Finance Minister Nirmala Sitharaman in a press conference today announced several steps towards providing relief to the salaried individuals.
In the employee provident fund (EPF) account, the employee’s contribution of 12 per cent plus 12 per cent of the employer’s contribution will be paid by the government for the next 3 months.
Based on the basic salary of the employee, 12 per cent is equally contributed by the employee and the employer. The interest rate is paid on such monthly running balance that keeps accumulating in the employee’s PF account.
“The proposal to permit non-refundable advance to employees out of their PF balances will help employees to tide over their liquidity issues. Currently, non-refundable advances are permitted only for specified purposes such as housing, marriage etc. Even these are permitted where the employee has put in a minimum services period. The FM’s proposal will enable employees to withdraw up to 75 per cent of the PF balances limited to 3 months wages as non-refundable advance enhancing the liquidity of employees,” says Saraswathi Kasturirangan, Partner, Deloitte India.
This relief package may, however, be not available to all employees and hence knowing the eligibility helps. This PF benefit will be applicable to all those establishments which have up to 100 employees and out of those, 90 per cent are earning less than Rs 15,000 a month. Only employees in such establishments will be eligible for this benefit.
Importantly, 8.33 per cent of the employer’s contribution goes into the employee’s pension scheme (EPS) every month.
Overall, this package will give relief to eligible employees regarding their retirement money.
In another move, the government has announced that the EPFO Scheme regulations will also be amended to allow non-refundable advance which will be 75 per cent of credit balance I.e. PF balance or 3 months of wages, thus benefiting 80 lakh employees of nearly 4 lakh establishments.