The government has announced the new EPF rules, which would result in an increase in the amount of monthly take-home salary of the employees.
The New EPF rules
In order to increase liquidity in the economy, the government has declared that the EPF contribution of the employers and workers will be reduced from 12% to 10%. With Employee Provident Fund (EPF) rules get changed for a quarter of a year from May 2020, the amount of monthly take-home salary will now increase however, and that too without an adjustment in your absolute CTC (cost to company).
Existing EPF rules
At present, the businesses and the workers having EPF registration contribute 12% each (complete 24%) of the essential compensation and dearness allowance (DA) to the retirement kitty run by the Employees’ Provident Fund Organization (EPFO) as per EPF new rules.
Time-period for New EPF rules
The new EPF rules are for a quarter of a year of May, June, and July. It implies the pay you will get close by during the current month will be higher by a whole proportionate to 4% of your essential and DA.
Let us understand this with a practical example:-
For instance, if your month to month essential and DA is ₹10,000, both you and your manager will contribute ₹1,000 each rather than ₹1,200 each to the EPF account. In this way, you would get ₹400 progressively (both manager’s and representative’s commitment) as close by pay. The work service has given an announcement explaining this.
Moreover, the government has raised the DA amount.
Effect of the New EPF rules on employee’s salary
Because of a decrease in the legal pace of commitments from 12% to 10%, the worker will have a higher salary because of a decrease in derivation from his compensation by employee contribution rate in PF commitment.
- The business will likewise have his obligation diminished by 2% of the wages of his representatives.
- Moreover, the total amount of EPF contribution of employers and employees from May-June 2020 will be paid by the government under the Atmanirbhar Bharat package.
Know more about the Atmanirbhar Bharat package.
Exception for New EPF rules
The decrease of the EPF contribution amount shall not apply to entities like Central and State Public Sector undertakings or some other foundation claimed or constrained by or leveled out of the Central Government or State Government. These foundations will keep on contributing 12% of EPF contribution and DA.
These are the new EPF rules which would result in more liquidity in the economy.
In case you require any sort of assistance regarding the EPF registration, please feel free to contact us at 8881-069-069.
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