EPFO publishes FAQ on Reduction in EPF contribution rate to 10%

EPFO on 20th May 2020 has published Frequently Asked Questions (FAQ) on reduction in statutory rate of EPF contribution from 12% to 10%. The Ministry of Labour & Employment vide Notification S.O. 1513(E). dated 18th May 2020 has implemented the decision to cut employees’ provident fund (EPF) contributions to 10 % from the existing 12 % for three months till July. The objective of such reduction is aimed at benefiting 4.3 crore employees/members and employers of 6.5 lakhs establishments to tide over the immediate liquidity crisis to some extent during COVID-19 Pandemic situation.  In this connection, FAQ has been published by EPFO which provides that-

  1. The statutory rate of contribution will be 10% for wage months- May 2020, June 2020 and July 2020 irrespective of the date of payment.
  2. It is applicable to all class of establishments covered under the EPF & MP Act, 1952, except the establishments owned or controlled by Central Govt. or State Govt.
  3. The reduced rate is also not applicable to establishments eligible for PMGKY benefits.
  4. The reduced rate is applicable to exempted establishments also.
  5. Establishments registered during wage months of May-July, 2020 will be eligible for reduced rate for the remaining period from date of coverage.
  6. There is no change in the EPF administrative charges (0.5% of EPF wages subject to minimum prescribed) and EDLI contributions (0.5% of wages) both payable by employers.
  7. To avail the benefit, establishment has to remit dues at reduced rate through the Electronic-Challan cum Return (ECR) itself.
  8. The employer, employee or both can contribute at higher rate also if the wish.
  9. The reduced rate of EPF contributions to 10% will not reduce the pension contributions or benefits.
  10. The establishments, which were already entitled to reduced rate of contribution (10%) through the SO 320 (E) dated 09.04.1997 are not eligible for any further reduction in rate of contribution.


Be the first to comment

Leave a Reply

Your email address will not be published.