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FAQs on EPF & EPS Contributions relief for 3 months.

Q1: What is the objective of this Scheme?

Ans: The Central Govt. announced Pradhan Mantri Garib Kayan Yojana Package to help the poor fight the COVID-19 pandemic. As part of this package, to prevent disruption in the employment of low wage-earning employees and support businesses employing less than one hundred employees, the Central Govt. has decided to pay 24 percent of the monthly wages into their EPF accounts for three months.

To implement the package, the Ministry of Labour, Govt. of India has approved Scheme guidelines.

Q2: What are the effective months during which this Scheme is being implemented?

Ans: This Scheme will be valid for wage months- March 2020, April 2020 and May 2020.

Q3: Which are the establishments eligible for getting the benefit of contributions from Central Govt.?

Ans: For any establishment to be eligible for benefits,

The establishment or factory should already be covered and registered under the Employees’ Provident Funds & Misc. Provisions Act, 1952.

The total number of employees employed in the establishment should be up to 100 (one hundred), with 90% or more of such employees should be drawing monthly wages less than Rs.15000/-.

Q4: Are all employees of eligible establishment eligible for the Central Govt. relief under this Scheme?

Ans: For an employee to be eligible for benefits,

The employee should be employed in any eligible establishment earning monthly wages of less than Rs.15000/- and his UAN should be seeded with his/her Aadhaar.

The employee should be a member of EPF Scheme, 1952 & Employees’ Pension Scheme, 1995 whose contributions are received for any period during the last six months (wage months: September 2019 to February 2020) in the ECR filed by any eligible establishment against his/her UAN.

Such contributions in ECR should have been received on a monthly wage of less than Rs.15000/-.

Q 5: Whether an employee, earning less than Rs.15000/- employed in an eligible establishment who is no longer a member of EPS, 1995 due to his attaining the age of 58 years but is a member of the EPF Scheme, 1952 eligible for relief under this Scheme?

Ans: EPF members who are not EPS members due to completion of 58 years shall be eligible provided other conditions are fulfilled and the contribution from Central Govt. will be credited to his EPF account.

Q6: Can you illustrate the verification of eligibility of an EPF covered establishment for benefit under this Scheme?

Ans: If an establishment already covered under the EPF & MP Act, 1952 has remitted contributions in respect of fifty employees for February 2020, through ECR and on verification of ECR, it is found that for 46 employees (92% of 50 employees), the contributions are paid on wages less than Rs.15000/-, the establishment is eligible.

All the 46 employees earning wages less than Rs.15000/- are eligible for the benefit.

If the above situation of total employees up to 100 and 90% or more of employees earning a monthly wage of less than Rs.15000/- prevails in wage month of March 2020, April 2020 and May 2020, the establishment is eligible for benefit under this Scheme.

Q7. What is the quantum of Central Govt. relief under this Scheme?

Ans: The entire employee’s EPF contributions (12% of wages) and employer’s EPF & EPS contribution (12% of wages), totaling 24% of the monthly wages for the next three months shall be directly paid by the Central Govt. in the EPF accounts (UAN) of eligible employees in employed in eligible establishments.

Q8: Whether an employee is defined for this Scheme?

Ans: The definition of employee as contained in Sec 2(f) of the EPF & MP Act, 1952 as well as other definitions in EPF & MP Act, 1952 are mutatis mutandis applicable to this Scheme.

Q9: Who will be considered as a contributory member for determining eligibility?

Ans: Employee, employed in the eligible establishment, should be a contributory member of EPF Scheme, 1952 & Employees’ Pension Scheme, 1995, whose contributions are received against his/her UAN for any period during last six months (wage months- September 2019 to February 2020) in the ECR filed by any eligible establishment.

Q10: How an eligible employee is benefitted by this Scheme?

Ans: The monthly employee’s EPF contributions @ 12% of monthly wage which is deducted from the wage of the employee is now to be paid by the Central Govt. in the EPF account of the eligible employee. So there will be no deduction from wages of the eligible employee so he/she will have a higher take-home salary.

Since the employer is also supported for the employer’s share by the Govt., it prevents loss of employment of low wage earners and ensures payment of wages to employees.

Q11: How an employer of eligible establishment is benefitted by this Scheme?

Ans: Employer of eligible establishment is not required to pay his share of EPF & EPS contributions @12% of the monthly wage of eligible employees of his establishment and so the employer saves this money. This is an incentive to employers of small businesses to retain all his employees and pay them wages.

Q12: Can you illustrate the monetary benefit to an Employee & Employer under this Scheme?

Ans: If an eligible employee draws a monthly wage of Rs.10000/-, Rs.1200/- which was to be paid into EPF by deduction from his monthly wage will now be paid by the Central Govt.

Further, in the above case, the employer is also not required to incur an expenditure of Rs.1200/- from his finances as the Central Govt. pays the same.

Q13: So, Central Govt. will bear the entire liability under the EPF & MP Act, 1952 for eligible establishments?

Ans: The Central Govt. shall bear the entire liability towards the EPF & EPS contributions of the eligible employees in the eligible establishment. The employer of eligible establishment, shall continue to pay the EDLI contributions and EPF administrative charges for all employees as well as the EPF & EPS contributions for ineligible employees.

Q 14: Whether this scheme applies to employees in the exempted establishment?

Ans: Yes, provided that the establishment meets the eligibility conditions as mentioned in Answer to Q3

Q 15: If the UAN is not seeded with Aadhaar, how the validation/seeding is possible in the lockdown period?

Ans: Online e-KYC facility is available to the member on EPFO Portal as well on UMANG mobile App to self-validate their UAN with Aadhaar without any intervention by Employer. This is in addition to Online Aadhaar validation in member’s UAN by the employer.

Since the validation is Online, the seeding of Aadhaar in UAN can be completed now also.

Q 16: Whether the EPFO will communicate with the employers of the establishments found eligible from ECRs of the month before March 2020?

Ans: Yes, EPFO will send a communication in employer’s login to all such establishments for payment of wages to employees and filing of ECR. However, the eligibility will be validated on the filing of ECR by employers for the wage months- March 2020, April 2020 and May 2020 and also about the information furnished in Form 5A.

Q 17: How the benefits can be applied for and who has to apply, employer or employee?

Ans: The employer concerning any eligible establishment, is required to disburse salary/wages for the month to all employees of the establishment, without deducting EPF contributions from wages of eligible employees and file Electronic Challan cum Return (ECR) for the month to claim benefit under this Scheme.

Also Read: GST: FAQs on form GSTR-10

Q 18: Is the employer required to file separate ECR for the eligible employees?

Ans: Each eligible establishment has to file only one valid ECR for each of three months in respect of its total employees both eligible as well as ineligible employees.

Q 19: Is the employer required to file any other information other than ECR?

Ans: Form 5A (Ownership return) should contain particulars of all branches and departments of the establishment and also code numbers if any, taken for administrative convenience for the branches. The employer can update Form 5A online using his approved Digital Signature Certificate (DSC).

Q 20: Whether the amount of the contribution has to be initially paid by the establishment and thereafter reimbursed by Central Govt.?

Ans: Once ECR is uploaded by an employer of eligible establishment, the challan will separately show such amounts of employees’ and employers’ contributions as Central Govt. relief due under this Scheme in respect of eligible employees and the remaining amount payable by the employer.

After the employer remits the payment due from him as reflected in challan as noted above, the EPF & EPS contributions in respect of eligible employees will be credited directly in their respective UAN by the Central Govt.

Q 21: What is the responsibility of the employer for availing the benefits?

Ans: The employer must ensure to file correct information, statement or declaration for the total number of employees, disbursement of wages, amount of wages in the ECR and full details of establishment in Form 5A. The employer is required to file a certificate/declaration in the format prescribed under 6 (vii) of the Scheme at the time of ECR submission.

If it is discovered that the information furnished or declaration made electronically in ECR or Form 5A or otherwise are false/incorrect, then the employer will be liable to refund the relief and also face the penal consequences for such contravention under the EPF & MP Act, 1952.

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TaxClue Teamhttp://taxclue.in
Taxclue is an online news portal for reporting all news, articles, judgments, Circulars, orders, and notifications relating to various corporate and tax laws in India. We use the tagline ‘Simplifying Laws’. Our mission is to Simplify the Laws and make people aware of their rights and duties in relation to tax matters in order to equip them to participate in nation-building.

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