PMGKY scheme
This query is : Resolved
04 March 2022
Sir,
AS per the notification EPF contribution payment by govt was deferred upto August 2020,under PMGKY scheme how to pass journal entry for the payment .
AS per the notification EPF contribution payment by govt was deferred upto August 2020,under PMGKY scheme how to pass journal entry for the payment .
10 July 2024
Under the PMGKY (Pradhan Mantri Garib Kalyan Yojana) scheme, the Government of India provided relief by deferring the employer's contribution to the Employee Provident Fund (EPF) for certain eligible organizations. Here is how you can pass the journal entries for the deferred EPF contribution payment:
### Journal Entries for Deferred EPF Contribution under PMGKY
#### 1. At the time of recording the EPF liability:
When the EPF contribution liability is recognized for a month, you will pass the following entries:
**Entry for Employee's Contribution:**
```plaintext
Salaries & Wages A/c Dr. XXX
To EPF Payable A/c XXX
```
**Entry for Employer's Contribution:**
```plaintext
Employer's Contribution to EPF A/c Dr. XXX
To EPF Payable A/c XXX
```
#### 2. At the time of recording the Government's contribution (PMGKY):
The government will pay the employer's contribution for eligible organizations. When this contribution is recognized, the following entry is passed:
```plaintext
Government Grants A/c Dr. XXX
To Employer's Contribution to EPF A/c XXX
```
#### 3. At the time of actual payment to EPF by the government:
When the payment is made by the government, no entry is needed since the liability has already been recognized in the previous entry.
#### 4. Recording the grant income when it is utilized:
When the grant is utilized, recognize the income from the grant:
```plaintext
Government Grants A/c Dr. XXX
To Other Income A/c XXX
```
#### Example with amounts:
Assume the total EPF contribution (employee + employer) for a month is ₹50,000, with the employer's portion being ₹25,000, and the government's grant covering the employer's contribution.
1. **Recording the employee's contribution:**
```plaintext
Salaries & Wages A/c Dr. ₹25,000
To EPF Payable A/c ₹25,000
```
2. **Recording the employer's contribution:**
```plaintext
Employer's Contribution to EPF A/c Dr. ₹25,000
To EPF Payable A/c ₹25,000
```
3. **Recording the government's grant for employer's contribution:**
```plaintext
Government Grants A/c Dr. ₹25,000
To Employer's Contribution to EPF A/c ₹25,000
```
4. **Utilizing the grant:**
```plaintext
Government Grants A/c Dr. ₹25,000
To Other Income A/c ₹25,000
```
By following these steps, you can properly account for the deferred EPF contribution under the PMGKY scheme and reflect it accurately in your financial statements.
### Journal Entries for Deferred EPF Contribution under PMGKY
#### 1. At the time of recording the EPF liability:
When the EPF contribution liability is recognized for a month, you will pass the following entries:
**Entry for Employee's Contribution:**
```plaintext
Salaries & Wages A/c Dr. XXX
To EPF Payable A/c XXX
```
**Entry for Employer's Contribution:**
```plaintext
Employer's Contribution to EPF A/c Dr. XXX
To EPF Payable A/c XXX
```
#### 2. At the time of recording the Government's contribution (PMGKY):
The government will pay the employer's contribution for eligible organizations. When this contribution is recognized, the following entry is passed:
```plaintext
Government Grants A/c Dr. XXX
To Employer's Contribution to EPF A/c XXX
```
#### 3. At the time of actual payment to EPF by the government:
When the payment is made by the government, no entry is needed since the liability has already been recognized in the previous entry.
#### 4. Recording the grant income when it is utilized:
When the grant is utilized, recognize the income from the grant:
```plaintext
Government Grants A/c Dr. XXX
To Other Income A/c XXX
```
#### Example with amounts:
Assume the total EPF contribution (employee + employer) for a month is ₹50,000, with the employer's portion being ₹25,000, and the government's grant covering the employer's contribution.
1. **Recording the employee's contribution:**
```plaintext
Salaries & Wages A/c Dr. ₹25,000
To EPF Payable A/c ₹25,000
```
2. **Recording the employer's contribution:**
```plaintext
Employer's Contribution to EPF A/c Dr. ₹25,000
To EPF Payable A/c ₹25,000
```
3. **Recording the government's grant for employer's contribution:**
```plaintext
Government Grants A/c Dr. ₹25,000
To Employer's Contribution to EPF A/c ₹25,000
```
4. **Utilizing the grant:**
```plaintext
Government Grants A/c Dr. ₹25,000
To Other Income A/c ₹25,000
```
By following these steps, you can properly account for the deferred EPF contribution under the PMGKY scheme and reflect it accurately in your financial statements.
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