EPF Update – Will New Rules Reduce Your In-Hand Salary? Big Update on PF

EPF Deduction New Rule – The Union Ministry of Labour and Employment has formulated new rules for salaried employees, which are currently in the process of being implemented. Once implemented, many things will change. Salaried employees across the country are raising numerous questions. The question is whether this will have any impact on their in-hand salaries.

The four labour codes consolidate 2 labour laws. Changes have been made to everything from social security to workplace regulations. The government’s most significant change for employees is the new definition of salary. In this, 50% of the total salary will be the basis for calculating PF, gratuity, and other benefits.

Will in-hand salaries decrease?

The central government labour reforms are sure to impact take-home salaries. The expansion in the salary definition will also increase EPF contributions. This could reduce the salary coming into bank accounts, even if the cost to the company remains the same.

Additionally, according to Balasubramanian A., Senior Vice President at TeamLease Services, per percentage of your CTC will be eligible for per percentage EPF deduction. If your CTC doesn’t increase for some reason, your EPF contribution will increase, and your take-home salary will likely decrease slightly.

Which employees’ salaries will not be affected?

Currently, EPF is deducted only on basic salary + dearness allowance. Both the employee and the employer contribute to the centre. Employees currently receiving the minimum EPF deduction (₹1,800 per month) will not see any impact. Balasubramanian further explains that if you are currently paying only the minimum EPF, there will be no change.

These employees’ salaries will be affected.

Higher-paid employees may be affected by the new rules, but they have several options. Employees will be able to cap their EPF at ₹1,800. You can also ask your HR to cap your PF at Rs 1,800.

By adopting this method, employees will be able to avoid a decline in their in-hand salary. Improvements to the minimum wage could also increase salaries. A national floor wage (national minimum wage) is also being introduced in the labour codes.