During this pandemic, the Employees’ Provident Fund Organisation (in short EPFO) has reduced the statutory rate of contribution to 10% on the basic and dearness allowance from the earlier existing rate of 12% for all classes of establishments covered under the Employees’ Provident Funds & Miscellaneous Provisions Act, 1952 vide notification no.SO 1513 (E) dated 18.05.2020 (copy attached). By this kind act, the EPFO aims to give some financial relief to around 3.4 crores employees and 6.5 lacs employers in India already covered under the Act. For the time being, the reduced rate of contribution (i.e.10%) would be applicable on the wages for the month of May to July 2020. New establishments seeking registration under the EPF & MP Act, during this period would also be entitled to benefit under the reduced rate of contribution.
This facility is applicable to all establishments ordinarily covered under the Act including exempted establishments. However, establishments under the Pradhan Mantri Garib Kalyan Yojana are exempted from this benefit of reduced contribution since the Government directly pays the entire contribution of both employers and employees (12% + 12%) for establishments registered under this Scheme.
During this uncertainty of pandemic, this is a small step to ease the financial burden on both the employers and employees under the labour laws in India.