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To create employment Govt. announces to pay PF contribution of employer and employee

To create employment Govt. announces to pay PF contribution of employer and employee

New Delhi | November 13, 2020  The government on Thursday announced an employment incentive scheme, Atmanirbhar Bharat Rozgar Yojana, under which it will provide subsidy for provident fund contribution for adding new employees to establishments registered with the Employees’ Provident Fund Organisation (EPFO). The Centre will provide the subsidy for two years for workers who lost jobs between March 1 to September 30 and for new workers employed on or after October 1.

Under the scheme, the central government will pay PF contribution for workers with wages up to Rs 15,000. The contribution of 24 per cent for both employers and employees for establishments employing up to 1,000 employees will be borne by the Centre and for establishments employing more than 1,000 employees, 12 per cent of the employees’ share will be contributed by the government.

The additional eligibility condition for the scheme specifies that the subsidy will be provided for employment of two new employees if the establishment has 50 or less employees and will be paid for five new employees if establishments have more than 50 employees. The reference base for employees would be September 2020. The subsidy amount under the scheme, which will be operational till June 30, 2021, will be credited upfront only in Aadhaar-seeded EPFO accounts (UAN) of new employees.

“99.1 per cent of the establishments will be covered under this scheme and 65 per cent of all employees in the formal sector are estimated to be covered in the first category, wherein EPF contributions will be given by the government by way of subsidy support,” Finance Minister Nirmala Sitharaman said.

The new scheme is similar to the earlier scheme of Pradhan Mantri Rozgar Protsahan Yojana (PMRPY) which was implemented upto March 2019 to incentivise new employment. PMRPY was announced in August 2016, with the Centre providing for full employers’ contribution of 12 per cent (EPF and Employees’ Pension Scheme), for three years for new employees registered with the EPFO on or after April 1, 2016 earning up to Rs 15,000 per month. Total amount of Rs 8,300 crore has been given to 1,52,899 establishments covering 1,21,69,960 beneficiaries under PMRPY.