Employees, employers' contribution to PF cut to 10%; move to inject Rs 6,750 cr liquidity

Finance Minister Nirmala Sitharaman on Monday announced reduction of statutory provident fund contribution by both employers and employees to 10 per cent of basic wages from the existing 12 per cent for the next three months.

The decision has been taken to facilitate more take-home salary for employees and give relief to employers in payment of PF dues, resulting in a liquidity ease of Rs 6,750 crore.

The decision, which will have an impact on 4.3 crore employees and 6.5 lakh employers reeling under liquidity crunch due to COVID-19 lockdown, will be applicable on all the establishments covered under the Employees' Provident Fund Organisation (EPFO).

Besides, the finance minister also announced the extension of another scheme under the Pradhan Mantri Garib Kalyan Yojana (PMGKY) for three months till August, where the government would contribute entire 24 per cent of PF contributions till August, giving relief to 3.67 lakh employers and 72.22 lakh employees.

The government had imposed lockdown on March 25 to fight deadly COVID-19.

Under the Pradhan Mantri Garib Kalyan Package (PMGKP), payment of 12 per centof employer and 12 per centemployee contributions were made into EPF accounts.

In a presentation on such steps, Sitharaman said, "This was provided earlier for salary months of March, April and May 2020. This support will be extended by another three months to salary months of June, July and August 2020."