EPFO contributions reduced; gains in take home, employee cost

News:The Finance minister has provided relaxation to all private sector companies by reducing the statutory PF contribution of both employer and employee from 12% to 10% for the next three months.

Facts:

Employees’ Provident Fund(EPF) Scheme:

• Employees Provident Fund (EPF): It is a retirement benefit scheme under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952.
• Nodal Body: The fund is maintained and overseen by the Employees Provident Fund Organisation of India(EPFO).
• Eligibility: It covers every establishment in which 20 or more persons are employed and certain organisations are covered, subject to certain conditions and exemptions even if they employ less than 20 persons each. 
• Features:
  • Under the scheme, employers and employees contribute 12% of an employee’s monthly salary (basic wages plus dearness allowance) to the Employees’ Provident Fund (EPF) scheme.
  • The employee gets a lump sum amount including self and employer’s contribution with interest on both on retirement.

Additional Facts:

Employees Provident Fund Organisation(EPFO):

• It is a statutory body formed under the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952.
• It is administered by the Ministry of Labour & Employment, Government of India.