EPF Relief during COVID-19

EPF Relief during COVID-19

EPF Relief during COVID-19

The Employees’ Provident Fund Organization and the Ministry of Labour & Employment have announced various relief measures beneficial to both the establishment/ factory and the employees. Such relief measures will definitely boost the establishment to fight against the current pandemic situation. The present article covers the various recent reliefs and announcements provided under the Employees’ Provident Fund (EPF).

Reduction in the statutory rate of EPF contribution

To benefit both the employees as well as the employers and also to tide over the liquidity crisis during the COVID-19, the Government, under the Atmanirbhar Bharat Abhiyan package, announced the reduction of EPF contribution rate.

At present, the current statutory rate of EPF contribution is 12% of basic wages and dearness allowance. However, the current statutory rate has been reduced to 10% of basic wages and dearness allowance.

As per notification dated 18th May 2020, issued by the Ministry of Labour & Employment, the reduced rate of 10% shall be applicable for wage months May 2020; June 2020 and July 2020.

It is noteworthy to mention here that the reduced rate of 10% shall be effective to all the class of establishment which are covered under the EPF & MP, Act 1952 except followings-

  • Central Public Sector Enterprises;
  • State Public Sector Enterprises;
  • Any other establishment owned or controlled by the Central or the State Government.

Please note that only the statutory rate of EPF contribution is reduced. However, there is no change in the EPF administrative charges (which is 0.5% of the EPF wages) and EDLI contribution (which is also 0.5% of the EPF wages).

Non-refundable advance from EPF account

The Ministry of Labour & Employment, vide notification dated 27th March 2020, announced the facility of availing non-refundable advance from EPF account. The same is detailed hereunder-

  • Any member of the EPF Scheme 1952 with Universal Account Number (i.e., UAN) employed in any factory or establishment covered under the EPF & MP Act, 1952, is eligible for a non-refundable advance from their EPF account.
  • The member is eligible for non-refundable advance to the extent of lower of the following amounts-
    • Basic wages and dearness allowance for three months; or
    • 75% of the amount standing credit to the member’s EPF account.
  • The member is not required to submit any type of certificates or documents for availing the advances.
  • The UAN should be validated with Aadhaar number along with KYC of Bank account and Mobile number.
  • The non-refundable advances are available only once.
  • The facility for availing the non-refundable advances shall be available till the COVID-19 pandemic prevails.

Pradhan Mantri Garib Kalyan Yojana

Around INR 1.70 lakhs Crore relief package has been announced by the Government under the Pradhan Mantri Garib Kalyan Yojana. The main purpose of the relief package is to help the poor to fight the battle against COVID-19.

Under the relief package, the Government will pay 24% of the monthly wages into the EPF account for a period of three months for the employees with the wages below INR 15,000 per month, only if-

  1. The employees are employed in the establishment/ factory, which is already covered and registered under the Employees’ Provident Fund & Misc. Provisions Act, 1952;
  2. Such establishment should have employees up to 100; and
  3. 90% or more of the employees in such an establishment should be earning monthly wages less than INR 15,000.

Salient features of the scheme are detailed hereunder-

  • The scheme will be in operation for the wage months, March, April, and May 2020.
  • In order to benefit from the scheme, the eligible establishment has to file the ‘Electronic Challan cum Return’ (ECR), electronically.

Please note the employer is required to file one valid ECR for each month (i.e., March, April, and May 2020) with respect to the total number of employees (including both eligible and non-eligible employees).

  • The employer is also required to file a certificate in Form 5A confirming the information furnished in ECR. The employer is also required to give an undertaking stating that, in case of submitting any incorrect or false information, he will be liable for penal and coercive consequence.

Relief from levy of penal damages

Keeping in mind the operational and economic issues being currently faced by the establishment, on account of COVID-19. The Ministry of Labour & Employment, vide statement dated 15th May 2020, declared that no proceedings shall be initiated to levy penal damages in case of any delay in payment of any contributions and/ or administrative charges for any period during the lockdown.

Post by poonamgandhi

CA Poonam Gandhi is a Chartered Accountant and a Lawyer. With a wide practice experience and deep understanding of different laws and taxes, she has been an independent professional writer in the field of taxation, finance and laws.