2020
    Employee’s PF Contribution – A/c No: 1 12% 10%
    Employer’s PF Contribution – A/c No: 1 3.67% (12%-8.33%) 1.67% (10%-8.33%)
    Employer’s EPS Contribution – A/c No: 10 8.33% 8.33%
    EDLI Contribution – A/c No: 21 0.50% 0.50%
    Administrative Charges – A/c No: 2 0.50% (Minimum Rs. 500/-) 0.50% (Minimum Rs. 500/-)
    No change in inspection charges in A/c No. 22 in respect of EDLI exempted establishments.

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