Dear Experts,
I have a query.
1. Can a manufacturing establishment that has been continuing and contributing to PF remittance at 12% since the date of incorporation suddenly reduce the contribution to 10%?
2. The establishment has fewer than 20 members engaged throughout the year but still contributes at 12%. Whereas the PF Act states 10% applicability if the manpower engaged is more than 20 (excluding the recent 10% for three months).
3. The establishment is not a seasoned factory or engaged in mining or gum industries where 10% is applicable.
I need an expert clarification on this.
Regards,
R. Devarajan
From India, Madras
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17I have a query.
1. Can a manufacturing establishment that has been continuing and contributing to PF remittance at 12% since the date of incorporation suddenly reduce the contribution to 10%?
2. The establishment has fewer than 20 members engaged throughout the year but still contributes at 12%. Whereas the PF Act states 10% applicability if the manpower engaged is more than 20 (excluding the recent 10% for three months).
3. The establishment is not a seasoned factory or engaged in mining or gum industries where 10% is applicable.
I need an expert clarification on this.
Regards,
R. Devarajan
From India, Madras
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Dear Mr. Devarajan,
Please go through the Code Number Allotment letter from EPF issued to your establishment. For the months of May, June, and July 2020, you can contribute at 10%.
Please be informed that your establishment is not contributing to EPF from the date of incorporation as stated by you. Your establishment is contributing to EPF from the date of coverage under the EPF Act. Please verify all your PF records. Contact the SRO-EPF applicable to your factory.
From India, New Delhi
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Please go through the Code Number Allotment letter from EPF issued to your establishment. For the months of May, June, and July 2020, you can contribute at 10%.
Please be informed that your establishment is not contributing to EPF from the date of incorporation as stated by you. Your establishment is contributing to EPF from the date of coverage under the EPF Act. Please verify all your PF records. Contact the SRO-EPF applicable to your factory.
From India, New Delhi
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Dear R. Devarajan,
You mentioned that your company has been contributing PF at 12% from the beginning. However, you also mentioned that your company has recently reduced the contribution to 10%. You are seeking clarification on how this reduction was implemented.
In response to your query, based on the Gazette Notification issued by the Government of India with reference number CG-DL-E-18052020-219425 dated 18.05.2020, and the Circular issued by EPFO with reference number TB/TAM/RO/Covid-19/Cont.Rate/2020 dated 19.05.2020, your company has indeed reduced the statutory contribution rate from 12% to 10% for the wage months of May, June, and July 2020.
The Government has made this decision to decrease the contribution by 2% in order to provide liquidity to both employers and employees during the Covid-19 pandemic lockdown.
Kind regards,
[Your Name]
From India, Mumbai
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You mentioned that your company has been contributing PF at 12% from the beginning. However, you also mentioned that your company has recently reduced the contribution to 10%. You are seeking clarification on how this reduction was implemented.
In response to your query, based on the Gazette Notification issued by the Government of India with reference number CG-DL-E-18052020-219425 dated 18.05.2020, and the Circular issued by EPFO with reference number TB/TAM/RO/Covid-19/Cont.Rate/2020 dated 19.05.2020, your company has indeed reduced the statutory contribution rate from 12% to 10% for the wage months of May, June, and July 2020.
The Government has made this decision to decrease the contribution by 2% in order to provide liquidity to both employers and employees during the Covid-19 pandemic lockdown.
Kind regards,
[Your Name]
From India, Mumbai
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It is in order for Establishmnet to reduce the PF contributions from 12% to 10% strictly in accordance with the recent circular /notification from Ministry of Labour and Employment and this is valid for the months of May , June and July 2020 alone .
For your ready reference the aforesaid notification is reproduced below:
Ministry of Labour & Employment
Lower rate of EPF subscription 10% with EPFO notified placing higher liquidity in the hands of employees and employers during COVID -19 pandemic
Government Sector, their PSEs and establishment whose subscription is being borne by Union Government under PMGKY continue to have subscription at old rates of 12%
Lower rates to be applicable for salary months of May, June and July 2020
Posted On: 19 MAY 2020 6:32PM by PIB Delhi
Various measures have been announced from time to time to provide relief to the employers and employees of the establishments covered under the EPF & MP Act, 1952 distressed by Lockdown to prevent spread of COVID-19 and other disruptions due to Pandemic.
The reduction in statutory rate of contributions from 12% to 10% for wage months May, 2020, June, 2020 and July, 2020 for all class of establishments covered under the EPF & MP Act, 1952 announced on 13.05.2020 by the Central Govt. as part of Atma-Nirbhar Bharat package 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
The above reduction of rate of contribution is not applicable to 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. These establishments shall continue to contribute 12% of basic wages and dearness allowances.
The reduced rate is also not applicable for PMGKY beneficiaries, since the entire employees EPF contributions (12% of wages) and employers’ EPF & EPS contribution (12% of wages), totaling 24% of the monthly wages is being contributed by the Central Govt.
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.
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.
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.
Under the EPF Scheme, 1952 any member has the option to contribute at a rate higher than statutory rate (10%) and employer can restrict his contributions 10% (statutory rate) in respect of such employee.
I wonder how the Establishment has not put up a notification to employees before acting on such Gazette notification
Panchsen
P.Senthilkumar
IR and Labour Law consultant
Former Corporate Head- MRF Ltd
'
9884009193
From India, Chennai
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For your ready reference the aforesaid notification is reproduced below:
Ministry of Labour & Employment
Lower rate of EPF subscription 10% with EPFO notified placing higher liquidity in the hands of employees and employers during COVID -19 pandemic
Government Sector, their PSEs and establishment whose subscription is being borne by Union Government under PMGKY continue to have subscription at old rates of 12%
Lower rates to be applicable for salary months of May, June and July 2020
Posted On: 19 MAY 2020 6:32PM by PIB Delhi
Various measures have been announced from time to time to provide relief to the employers and employees of the establishments covered under the EPF & MP Act, 1952 distressed by Lockdown to prevent spread of COVID-19 and other disruptions due to Pandemic.
The reduction in statutory rate of contributions from 12% to 10% for wage months May, 2020, June, 2020 and July, 2020 for all class of establishments covered under the EPF & MP Act, 1952 announced on 13.05.2020 by the Central Govt. as part of Atma-Nirbhar Bharat package 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
The above reduction of rate of contribution is not applicable to 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. These establishments shall continue to contribute 12% of basic wages and dearness allowances.
The reduced rate is also not applicable for PMGKY beneficiaries, since the entire employees EPF contributions (12% of wages) and employers’ EPF & EPS contribution (12% of wages), totaling 24% of the monthly wages is being contributed by the Central Govt.
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.
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.
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.
Under the EPF Scheme, 1952 any member has the option to contribute at a rate higher than statutory rate (10%) and employer can restrict his contributions 10% (statutory rate) in respect of such employee.
I wonder how the Establishment has not put up a notification to employees before acting on such Gazette notification
Panchsen
P.Senthilkumar
IR and Labour Law consultant
Former Corporate Head- MRF Ltd
9884009193
From India, Chennai
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Dear all,
Thank you for the response. I am aware that the Government had announced a reduction in PF contributions at 10% for three months. My question is: In general, irrespective of manpower, can an establishment reduce the contribution from 12 to 10?
However, I have received answers and opinions from experts.
Thank you,
R. Devarajan
From India, Madras
Acknowledge(0)Amend(0)
Thank you for the response. I am aware that the Government had announced a reduction in PF contributions at 10% for three months. My question is: In general, irrespective of manpower, can an establishment reduce the contribution from 12 to 10?
However, I have received answers and opinions from experts.
Thank you,
R. Devarajan
From India, Madras
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