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Newly proposed PF rule to low your take-home pay
Posted on: 14/Mar/2015 9:58:47 AM
Soon, employees will have to allot more towards their Employees Provident Fund (EPF), as the government is devising plans to include all allowances they enjoy into their wages for deducting PF contribution. Aiming to figure out the provident fund of both employers and employees, in a recently proposed draft bill, it was said that the wages will include their basic pay and allowances as well. As of now, PF liability is calculated based on the workers’ wages which is inclusive of their basic pay and dearness allowance. They are bound to pay 12 per cent of their wages for EPF.
About 3.67 per cent of the employers’ contribution is forwarded for EPF, 8.33 per cent for Employees’ Pension scheme, and 0.5 per cent for Employees` Deposit Linked Insurance Scheme.
According to the draft bill, ‘wages’ is termed as emoluments including all the payable allowance to an employee as cash. Speaking about this, the General secretary Bharatiya Mazdoor Sangh said the wages are split into varied allowances so as to reduce PF liability. The newly proposed definition of wages will check all these practices.
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