EPFO News: If the wage limit of Rs 15,000 is revised to Rs 30,000, then this contribution will increase to Rs 3,600 per month on a mandatory basis.
EPFO News: Modi government may double the monthly salary limit to Rs 30,000 per month. The government may soon increase the salary limit to compulsorily include workers under the Employees’ Provident Fund (EPF) and Employees’ State Insurance Corporation (ESIC) schemes. There is also a plan to bring the salary limit under the Employees’ State Insurance Corporation at par with EPF. Recently, both these issues were discussed in detail in the meeting of the Central Board of Trustees (CBT), the apex decision making body of the Employees’ Provident Fund Organization, on Saturday.
At present, the salary limit for joining under EPFO is Rs 15,000 per month and Rs 21,000 under ESIC. Official sources told Business Standard that the limit is likely to be increased to Rs 30,000 per month for both the schemes.
Final decision may be taken in February meeting
The issue of increasing the salary limit was discussed in the meeting of the Central Board of Trustees (CBT) of EPFO held on Saturday. A source involved in the meeting said, “The final decision is expected to be taken in the February meeting of the CBT, but most members and the Ministry of Labor are in favor of doubling the current limit.”
Wage limit under EPF and ESI refers to the salary limit up to which EPF and ESI contribution is mandatory under the law. The amount of ’employee contribution’ for EPF and ESI should be deducted by the employer from the salary of the employees and deposited in EPFO and ESIC. Employers will have to deposit an amount equal to the contribution.
What will be the benefit of this change
According to the current rules, employees earning more than Rs 15,000 have the option to opt out of EPF coverage. If this limit is increased by Rs 15,000, the number of contributors will increase.
At present, there are 7 crore active members under EPFO. The current salary limit for EPFO is fixed at Rs 15,000 per month, which was revised from Rs 6,500 in 2014. Under EPFO, both the employee and the employer contribute 12-12% to the EPF account for employees earning a monthly salary of Rs 15000 or less.
The entire contribution of the employee goes to the PF account, but the employer’s contribution is divided into two parts. 8.33% is allocated to the Employees’ Pension Scheme (EPS) and the remaining 3.67% goes to the Provident Fund account.
How much will be deposited in PF then
Currently, the EPF contribution of an employee with a basic salary of Rs 15,000 comes to Rs 1,800 per month, but suppose, if this salary limit is revised to Rs 30,000 then this contribution will increase to Rs 3,600 per month on a mandatory basis.
