- Date : 20/11/2020
- Read: 4 mins
A safe harbour of 20% will help home buyers and developer save taxes on residential units purchased between November 12, 2020 and June 30, 2021
Finance Minister Nirmala Sitharaman announced the third stimulus package on 12 November 2020, which incudes the Atmanirbhar Bharat Rozgar Yojana benefit for EPFO contributions. This scheme aims to create new jobs by providing subsidies to employers. Organisations registered with the Employee Provident Fund Organisation (EPFO) can avail of this subsidy for newly hired employees. Appointments made till 30 June 2021 will be eligible.
Organisations registered with EPFO can be eligible for the scheme by adding as little as two employees. Accordingly, if an organisation had 50 or fewer employees during the September 2020 reference base, it will be covered under the scheme if a minimum of two employees is added. If the number of employees exceeds 50, the company will need to add five or more employees to be covered under the scheme.
For additions to the workforce made between 1 October 2020 and 30 June 2021, the organisation will be able to avail of the scheme for the next two years. This will also be applicable if they hire employees who had earlier lost their jobs during the period from 1 March 2020 to 30 September 2020. Employees joining at a monthly wage of up to Rs 15,000 per month will be included in this scheme.
Under Atmanirbhar Bharat Rozgar Yojana, the government will contribute the provident fund amount on behalf of the employees in their EPFO accounts. In establishments with up to 1000 employees, 12% of the employee’s contribution and 12% of the employer’s contribution will be made by the government. In larger organisations with more than 1000 employees, only the employee’s contribution of 12% will be made. The subsidy will be promptly transferred to the employee’s Aadhaar-linked EPFO account.
Who does Atmanirbhar Bharat Rozgar Yojana scheme benefit and how?
Both employers and employees stand to benefit from this scheme. For employers, it will result in a cost-saving amounting to 12% of the employer’s contribution to the EPF. This should encourage employers to hire more staff. Employees of smaller organisations will see 12% less deduction from their salary. This will give them extra liquidity for at least two years. It will also offer hope to people who lost their jobs during the pandemic since the scheme incentivises companies to re-employ staff laid off earlier.
What are the other benefits offered by stimulus package 3.0?
Apart from the EPFO benefits, an Emergency Credit Line Guarantee Scheme has been released for businesses, including MSMEs, individuals, and Mudra borrowers who had taken a loan for business purposes. Ten sectors have been selected for a fund of nearly Rs 1.5 lakh crore to boost their domestic manufacturing, investment, employment, and exports.
An additional sum of Rs 18,000 crore has been earmarked for the PM Awaas Yojana (Urban). Performance security and earnest money deposit on government tenders, which was 5%-10% earlier, has been slashed to 3%. Besides, income tax relief has been extended to home buyers and builders, government investment announced for infrastructure financing, support for agriculture, rural employment, project exports, industrial and capital expenditure, and R&D of COVID vaccine.
What has been offered so far under stimulus packages?
Earlier this year, the government released the much-publicised ‘10% of GDP’ stimulus package to tackle the effects of the pandemic. It included a Garib Kalyan Package for the poor, RBI raising advance and overdraft limits for states, speedy disbursal of income tax refunds, Rs 15,000 crore for Emergency Health Response Package, increased bank borrowing limits, loans for businesses including MSMEs, EPF contribution, Rs 30,000 crore liquidity schemes for NBFCs and HFCs, agricultural loans, support for migrants and the urban poor, fast-tracked investment clearance for the industry sector, Rs 40,000 crore for MGNREGS, etc. How much do you know about EPFO changes in 2020?