About a third of all employers registered with India’s retirement fund manager- Employees’ Provident Fund Organisation (EPFO)- have not filed statutory provident fund dues for April.
Before the country had gone into the lockdown phase, in February, 5,20,566 companies had paid their employees’ and employers’ contributions for February, says EPFO data. But in April, there was a plunge of 37% from March, with only 3,21,800 companies paying their contributions.
This huge drop is reportedly attributed to layoffs, closures and relaxations from the side of government. A total of 6,54,421 establishments are registered with the retirement fund body who submitted PF deductions directly to EPFO in the past one year.
Also read: Is Urban Economy Staring at Disaster?
“The companies have got some exemptions due to the lockdown, but you must realise that such a high number of companies not submitting dues shows that their revenue is in bad shape,’ said Muralidharan Thyagarajan, chairman of TMI Group, a Hyderabad-based staffing company.
While, since the lockdown on March 25, the retirement fund has seen payment defaults and massive withdrawals by employees.
“Yes, EPFO had announced it won’t penalise those who won’t submit dues on time, but you have to remember that 1,78,000 fewer firms contributing EPF dues—both their own share and millions of their employees’ share—tell us the damage done to the formal sector,” a person familiar with the development, was quoted saying by the Hindustan Times.
Earlier, EPFO had decided not to impose any penalty for delay in payment of employees’ provident fund contributions by firms during the lockdown.
"During the lockdown period we are not going to impose any damages (penalty). This is our pro stakeholder/businesses/employers attitude which we are following," Employees' Provident Fund Organisations (EPFO) Central Provident Fund Commissioner Sunil Barthwal had said.
While the Labour Ministry in a statement had said that during the ongoing COVID-19 induced lockdown, businesses are not able to function normally and are facing liquidity issues or cash crunch to pay their statutory dues even though they are retaining the employees on their rolls.
Barthwal also told the industry representatives during the webinar that the government's decision to cut employers and employees' PF contributions to 10% each from the existing 12% would be implemented in May month's salaries.
Earlier this week, Finance Minister Nirmala Sitharaman had announced reduction of statutory provident fund contribution by both employers and employees to 10% of basic wages from the existing 12% for the next three months.
Also read: Workers Hit Hardest as Existential Crisis Grips Tourism Sector in HP
The decision was taken to facilitate more take-home salary for employees and give relief to employers in payment of PF dues, resulting in a liquidity ease of Rs 6,750 crore. The decision is expected to benefit 4.3 crore employees and 6.5 lakh employers reeling under a liquidity crunch due to COVID-19 lockdown.
Without divulging details about type of claims and time period, Barthwal said as many as 23 lakh claims were settled with disbursal of Rs 8,000 crore.
Earlier on March 28, the EPFO had allowed formal sector workers under its ambit to withdraw a non-refundable advance from their retirement savings to deal with hardships due to lockdown.
(With inputs from PTI)