Labour ministry notifies provident fund contribution towards EPF & EPS scheme

The labour ministry on Friday notified the special scheme wherein the government will deposit the employer’s and employee’s contribution in the Employee Provident Fund (EPF) and Employee’s Pension Scheme (EPS) for three months to tide over the impact of COVID-19 on small establishments.  Under Gareeb Kalyan Yojana scheme, the central government will grant relief in the form of a credit of EPF & EPS contributions (24% of wages) for three months in UANs of contributory EPF members, earning a monthly wage of less than Rs.15000/- The scheme is expected to benefit around 79 lakh subscribers and 3.8 lakhs establishment according to People familiar with the matter. However, this benefit will be available to an industrial unit which has up to 100 employees, of which at least 90 per cent should have monthly wage of less than Rs.15,000/-.

Under EPF scheme, an employee has to pay a certain contribution towards the scheme and an equal contribution is paid by the employer under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. The employee gets a lump sum amount including self and employer’s contribution with interest on both, on retirement. As per EPFO rules, Industrial units which have more than 20 employees will have an EPF contribution rate of 12 per cent of basic wages plus dearness allowance plus retaining allowance, while industrial units with less than 20 employees, or meet certain other conditions,  the contribution rate for both employee and the employer is limited to 10 percent. The scheme is managed under the aegis of Employees provident Fund Organisation(EPFO).The contribution paid by the employer is 12% of basic wages plus dearness allowance plus retaining allowance. An equal contribution is payable by the employee also. In the case of establishments which employ less than 20 employees or meet certain other conditions, the contribution rate for both employee and the employer is limited to 10 percent. Whereas the entire share of the employee is contributed towards the EPF, 8.33 per cent of the employer’s share goes towards EPS and the remaining contributed towards the EPF.

According to the notification, the relief announced by the Government can be claimed by the eligible organisations/establishments by filing an Electronic Challan-cum-Return (ECR). The amount that is due, on behalf of Employers and Employees reflected in the ECR on account of EPF and EPS (24 percent wages), will be credited by the Central Government for three months in the UANs of the contributory EPF members of eligible entities. It is learned, total outgo will be 4800 Crores for a period of three months. The eligible employer shall disburse wages for the month to all employees of the establishment and ECR with the required certificate and declaration to avail the benefit under the Scheme. After ECR is uploaded and eligibility of establishment and employees is validated, then the challan will separately show the amount of employees’ and employers’ contributions due to Central Govt. relief in respect of eligible employees.  After the employer remits the payment due from him for other non-eligible employees, as reflected in the challan, the EPF and EPS contributions will be credited directly in the UANs of the eligible employees of the establishment by the Central Government