The Union Ministry of Labour and Employment has recently issued an amendment to the Employees’ Provident Funds (EPF) Scheme in response to the COVID-19 pandemic. This alteration permits EPF members to withdraw non-refundable advance amounts.
New Amendments to the EPF Scheme
This recent development amends the EPF Scheme of 1952 through the introduction of Sub-Para (3) under Para 68L. According to this modification, in case of an epidemic or pandemic outbreak, members are allowed to make a withdrawal. The extent of withdrawal is limited to the basic wages and dearness allowance for three months or up to 75% of the PF balance, depending on which is lower.
Previous Non-Refundable Advances
Prior to this amendment, non-refundable advances were only authorized for certain specified purposes, such as housing or marriage. Even these were only permissible if an employee had completed a stipulated minimum service period.
Eligibility and Benefits
As the COVID-19 crisis has been declared a pandemic across the nation, employees from all establishments and factories in India who are part of the EPF scheme are qualified for this revised scheme. The Finance Minister announced as part of the Pradhan Mantri Garib Kalyan Yojana that the government will cover the provident fund contributions for the upcoming three months—12% each from both the employer and the employees—for those establishments having up to 100 employees and where 90% of them earn less than ₹15,000 per month as salary. Furthermore, the conditions for withdrawal from EPF accounts have been relaxed.
About the Employees’ Provident Funds Scheme
The EPF Scheme is the primary plan under the Employees’ Provident Funds and Miscellaneous Act, 1952. It provides the foundation for provident funds for factory employees and other establishments. Under this scheme, both the employee and employer contribute 12% of the employee’s basic salary and dearness allowance towards the EPF.
Previous Suggestions and Current Laws
The Economic Survey of 2016-17 advocated that employees should be given the option to decide whether to save 12% of their salary into EPF or retain it as take-home pay. According to current legislation, if an individual’s monthly salary does not exceed Rs. 15,000, they automatically become a member of EPF.