COVID-19 (Coronavirus) pandemic is impacting all businesses across the sector. It is showing a real impact on the manufacturing and construction industry. After the twenty-one days of lockdown announced by Prime Minister Narendra Modi, the Indian Government is working on a slew of packages to support the needy. Today's announcement from the Finance Minister Nirmala Sitharaman is one that is very supportive at this stage. EPFO regulatory amendment to allow early withdrawal of Non-refundable advance and support to SMEs with EPF contribution for the next three months was well received.
Employee Provident Fund contribution of 12% from the employee and 3.67% from employer and Employee Pension Scheme contribution from employer of 8.33% will be entirely covered by the Government for the next three months starting 1st April 2020.
The following are the eligibility criteria.
- Establishments with up to 100 employees
- 90% of those employees are taking a salary of Rs 15000 or less (Below the statutory limit)
There was no mention of EDLI (Employee Deposit Linked Insurance) contribution for employees and administration fees. EDLI scheme is an optional component, and the employer voluntarily contributes premium every month at the rate of 0.5 percent of the EPF Wages for all employees.
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As part of the measures announced by the Finance Minister Nirmala Sitaraman, EPFO regulations will go for an amendment.
At its current state, employees can withdraw a certain amount from the EPFO Non-refundable advance after meeting specific terms and minimum service requirements. In this case, there is no pre-condition to draw 75% of the balance an employee has in his account or three months of salary, whichever is lesser. It will benefit 4.8 crore or 48 million employees in the organized sector.
For claiming the Non-refundable advance, employees need to submit Form-31 (Form-31 with Aadhaar & Form 31 Non Aadhaar) with the details duly filled in.
The situation will get better, and we will be back to our regular life. Hence think before withdrawing the balance. If it is necessary to manage your lifestyle, please go ahead. Alternatively, you can invest in stocks as the market has got few more legs to go down in the coming days. Pick the share that you can retire 🙂
(Disclaimer: I am not a financial advisor, please consult your financial advisor before taking such decisions).
Stay Safe and Stay Healthy!
