Nirmala Sitharaman Press Conference: ₹9250 crore relief for provident fund contributors
Finance minister Nirmala Sitharaman has announced several economic measures to mitigate the negative impact of coronavirus on India’s economy.
The Central government has announced Employees Provident Fund (EPF) related relief to companies and individuals employed in the private sector by extending its contribution to the EPFO by three more months for small companies and by cutting down mandatory EPF contributions from both employers and employees by two percentage points for others.
Sitharaman said the government was extending by another three months, the relief measure announced last month to fund three months PF contributions—both by the employee and the employer—amounting to 24% of wages of EPFO members earning less than ₹15,000 a month in establishments that have up to 100 workers. The scheme was earlier valid from March to May but the finance minister said it was now being extended from June to August.
“The move will benefit nearly 3.67 lakh establishments and 72.22 lakh employees as 12% of employer and 12% of employee contribution to the EPF gets paid by the government,” she said adding that the above extension added up to support of ₹2500 crores.
In another PF related relaxation aimed to provide more liquidity to employers and employees not covered under the above scheme, the government decided to slash the rate of mandatory PF contribution for both employees and employers by two per cent from 12 % to 10 %. This move is likely to provide additional liquidity of ₹6,750 crore, she added.
“Statutory PF contribution of both employer and employee will be reduced to 10% each from 12% each for all establishments covered by EPFO for the next three months,” she said.
Sitharaman said this was being done since businesses needed liquidity support to ramp up production and employees needed more take-home salaries. This scheme is likely to provide relief to about 6.5 lakh establishments and about 4.3 crore covered employees. She added that the government will continue to pay 12% PF as employer contributions during this period.
This was part of the 15 relief measures Sitharaman announced to revive the economy and ease liquidity pressure.