Govt to make PF contributions for these employees under new job incentive scheme

Centre announces Atmanirbhar Bharat Rozgar Yojana to incentivise job creations

epfo pti EPFO manages the accounts of over six crore members and has a corpus of over Rs 10 lakh crore | PTI

The Centre on Thursday announced a series of stimulus measures as part of Atma Nirbhar 3.0 announcements. One of the key announcements was the launch of the Atmanirbhar Bharat Rozgar Yojana, a job creation scheme to incentivise companies for generating employment. 

As part of the scheme, the Central government will give subsidy for two years for new employment from October 2020-June 2021, which will cover both employers’ and employees’ contribution towards the Employees’ Provident Fund (EPF) scheme. 

The subsidy will be in the form of total contribution being made by the Central government. This means, 12 per cent of the employee’s contribution and 12 per cent of the employer’s contribution will be borne by the Central government.

The scheme will benefit workers with wages up to Rs 15,000 who have been employed for the first time by an establishment covered by the Employees’ Provident Fund Organisation. In addition, “EPF members drawing monthly wage of less than Rs 15,000 who made an exit from employment during COVID-19 pandemic from March 1, 2020 to September 30, 2020 and is employed on or after October 1, 2020” will also be a part of the scheme,” Finance Minister Nirmala Sitharaman said. 

According to the finance minister, about 65 per cent of workers in the formal sector will be covered under the scheme.

To be eligible for the scheme, employers will have to add at least two new employees if they have a total workforce of less than 50. If the workforce is more than 50, employers will have to hire a minimum of five new employees. The new employment has to take place between October 1, 2020 and June 30, 2021.

Additionally, establishments covered under the EPFO after the starting of the scheme will get subsidy for all employees, the finance ministry said.

The amount will be credited to Aadhaar-seeded EPFO account of the eligible employees. It will cover all establishments with a maximum of 1,000 workers, which is equivalent to 95 per cent of all establishments in India. However, establishments with more than 1,000 workers will also be entitled for subsidy towards the employer’s share.

At present, both employers and employees contribute 12 per cent towards each of a worker’s wage towards schemes under the EPFO.

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