This Article is From May 13, 2020

Finance Minister Nirmala Sitharaman Announces PF Benefits: 5 Things To Know

Deduction towards PF from both the employer and employee has been reduced from 12% to 10% for three months.

PF deduction has been reduced from 12% to 10%

Finance Minister Nirmala Sitharaman on Wednesday announced measures related to provident fund (PF), which will result in a hike in take home salaries of employees across the board. The announcement came as part of the first tranche of measures detailed upon, as a part of the Rs 20 lakh crore economic package that Prime Minister Narendra Modi announced on Tuesday. Ms Sitharaman on Wednesday said that the statutory deduction of 12 per cent from salaries towards PF by both the employer and employee, will now be reduced to 10 per cent each.

Here are five things to know:

  1. This measure will be applicable for the next three months, Ms Sitharaman added.

  2. All establishments under the Employees' Provident Fund Organisation (EPFO) will enjoy the benefits of this scheme, Ms Sitharaman said.

  3. However, state and central governments will continue to pay 12 per cent towards PF contribution, even as those employed by them will enjoy the benefit of paying 10 per cent only.

  4. Besides, the government also extended, for further three months, the PF-related benefit for smaller firms, which had been announced under the Pradhan Mantri Garib Kalyan Yojana in March.

  5. Under that scheme, it was announced that establishments with up to 100 employees, 90 per cent of whom, earn less than Rs 15,000 a month, will not have to pay the PF contribution, as it will be covered by the government. Moreover, the employees' contribution was also waived off.

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