NEW DELHI :
As a short lived reduction measure to extend in-hand salary through the coronavirus disaster, finance minister Nirmala Sitharaman has decreased the workers’ provident fund (EPF) contribution by 4% for 3 months. As a consequence, staff of round 6.5 lakh firms will profit with liquidity of round ₹2,250 crore each month.
According to the rule, staff and employers deposit 24% — 12% every of primary salary and dearness allowance (DA) — as EPF deductions each month for the retirement kitty maintained by the Employees’ Provident Fund Organisation (EPFO).
Now, the statutory deduction has been lower by a complete of 4% (2% of employer’s contribution and a pair of% of worker’s contribution). Employees of central public sector enterprises and state PSUs will, nevertheless, proceed to pay 12% of the employers share whereas staff can pay 10%.
So how would your salary slip look like after the EPF rejig? While the two% of your EPF contribution would invariably land in your take house salary, there may be nonetheless some confusion about what is going to occur to the employer’s 2% contribution to EPF.
Typically, the break-up of your CTC (price to firm) or whole salary bundle consists of the 12% contribution to be made by the corporate on your behalf in your EPF account. Now because the authorities has decreased the obligatory 12% requirement, some employers might not move on the good thing about the remaining 2% to their staff.
In case some employers select to provide the advantage of solely 2% (worker’s contribution), then it could result in a web discount of two% equal to your primary salary and DA for 3 months. Others might argue that because the 12% employer’s contribution is a part of the CTC, the corporate is liable to move on the advantages of EPF lower to the worker.
“In case of those private sector organisations where employer contribution to PF is included as part of the employee’s “Cost-to-company” bundle (CTC) and the place the employer has in any other case not made any cuts to fastened pay as a result of Covid impression, the workers could count on to be compensated for this discount in PF contribution by means of an equal money allowance,” Alok Agrawal, Partner, Deloitte India, mentioned.
However, he mentioned it stays to be seen from the ultimate PF notifications to be issued by the authorities, if sure employers may have an choice to proceed sustaining the identical 12% contribution, if their monetary place permits.