New Delhi: As the payday nears, salaried employees are confused whether their in-hand salary will increase from this month, going by the EPF contribution relief finance minister Nirmala Sitharaman announced as part of the Rs 20 lakh crore package of Aatmanirbhar Bharat. Also Read - TMC MP Likens Nirmala Sitharaman to 'Kal Nagini', Says People Dying Due to 'Worst FM'
Here’s what she said. Also Read - Sitharaman Stresses on Role of Tax Admin For 'Aatma Nirbhar Bharat'
The statutory provident fund contribution by both the employers and the employees will be reduced to 10 per cent of the basic wages from the existing 12 per cent. This will be in force only for the next three months. Also Read - Centre Discussing With RBI on One-time Loan Restructuring For Stressed Companies
What does this mean?
1. The salary you will get in-hand for this month will be higher by a sum equivalent to 4% of your basic and DA. The labour ministry has said, as a result of a reduction in statutory rate of contributions from 12% to 10%, the employee shall have a higher take-home pay due to reduction in a deduction from his pay on account of EPF contributions and employer shall also have his liability reduced by 2% of wages of his employees.
2. This, however, will not change your cost to the company.
3. Are you covered under this scheme? This scheme will be applicable for workers who are not eligible for 24 per cent EPF support under PM Garib Kalyan Package and its extension.
4. The scheme is not applicable to the Central and State Public Sector enterprises or any other establishment owned or controlled by or under control of the Central Government or State Government.
5. What if you don’t want this change? The labour ministry has also said that employees, if they want, can contribute more than 10% of basic wages to their provident fund (PF) for the next three months, but employers don’t need to match the higher contribution.
For example, if your monthly basic and DA is ₹10,000, both you and your employer will contribute ₹1,000 (10 per cent of Rs 10,000) each instead of ₹1,200 (12 per cent of Rs 10,000) each to the EPF account. So you will get an extra Rs 400 (200+ 200) in your in-hand salary this month.