Centre has reduced both employer and employee contribution in the EPF account as a Covid measure.
The government has reduced both employer and employee contribution to the latter’s EPF account from 12% of employee’s salary to 10% for next 3 months as part of coronavirus relief measures. Thus, employers will save money due to the 2% reduction in their contribution to EPF.
However, going by the information currently available in public domain, employers may or may not add this saving to the employees’ salaries. While the reduction in employees’ contribution will be added to their take home salaries, it is not clear whether employers will have to add their saving to the employees’ take home pay. If the employers’ saving on PF contribution is not added to the employees’ salary, it would mean a net loss for the employee to that extent.
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As per the finance ministry announcement: “Businesses need support to ramp up production over the next quarter. It is necessary to provide more take home salary to employees and also to give relief to employers in payment of Provident Fund dues”. This appears to indicate that the reduction in EPF contribution by the employer is not meant to be transferred/added to the take home salaries of the employees because if this were to happen then there would be no net ‘relief’ for the employer organisations.
Source: Economic Times
