New Delhi: A week after Union Finance Minister Nirmala Sitharaman announced reduction of provident fund contribution by both employers and employees to 10 per cent of from 12 per cent, the Union Labour Ministry on Tuesday said employees can contribute more than the newly set limit of 10 per cent of basic wages to their provident fund (PF) for the next three months. The ministry further stated that the employers don’t need to match the higher contributions. Also Read - 7th Pay Commission Latest News: Tamil Nadu Govt Extends Retirement Age of Employees to 59 From 58
Issuing a statement, the Labour Ministry said that under the EPF Scheme, 1952, any member has the option to contribute at a rate higher than statutory rate (10 per cent) and employer can restrict his contributions 10 per cent in respect of such employee. Also Read - 7th Pay Commission Latest News: Karnataka Govt Won’t Pay Additional Installments of DA to Employees, Pensioners
The ministry further explained that the employer contributions to the social security scheme run by the EPFO shall be 10 per cent of the wages of May, June and July due in June, July and August, respectively. Also Read - 7th Pay Commission Latest News: Tamil Nadu Freezes DA Till July 2021, Suspends Earned Leave Of Its Employees For One Year
The development comes after the labour ministry on Monday issued a notification indicating lower rates of provident fund contribution at 10 per cent, increasing the in-hand salary of 4.3 crore provident fund subscribers.
While making announcements, Finance Minister Nirmala Sitharaman had last week announced the reduction of statutory provident fund contribution by both employers and employees for the next three months to 10 per cent of basic wages from 12 per cent.
However, the 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 Government or State Government.
As per the standard norms, these establishments will continue to contribute 12 per cent of basic pay and dearness allowances (DA). EPF contributions are paid as a proportion of basic wages which include basic pay and DA.