Withdrawal from EPF Accounts | 31 Mar 2020
Why in News
The Union Ministry of Labour and Employment has notified an amendment to the Employees’ Provident Funds (EPF) Scheme allowing members to withdraw non-refundable advance amounts in the wake of the COVID-19 pandemic.
Key Points
- The notification amends the EPF Scheme, 1952 by inserting Sub-Para (3) under Para 68L of the EPF Scheme, 1952.
- This permits withdrawal not exceeding the basic wages and dearness allowance for three months or up to 75% of the PF balance, whichever is lower, in the event of outbreak of epidemic or pandemic.
- Earlier, non-refundable advances were permitted only for specified purposes such as housing and marriage. Even these were permitted only where the employee has put in a minimum service period.
- Since the outbreak of COVID-19 had been declared a pandemic for the entire country, all employees of establishments and factories in India who are members of the EPF scheme would be eligible for the amended scheme.
- Recently, the Finance Minister — as part of the Pradhan Mantri Garib Kalyan Yojana — said that the government will bear the cost of the provident fund contributions, both of the employer and employees—12% each—for the next three months for those establishments which have up to 100 employees and 90% of whom are earning less than ₹15,000 per month as salary. It also relaxed withdrawal conditions from EPF accounts.
Employees’ Provident Funds Scheme
- EPF is the main scheme under the Employees’ Provident Funds and Miscellaneous Act, 1952. This scheme offers the institution of provident funds for factory employees and other establishments.
- The employee and employer each contribute 12% of the employee’s basic salary and dearness allowance towards EPF.
- The Economic Survey 2016-17 had suggested that employees be allowed to choose whether or not to save 12% of their salary into EPF or keep it as take home pay.
- As per current laws, a person mandatorily becomes a member of EPF if his monthly salary does not exceed Rs. 15,000.