NEW DELHI: The government, keen to prevent job cuts, may soon pay both the employer and employee’s share of provident fund contributions at more companies.
An announcement on this could be part of an economic package that is in the works, a top government official told ET.
As part of a ₹1.7 lakh crore package announced by finance minister Nirmala Sitharaman on March 26, the government had said it would pay the entire provident fund contribution of those who earn less than ₹15,000 per month in companies that employ up to 100 people, where 90% draw salaries of less than ₹15,000 per month.
This was for three months and entailed a total estimated cost of ₹4,800 crore. The Employees’ Provident Fund Organisation has six crore subscribers.
The current proposal will seek to relax the 100 workers’ limit and the stipulation that 90% of workers should have drawn a salary of ₹15,000 per month, the official said.
“…this cap of 100 employees may go altogether or substantially raised to cover more and more establishments,” the official, aware of the deliberations, told ET.
The usual PF contribution is 24% of a worker’s basic pay, of which 12% comes from the employee and the rest from the employer.
“The government is working out the additional financial implication under the two scenarios – doing away with the cap altogether or raising it substantially, based on which a decision would be taken,” the official said, requesting anonymity.
The initial strict ceiling on government contributions was because it was targeted at giving relief to MSMEs that have been hit the hardest due to the ongoing nationwide lockdown to contain the Covid-19 virus outbreak.
There is now pressure on the government to raise it to cover all establishments to ease the burden on employers and prevent job losses and salary cuts.
The labour ministry has already asked the EPFO to carry out a ground level assessment on job losses or salary cuts and prepare a report that can be placed before top policymakers.