Union cabinet may give post facto approval to the proposal of EPFO contribution by the government announced under PM Garib Kalyan Yojana by Finance Minister Nirmala Sitharaman on March 26.

Official sources said that the cabinet approval is required to implement the proposal as it is expected to require additional budgetary allocation of around Rs 4,960 crore during the current year.

Moreover, the proposal to allow subscribers to withdraw 75 per cent of their EPF contribution or three months wages whichever is lower as contingency expenditure non-refundable advance would need an amendment to EPFO regulation.

The cabinet is scheduled to meet later in the day on Wednesday.

As part of the relief package worth Rs 1.7 lakh crore announced, the Centre will pay the Employees’ Provident Fund (EPF) contribution both of the employer and of the employee (24 per cent put together) for firms with over 100 employees with 90 per cent of them earning less that Rs 15,000, for the next three months.

Speaking on the same, Union Finance Minister Nirmala Sitharaman had said that the Government is ready to amend the regulation of EPF due to the pandemic so that workers can draw up to 75 per cent non-refundable advance from credit in PF account or three months salary, whichever is lower. This decision will benefit 4.8 crore workers. Sitharaman said.

The measure was announced to provide relief to establishments facing disruptions due to lockdown and were facing shortages in cash flow even to meet statutory obligations.

For organised sector, EPFO regulation is being amended to implement the proposal on non-refundable advance.

“The PM Gareeb Kalyan scheme under which the government proposes to pay both the employer and employee PF contributions will ease liquidity challenges on the employer and ensure continuity of PF contributions for the employee.

“While the scheme is applicable to companies with up to 100 employees, the additional condition that 90 per cent of employees should earn less than Rs 15,000 per month will limit the applicability. The government should also clarify whether the Rs 15,000 refers to wages for the purpose of PF contribution or total wages,” said Saraswathi Kasturirangan, Partner, Deloitte India.

As per the government data, as on April 13, about 2.1 Lakh members of EPFO have taken benefit of the online withdrawal of non-refundable advance from EPFO account amounting to Rs 510 crore. Besides, an amount of Rs 1,000 crore has already been released to EPFO for the Scheme (payment of EPF contribution) for the month of April, 2020. About 78.74 lakh beneficiaries and concerned establishments have been informed.