look news india
EPFO: The government is considering increasing the limit of contribution made by subscribers to the Employees' Provident Fund Organization (EPFO) and Employees' Pension Scheme (EPS). According to media reports, Union Labor Minister Mansukh Mandaviya has indicated this. If this happens, employees can get Rs 1 crore on retirement.
Current contribution share of EPF
Currently, if the employee's salary is ₹15,000 per month or less, both the employee and the employer contribute 12% of their salary. The employer's contribution is divided into two parts – 8.33% goes to the Employees' Pension Scheme (EPS), while the remaining 3.67% is deposited in the Provident Fund (EPF). For example, if the salary is ₹15,000 per month, the employee's contribution to the Provident Fund will be ₹1,800, while the employer's contribution to the Provident Fund will be ₹550.50 and to the pension scheme will be ₹1,249.50.
What will be the new limit of EPFO contribution?
The government is considering increasing this salary limit to ₹ 21,000. If this proposal is passed, then on a salary of ₹ 21,000, the employee's contribution will be ₹ 2,520 and the employer's contribution will be ₹ 770.70 in EPF and ₹ 1,749.30 in EPS.
Employees will get huge benefits
If the EPFO limit is increased to ₹21,000, a 23-year-old employee who contributes for 35 years can have a total corpus of ₹1 crore. At the current limit of ₹15,000, the corpus is ₹71.55 lakh, with a total contribution of ₹10.71 lakh and interest of ₹60.84 lakh. At a limit of ₹21,000, the total contribution will be ₹15 lakh and interest will be ₹85 lakh, which can yield an additional ₹28.45 lakh.
EPFO withdrawal limit
The withdrawal limit of EPFO has also been increased to ₹ 1 lakh, which was earlier ₹ 50,000. This limit has been increased especially when there is an urgent need of money in a family emergency.