Salaries of government employees, private staff likely to rise; EPF is the reason why
If the government accepts the ministry's report, the EPF contribution will come down to 10% from the current 12% for both employees and employers. For establishments having less than 20 employees, the contribution limit currently is 10 per cent, and the same could be applicable for all organisations now.
)
05:57 PM IST
For crores of private and government employees, Centre's proposal to slash employees’ social security contribution can lead to a hike in their take home salary. Union Labour Ministry is presently working on the contributory ceiling by the government towards universal social security for employees, adding that the panel is likely to recommend a 2% less contribution each as compared to the current ceiling of 24 per cent.
If the government goes ahead with the proposal, the total EPF contribution from an employee's salary will decrease to 10% as against the current mandatory contribution of 12%, said the Economic Times report.
Notably, 3.67% of an employee’s basic salary goes to the EPF kitty while 8.33% goes to the EPS (employee’s pension scheme). The labour ministry committee is reportedly looking into the matter and is likely to come out with its recommendation by end of August.
“We are enhancing the scale of coverage by five-fold. Hence, we think that going forward the contribution by and for each worker eligible for a social security cover will come down, benefitting both employee and the employer,” the report quoted an official as saying.
If the government accepts the ministry's report, the EPF contribution will come down to 10% from the current 12% for both employees and employers. For establishments having less than 20 employees, the contribution limit currently is 10 per cent, and the same could be applicable for all organisations now.
According to the ET report, the government aims to increase those covered under the social security scheme 5-fold to 50 crore from the current base of about 10 crore people.
For private sector employees, the report said that their employers' contribution to their EPF and EPS is already factored in their cost-to-company, therefore, a reduction in employee and employer's contribution is expected to be available to employees on some other head.
Watch this Zee Business video
This will no doubt boost the salary of employees if the government decided to implement the labour ministry's proposal.
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.
RECOMMENDED STORIES
)
Power of Rs 1,50,000 PPF Investment: How many years will it take to generate Rs 85,000/month tax-free income from Public Provident Fund?
)
Power of Rs 3,00,000 Lump Sum: In how many years can you generate Rs 1 crore corpus with one-time investment of Rs 3 lakh?
)
Top 6 Mutual Funds With up to 47% SIP Return in 6 Months: No. 1 fund turned Rs 33,333 monthly investment into Rs 2.33 lakh in half year
)
7 Stocks to buy for long term: Analysts recommend 6 largecap, 1 smallcap scrips; Persistent Systems, Dalmia Bharat on the list
)
PPF Calculation: How much will you earn in 20 years by investing Rs 8,000, Rs 10,000, and Rs 12,000 monthly in Post Office Public Provident Fund?
)
Rs 7,00,000 One-time Investment in Mutual Funds: How many years can it take to create Rs 1,00,00,000-Rs 4,00,00,000 corpus at a given rate?
05:57 PM IST