Good news for employees – The Employees Provident Fund Organization (EPFO) has hiked the minimum salary limit to Rs. 15,000 from Rs. 6,500. The changed rules will be applicable from 1st September 2014.
What it means to employees?
Suppose the basic salary of an employee is, say, Rs. 15,000. The company (employer) was obliged to calculate EPF at 12% on Rs.6500 and remit it to the PF account of the employee. Now, with the changed rules, the company has to deduct PF at 12% on Rs.15,000 (12% of the Basic Salary or Rs.15,000 whichever is lower)
So, it means your contribution towards PF will go up (your take home salary will come down) and also employer contribution will go up (additional cost to the company)
For whom this change will not impact –
Suppose the company is already deducting PF on the entire basic (say Rs.15,000 or any amount paid as basic) instead of Rs.6500 for the employees, then the new rule will not have any impact.
The minimum pension for EPFO subscribers has been fixed at Rs.1000 (increased from the current pension of Rs.250) while the insurance limit has also been hiked
Employees Deposit Linked Insurance Scheme (EDLI) –
The maximum insurance limit for provident fund subscribers has also been hiked under EDLI scheme. In case of the death of an EPFO subscriber (employee covered under EPF), their family will be entitled to maximum sum assured of Rs.3.6 lakh instead of existing Rs.1.56 lakh.
Please note the following changes required to be made in computation of PF contribution w.e.f01-09-2014 :
In case your organisation has been contributing subject to the limit of Rs.6500, all computations will now have to be made considering revised limit of Rs.15000
Further, if any employees were excluded from coverage for the reason that their salaries were beyond limit, and their salary range is from Rs.6500 – Rs.15000, such employees will have to be now compulsorily covered under PF.
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