The central government has taken a decision to increase its contribution to the Provident Fund for the its employees. This measure is being considered as a bonanza or jackpot by most central government employees.
As the parliamentary elections are nearing, the central government has targeted its employees to take some important decisions.
Accordingly, as under the National Pension Plan, the contribution made by the central government towards the Provident Fund of the employees who joined from January 2004 or after.
With this scheme, there would be a substantial increase for the employees who have been working in the central government for the last 14 years or less.
Presently, 10% of the basic pay of the employee monthly salary is being deducted as the contribution from the employee. Until now, the central government added another 10% to this contribution. However, with the recent above decision, the central government would now be increased to 14%.
With this increase in PF contribution by the central government, there will be a substantial increase in the PF when the concerned employee retires after the age of 60.
A proposal is set to be submitted for changing the current Act to introduce this increase. This would be effective from 1st April 2019.
As the Legislative Assembly elections are in process/progress in 5 states in India, as required by the regulations, the central government has withheld this proposal.
As per the 2004 scheme, no income tax exemption is possible in the employees` contribution. Presently, plans are afoot to change this as well.