New Delhi: EPF There is good news for account holders. New guidelines of EPFO are going to be issued soon. The government is going to make some new changes in it. The biggest change can be regarding the wage limit. Currently, under the Employees’ Provident Fund Organization (EPFO), employees and employers contribute 12% of the basic salary, in which the wage limit is fixed at ₹ 15,000. But now the government is preparing to change this limit.
If sources are to be believed, this limit can be increased to ₹ 21,000. This will enable more and more employees to avail the benefits of EPF and EPS. There is a consideration on increasing the wage limit of EPFO from ₹ 15,000 to ₹ 21,000. If this change is implemented, it will affect millions of employees and employers.
What is the rule of EPF and EPS?
According to the current rules of EPFO, employees whose basic salary is ₹ 15,000 or less, get the benefit of EPF (Employees Provident Fund) and EPS (Employees Pension Scheme). Both the employee and the employer have to contribute 12% of their salary to EPF. Out of the employer’s 12% contribution, 8.33% goes to EPS (pension scheme), but this can be a maximum of ₹1,250.
What can change?
1. If the government increases the salary limit from ₹15,000 to ₹21,000, what changes will it bring?
2. More money will go to EPS (Pension Scheme)- Currently, the employer gives ₹1,250 in EPS, while after the increased limit, it will become ₹1,749. Meaning, you will get more pension after retirement.
3. More money will be deposited in EPF – Employees whose salary was more than ₹ 15,000 but EPF deduction was limited, their entire contribution will now be based on their salary.
4. More employees will be included in this scheme – Earlier, those whose salary was more than ₹ 15,000 could not take advantage of EPS, but now employees with salary up to ₹ 21,000 will also be included in the pension scheme.
What will be the impact on your salary?
Impact on in-hand salary – Because, PF deduction may increase, your net in-hand salary may decrease a bit. But its benefit will be available at the time of retirement. There will be more savings for retirement- There will be more deduction in EPF and EPS, which will provide more pension and savings in old age. Burden on employer will increase- Companies will have to pay more money as employer contribution, due to which some changes can be seen in the salary structure.
When can this change happen?
So far EPFO or the government has not issued any official notification on this. But according to sources, this is being discussed and it is likely that the government may take a decision on this soon. For a long time, there was a demand of labor unions and pensioners that the wage limit should be increased.