FREQUENTLY ASKED QUESTIONS
Reduction in statutory rate of EPF contribution from
12% to 10%
Q.1: What is revised rate of
EPF contribution announced by the Central Govt. under Atmanirbhar Bharat
package?
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 of 12 percent for all
class of establishments covered under the EPF & MP Act, 1952.
Q 2: What is the objective of reduction in rate of
contributions?
Ans: Reduction in rate of EPF contributions from 12% to 10% of basic
wages and Dearness allowances is intended to benefit both 4.3 crore
employees/members and employers of 6.5 lakhs establishments to tide over the
immediate liquidity crisis to some extent during Pandemic situation.
Q 3: 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 contributions from 12% to
10% for wage months May, 2020, June, 2020 and July, 2020 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 home page of EPFO website.
Q.4: What is the period for which reduced rate of
contribution is applicable?
Ans. The statutory rate of contribution will be 10% for
wage months- May, 2020, June, 2020 and July, 2020.
Q 5. Who are eligible for the reduced rate of
contributions?
Ans. It is applicable to all class of establishments 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 or under
control of the Central Govt. or State Govt.
The reduced rate is also not applicable to
establishments eligible for PMGKY benefits, since the entire employees EPF
contributions (12% of wages) and employers’ EPF & EPS contribution (12% of
wages), totalling 24% of the monthly wages is being contributed by the Central
Govt.
Q6. Are exempted establishments eligible for reduced rate
of contribution?
Ans. Yes. The reduced rate is applicable to exempted establishments
also.
Q 7: How does
the reduced rate of contributions help the employees and employer?
Ans: As a result of reduction in statutory rate of contributions
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 contributions 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.
Q 8: I get
salary under Cost to Company (CTC) model, will the reduced rate of
contributions from 12% to 10% still benefit 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.
Q 9. 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 reduced rate for eligible remaining period
from date of coverage.
Q 10. 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
contributions (0.5% of wages) both payable by
employers.
Q 11. 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.
Q 12. 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 employer, employee or both can
contribute at higher rate also.
Q 13. How the
reduced rate of contribution will impact amount 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 contributions to 10% will not reduce the pension
contributions or benefits.
Q. 14. My
establishment will not be able to remit dues timely during the scheme period.
Is it still eligible for reduced rate of contribution?
Ans. Yes, the rate of contributions is 10% for the three
wage months- May, 2020, June, 2020 and July, 2020 irrespective of date of
payment.
Q. 15. 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.
Q. 16. 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.
No comments:
Post a Comment