EPFO: The government is preparing to bring about a major change for millions of employees working in the private sector. According to this news, which has surfaced just before the budget, a proposal to increase the salary limit for mandatory PF contributions under EPFO is moving forward rapidly. Currently, this limit is Rs 15,000 per month, and there is a possibility that it will be increased to Rs 25,000. This move aims to broaden the scope of social security.
PF limit may change after 12 years
The salary limit related to the Employees’ Provident Fund was last changed in 2014. In the past decade, there have been significant changes in inflation, the cost of living, and salary structures. Today, a large number of low and mid-level employees earn more than Rs 15,000, but they are outside the mandatory PF coverage. The government is now preparing to address this imbalance.
The proposal may be presented at the next meeting
According to reports, this proposal may be presented in the upcoming meeting of the Central Board of Trustees of EPFO. If the board gives its approval, it can be implemented from the beginning of the financial year. This will bring about a major change in the rules related to EPFO.
Supreme Court order accelerates the process
The role of the Supreme Court is also considered important in advancing this decision. The court has directed EPFO to review the salary limit in view of rising inflation and salary levels. The court believes that the current limit is not providing adequate social security to the employees.
What will be the impact on employees?
If the salary limit is increased to Rs 25,000, then PF contribution will become mandatory for all employees falling within this range. The direct benefit of this will be an increase in the amount received at the time of retirement and pension benefits. However, the take-home salary every month may be slightly less, as PF deductions will increase.
EPFO and EPS will be strengthened
Experts say that this decision will strengthen the fund base of both EPFO and the Employees’ Pension Scheme. The addition of more employees will increase regular contributions, making it easier to sustain pensions and other benefits in the future.
Increased Challenge for Companies
The impact of this change will not be limited to employees alone. Employers will also have to contribute more. New labor codes, a new definition of wages, and expenses like gratuity are already putting pressure on companies. This decision could further challenge their cost structure.
Read More- UIDAI Launches New mAadhaar App: Update Aadhaar from Your Phone in Just 2 Minute
When will the new rule be implemented?
If all formalities are completed on time, the new wage limit could be implemented from April 1st. After that, PF and all related benefits will be determined according to the new rules.