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NEW DELHI :
With the employees provident fund (EPF) of the rules was changed for three months from May, in his hand salary will increase, but without a change in the total CTC (cost to company). To facilitate the liquidity of the pressure on the employers and the employees, the government has announced that the statutory rate of the contribution of both parties was reduced from 12% to 10%.
Currently, employers and employees contribute 12% each (a total of 24%) of basic salary and dearness allowance (DA) to the retirement kitty run by Employees ‘ Provident Fund Organization (epfo). Under the new rules, this 12% is going to cut up to 10% (20%) for the three months of May, June and July.
This means that the salary which you receive in hand for this month is going to be higher by an amount equivalent to 4% of your basic and DA.
For example, if your monthly basis and GIVES ₹10,000, both you and your employer contribute ₹1,000 each, in place of ₹1,200 each to the EPF account. You, therefore, get ₹400 more (from both the employer’s and employee’s contribution) as in hand salary.
The ministry of labour has issued a statement clarifying this.
“As a result of the reduction in the statutory rate of contributions of 12% to 10%, the employee shall have a higher net wage, due to the reduction in the deduction from your salary in the account of the EPF contributions and the employer shall also have his liability reduced by the 2% of the salaries of its employees,” the ministry said.
“If ₹10,000 monthly RATE of wages, only ₹1,000 in place of ₹1,200 is deducted from the employee’s salary and the employer pays ₹1,000 in place of ₹1,200 towards the EPF contributions. The Cost to the Company (CTC) in the model, if ₹10,000 monthly RATE of wages, the employee obtains ₹200 more directly by the employer, as employer’s EPF/EPS contribution is reduced and ₹200 less is deducted from your salary,” he said.
The ministry of labour has also said that the employees, if you wish, you can provide more than 10% of the basic wages for provident fund (PF) for the next three months, but the employers do not have to match the highest contribution.
The reduction of the rate of contribution is not applicable to establishments like Central and State Public Sector enterprises or any other establishment owned or controlled by, or is under the control of the Central Government or the State Government. These facilities should continue to contribute 12% of basic pay and DA.
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