look news india
The central government is preparing to provide big relief to the employees. For this, there is a plan to increase the scope of social security under the Employees Provident Fund Organization (EPFO). Under which the minimum salary limit for contribution in PF account i.e. basic salary can be increased from Rs 15 thousand to Rs 21 thousand. Which simply means that more salary will go to PF and pension account.
The proposal to increase the salary limit for PF has been pending for many years. According to a media report, an official associated with the matter said that we are evaluating all options and a decision in this matter can be taken by the new government. Doing so would be a strong step towards achieving universal social security. According to the official, increasing the salary limit will have a huge financial impact on both the government and the private sector.
Lakhs of employees will benefit
The official said that lakhs of employees will benefit from the increased salary limit. Because in most of the states the minimum salary is between Rs 18000 to Rs 25000. Due to the existing salary cap, they are deprived of any social security.
Changes happened in 2014
The last change in the salary limit under EPFO was in 2014. Then it was increased from Rs 6500 to Rs 15000. However, in contrast, the salary range in Employees' State Insurance Corporation (ESIC) is even higher. There is an upper salary limit of Rs 21000 since 2017 and there is a consensus within the government that the salary limit should be made the same under all social security schemes. Both EPFO and ESIC are under the administrative control of the Ministry of Labor and Employment.
How much to contribute currently
As per the existing rules, both the employee and the employer contribute equally 12 per cent of basic salary, dearness allowance and dearness allowance (if any) to the EPF account. Where the entire contribution of the employee is deposited in the provident fund account. While 8.33 percent of the employer's contribution goes to the employee pension scheme and the remaining 3.67 percent is deposited in the PF account.
what will be the benefit
If the basic salary becomes Rs 21 thousand then the employee's contribution to PF becomes Rs 2520. Which is currently Rs 1800. Whereas the employer will also contribute the same amount in which Rs 1749 will go to pension and the remaining Rs 771 will be deposited in PF.