Your take home salary can go up after FM Nirmala Sitharaman’s announcement; here is now

Finance Minister Nirmala Sitharaman on Wednesday announced several measures as part of the relief package to kick-start the Indian economy. One of them could help increase your take home salary during the ongoing crisis. Yes, you read it right. The government has announced a reduction of statutory provident fund contribution by both employers and employees to 10 per cent of basic wages from the existing 12 per cent for the next three months.

The decision has been 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, which will have an impact on 4.3 crore employees and 6.5 lakh employers reeling under liquidity crunch due to COVID-19 lockdown, will be applicable on all the establishments covered under the Employees' Provident Fund Organisation (EPFO).

“Reducing the EPF from 12% to 10% means salaried people will get to take home more money. Putting more money in the hands of people is necessary to spur economic growth as it leads to more spending. We may even see many people invest this extra money they’re getting,” Harsh Jain, Co-founder, and COO, Groww explained. 

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Apart from this, the finance minister also announced the extension of another scheme under the Pradhan Mantri Garib Kalyan Yojana (PMGKY) for three months till August, where the government would contribute entire 24 per cent of PF contributions till August, giving relief to 3.67 lakh employers and 72.22 lakh employees. The government had imposed lockdown on March 25 to fight deadly COVID-19.

In a presentation on such steps, Sitharaman said, "This was provided earlier for salary months of March, April and May 2020. This support will be extended by another three months to salary months of June, July and August 2020."

The extension of the benefit will provide a liquidity relief of Rs 2,500 crore to 3.67 lakh establishments and for 72.22 lakh employees.