Various relief by EPF and ESIC during COVID 19

Various relief by EPF and ESIC during COVID 19

COVID 19 has overcome all the business since March, 2020 and it is getting really hard for the business and establishments to comply with all legal compliances on time and the liquidity crunch is also hitting hard.

Factories and Establishments are required to pay wages and salary to their workers and employees for these affected periods too. With payment of salary, ESIC and EPF compliance come along.

To provide some relaxations to establishments without affecting earnings of workers, the government has come with various reliefs by EPF and ESIC during covid 19 in compliances requirement with respect to ESIC and EPF.

Also, the government has offered to contribute to EPF accounts of employees to reduce the financial burden of factories.

In this article, we have discussed all relaxations given by the central government to circumvent this epidemic.

1. Relief by Employee Provident fund during covid 19

1.1 Extension of due date of payment of PF contribution and filing ECR for March, 2020

To cope-up with the unprecedented situation of COVID 19, the Central government has allowed a grace period of 30 days (from 16th April, 2020 to 16th May, 2020) to file Electronic Return cum Challan (ECR) for the month of March, 2020.

In ECR filed till 15th May, 2020, employer is required to declare actual date of disbursement of wages for the month of March, 2020 in ECR and remit the contribution and administrative/inspection charges on or before 15th May, 2020.

Source: (No. C-I/Misc./2019-20/Vol.II/Part./9 dated 15th April, 2020)

1.2  Revised due dates of Payment of EPF and filing of ECR

MonthDue date for filing ECRDue date of payment of Contribution
March, 2020Extended to 15th May, 2020(Grace period of 30 days allowed)Extended to 15th May, 2020(Grace period of 30 days allowed)
April, 202015th May, 2020 (No Extension)15th May, 2020 (No Extension)(However, no penal charges will be invoked for delay payment)
May, 202015th June, 2020 (No Extension)15th June, 2020 (No Extension)(However, no penal charges will be invoked for delay payment)

Source: No. C-I/Misc./2019-20/Vol.II/Part./9 dated 15th April, 2020, No. C-I/Misc./2020-21/Vol.I./1112 dated 15th May, 2020 

1.3 Reduced rate of EPF contribution from 12% to 10%

Under Atmanirbhar Bharat package, statutory rate of EPF contribution for both employer and employee has been reduced from 12% to 10%.

Reduced date of EPF is applicable for the month of May, 2020, June, 2020 and July, 2020.

Reduced rate of EPF is applicable for all class of establishments covered under EPF and MP Act, 1952 except:

  • Central and State Public Sector enterprises
  • Any other establishment owned or controlled by or under control of the Central Govt. or State Govt.

Reduced rate is not applicable to establishments eligible for PMGKY benefits, since the entire employees and employer contributions (totaling 24% of wages) is being contributed by the Central Government.

There is no change in the administrative charges (0.5% of EPF wages) and EDLI contributions (0.5% of wages) both payable by employer.

Source: Notification dated 18th May, 2020

FREQUENTLY ASKED QUESTIONS – The reduction in statutory rate of EPF contributions from 12% to 10% (Dated 20 MAY 2020)

1.4  24% Contribution to EPF Account by Government

The Central Government announced Pradhan Mantri Garib Kalyan Yojana Package (PMGKY) to help the poor fight the COVID-19 pandemic.

As a part of this package, the Central government announced to deposit both employer contribution (12%) and employee contribution (12%) to EPF Account for three months-March, 2020, April, 2020 and May 2020.

Only those organizations who have employees upto 100 and 90% or more of such employees should be drawing monthly wages less than INR 15,000.

Employees eligible for contribution:

  • Who are employed in any eligible establishment earning monthly wages of less than Rs.15,000/- and his UAN should be seeded with his/her Aadhaar.
  • Employee contributions are received in EPF account for any period during last six months (wage months: September 2019 to February 2020).
  • Contributions in ECR should have been received on monthly wage of less than Rs.15000/-

Source: Pradhan Mantri Garib Kalyan Yojana

FREQUENTLY ASKED QUESTIONS ON CENTRAL GOVT. RELIEF FOR EMPLOYEES’ AND EMPLOYERS’ CONTRIBUTION FOR THREE MONTHS TO LOW WAGE EARNING EPF MEMBERS EMPLOYED IN ESTABLISHMENTS WITH EMPLOYMENT STRENGTH UPTO ONE HUNDRED: Dated 10/04/2020

1.5 Electronic Return Cum Challan (ECR) can be filed without simultaneous payment of contribution

Earlier, payment of Contribution and administrative/inspection charges is a prerequisite for filing ECR.

However, to enable establishments to complete compliances smoothly during Lockdown, Electronic Return Cum Challan (ECR) can be filed without simultaneous payment of contribution.

ECR shall not stand lapsed and will be available for payment at future date also.

Dues may be remitted within the due date or within extended time, if any, as announced by the Central Govt. The Central government has waived any damages for delay in deposit of contribution during lockdown period.

Those entities which are eligible for PMGKY scheme, then they can file declaration for the month of March, 2020 and April, 2020 till 15th May, 2020.

Source: FREQUENTLY ASKED QUESTIONS: ECR FILING AND PAYMENT OF CONTRIBUTIONS

1.6 Non Refundable EPF Advance to Fight COVID-19 Pandemic

In the fight against COVID-19, all factories and establishments are temporarily closed down. In this period, Employees and workers may get short of funds. Therefore, the government has allowed employees to take non-refundable EPF Advances working in establishments and factories.

Any member of EPF scheme with UAN (Universal Account Number) employed in any factory or establishment is eligible to take advances.

Refund amount is allowed for least of the following amounts:

  • Basic Salary and Dearness Allowances of 3 months or
  • 70% of amount outstanding to credit of EPF Account

Since withdrawal is non-refundable, there is no requirement to refund the amount.

Process of claiming advance is also completely online. Therefore, any employee can claim such amount if his UAN is validated to Aadhar and KYC of Bank account and Mobile Number is seeded in UAN.

Source: (No. C_I/Misc./2019-20/Vol.II/Part/ dated 28th March, 2020)

FREQUENTLY ASKED QUESTIONS ON EPF ADVANCE TO FIGHT COVID-19 PANDEMIC 

1.7. Relief from penal charges for delay in deposit of contribution during lockdown period

Section 14B of EPF Act, 1952 provides for recovery of damages from employer who defaults in payment of contribution by due date.

During this epidemic, Central Government has clarified that delay in deposit of contribution during lockdown period is due to operational and economic reasons and employer has no guilty intention behind same.

Therefore, for delay in deposit of contribution or administrative charges during lockdown period, no proceedings will be initiated for levy of penal damages.

Source: (No. C-I/Misc./2020-21/Vol.I./1112 dated 15th May, 2020

2. Relief by Employee state Insurance Corporation during covid 19

2.1 Extension of due date of deposit of ESIC Contribution for the month of February, 2020 and March, 2020

To face pandemic COVID-19, due date of ESIC contribution extended for the month of February, 2020 & March, 2020 as follows:

MonthRevised Due datesEarlier Due date
February, 202015th May, 202015th March, 2020
March, 202015th May, 202015th April, 2020

Source: (No. P-11/14/Misc./1/2019-Rev. dated 16th March, 2020 read with notice dated 13th April, 2020

Read more about Reduced rate of ESIC from 6.5% to 4%

2.2      Extension of due date of filing ESIC return for quarter October, 2019 to March, 2020

Due date of filing of ESIC return for the period of October, 2019 to March, 2020 has been extended till 11th June, 2020 from 11th May, 2020

Source: (No. P-11/12/Misc./1/2019(M)-Rev. II dated 18th May, 2020)

DISCLAIMER: The views expressed are strictly of the author and VJM & Associates LLP. The contents of this article are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the author nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon.

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