Things you should know about EPF ( Employees’ Provident Fund ).People are getting lots of questions after the announcement of Finance Minister Nirmala Sitaraman about the reduction of EPF from 12% to 10%.
Because of lots of questions and confusions on EPF , EPFO Posted some FAQ to answer questions and solve queries of people.
Here is answers to all the questions related to EPF.
Q1. What are the revised rates of EPF contribution announced by the Central Govt. under Atmanirbhar Bharat packages ?
Ans.Under this package the statutory rate of EPF contribution of both employer and employee has been reduced to 10 percent of basic wages and dearness allowances from existing rate 12 percent for all class of establishment covered under the EPF & MP Act,1952.
Q2. What is the objective of reduction in rate of contributions ?
Ans. Reduction in rate of EPF contribution from 12% to 10% of the basic wages and Dearness allowance is intended to benefits both 4.3 crores employees / members and employers of 6.5 lakhs establishments to tide the immediate liquidity crisis to some extent during Pandemic situation.
Q3. Whether any notification has been issued under the EPF & MP Act, 1952 for reducing the rate of contributions? If so,how can I access the notification ?
Ans. The reduction in statutory rate of contribution from 12% to 10% for wage months May,2020, June , 2020 and July, 2020 and has been notified vide SO 1513 (E) dated 18.05.2020 published in the Gazette of India. The notification is available under the TAB-COVID-19 on the homepage of EPFO website.
Q4. What is the period for which reduced rate of contribution is applicable ?
Ans.The Statutory rate of contribution will be 10% for wages Months-May,2020,June 2020 and July 2020.
Q5. Who are eligible for the reduced rate of contributions ?
Ans.It is applicable to all class of establishment covered under the EPF & MP Act, 1952, except the establishments like Central and State Public Sector enterprises or any other establishment owned or controlled by under control of the Central Govt. or state Govt.
The reduced rate is not applicable to establishments eligible for PMGKY benefits ,since the entire employees EPF contribution (12% of wages) and employer’s EPF & EPS Contribution (12% wages) ,totalling 24% of the monthly wages is being contributed by the Central Govt.
Q6. Are exempted establishments eligible for reduced rated of contribution ?
Ans. Yes. The reduced rate is applicable to exempted establishments also.
Q7. How does the reduced rate of contributions help the employees and employer?
Ans. As a result of reduction in statutory rate of contribution from 12% to 10% , the employee shall have a higher take home pay due to reduction in deduction from his pay on account of EPF contribution and employer shall also have his liability reduced by 2% of wages of his employees.If Rs. 10000/- is monthly EPF wages, only Rs.1000/- instead of Rs. 1200/- is deducted from employee’s wages and employer pays Rs. 1000/- instead of Rs. 1200/- towards EPF contributions.
Q8. I get salary under Cost to Company ( CTC ) model , will the reduced rate of contributions from 12% to 10% still benefits me ?
Ans. In Cost to Company ( CTC ) model, if Rs. 10000/- is monthly EPF wages, in CTC Model the employee gets Rs. 200/- more directly from employer as employer’s EPF/EPS contribution is reduced and Rs. 200/- less is deducted from his/her wages.
Q9. Is the 10% rate of Contribution applicable to establishments which get registered with EPFO during wage months May, 2020, June 2020 and July, 2020 ?
Ans. Yes. Establishments covered during wage months of May-July , 2020 will be eligible for reduction rate for eligible remaining period from date of coverage.
Q10. What will be rate of contribution for administrative charges and insurance?
Ans. There is no change in the EPF administrative charges ( 0.5 of EPF wages subject to minimum prescribed ) and EDLI contribution ( 0.5% of wages ) both payable by employers.
Q11. How is benefit availed ? One has to pay at full rate and claim reimbursement later or direct payment at reduced rate can be made.
Ans. Establishment has to remit dues at reduced rate through the Electronic-Challan cum Return (ECR) itself.
Q12. Can the employer or employee pay at higher rate or the contribution rate of 10% is mandatory ?
Ans. The reduced rate of contribution ( 10% ) is minimum rate of contribution during period of the package. The employee or both can contribute at higher rate also.
Q13. How the reduced rate of the contribution will impact of pension in longer run ?
Ans. The EPS contributions 8.33% of wages ( subject to ceiling of Rs.15000/- ) is diverted from employer’s share of EPF contributions. The reduced rate of EPF contribution to 10% will not reduced the pension contributions or benefits.
Q14. My establishment will not be able to remit dues timely during the scheme period. Is it still eligible reduced rate of contribution ?
Ans. Yes , the rate of contributions is 10% for the three wage months- May, 2020 irrespective of date of payment.
Q15. Is the option to contribute at reduced rate available to establishments availing PMRPY benefits.
Ans. Yes. The establishment availing PMRPY benefits can remit contribution at reduced rate.
Q16. The rate of contribution for my establishment is 10 % as it is engaged in Manufacturing of gaur gum.Will the rate of contribution be further reduced for my establishment ?
Ans. 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.