A lot of Indians are stricken with the common issue of employees
not being provided their whole salary amount, as it became compulsory for EPF contribution for their own scheme.
It is said to be quite an issue for people who were earning in the lower
bracket of salary as the final salary per month came down to be not sufficient
for their monthly expenses, often driving them to debt. India is comparatively
conscious about debt but has not helped in such situations.
However, new Indian Budget for 2015 was released bringing relief
to some. Earlier, the EPF functioned based on contributing 12% of
their monthly salary towards the Employees Provident Fund, while the employer
too had to make the same contribution every month. Besides the EPF, employers
had to contribute 8.33% on the pension for every individual employee.
The Relief in EPF Contribution
The new budget has brought a lot of relief particularly for the
employees pertaining to their salaries. This department earlier has several
issues especially dealing with the amount of legal hassles as well as red tape
made, making it almost impossible for employees to get into. The 2015 budget
saw, many worries go away, in hopes that both the employer and their employees
will greatly benefit from it. One of the main highlights include the optional
factor to not make tax payments if the monthly income is lower than Rs. 30,000.
This will also be applicable for senior citizens, which is quite sustainable
since it would help to take care of their finances at their age. Senior
citizens earlier had to pay an amount every month towards their Provident Fund
leading to hassles of accessing it for legal complications did not make much
sense. With the advent of the new budget, the Government in India has taken
visible initiatives to reduce the burdens of the working class, as well as making
things easier for all parties in the scene.
Another proposal that was presented was to allow employees to
make a choice on how they would like to receive their salary. While the
proposal still stands at a stage of development, and would require the opinions
of the companies along with their stakeholders for opinion before making a
final decision, if it does get to be stated it will be helpful for the
employees. This is because, it would then allow them to choose between the
Employee’s State Insurance Corporation (ESI) or the Health Insurance product
that they choose. Also it would allowed the salaried to choose the option more
suitable to their needs and make some important decisions in pertaining to
their contributions in their salary besides the conventional and less
accessible EPF contributions.
With such notable proposals being made the nation’s Government
has made it easier for working for organizations and companies much more
lucrative the youngsters who contribute to being one of the largest population
any country has, of its kind. With such initiatives there will be lesser
migrations to other countries as people will save more and have a peace of mind
in their country. As of now i.e. October 2015, one needs to know the
contributions that can be made towards EPFO.
We already know that employees have to pay 12% of their basic
monthly wages towards EPF, but what about the employers?
Employer’s EPF Contribution
1. The Employees' Provident Fund Scheme
: This is payable for all
establishments that have or are employing 20 or more people and are engaged in
an industry listed under one of the 180 industries under Section 6 of Act, with
12% of the basic pay, Daily Allowance, food concession along with retaining
allowance, if there are any, upto a maximum of Rs.15,000 each month. Some
voluntary contributions that are higher are acceptable with a joint request
from the employer and the employee. But, the rate of contribution has to be 10%
for some categories of establishments that include:
o An
establishment that has been covered before September 22, 1997 in a case where
less than 20 people are employed.
o A
sick industrial company based on the definition, provided in the Clause (0) of
Sub-Section (1) of Section 3, which is a part of the sick industrial companies
under the 1985 Act. They also need to be declared the same, by the Board for
Industrial and Financial Reconstruction.
o An
establishment whose losses at the end of a financial year that has been accumulated,
adds up to the entire net worth or exceeding it.
o A
company or organization involved in manufacturing Jute, Beedi, Bricks, Coir
excluding the spinning sector) and Guar Gum Industries or factories.
2. The Employees' Pension Scheme
: 8.33% from the employer's
share of Provident Fund contributions of the total salaries that is
limited to Rs. 15,000 each month is sectioned and contributed towards the
Employees' Pension Fund in the A/C No. 10 that has been in effect since
September 1, 2014. Also Central Government of India contributes 1.1 or 6% of
total wages.
3. Employees' Deposit Linked Insurance Scheme
: For this scheme no
amount is taken from employee's salary. However, the employer has to make a
payment of 0.5% of the total wages amounting to a maximum of Rs. 15,000 every
month since September 1, 2014. The maximum benefit can amount up to Rs.
3,60,000, under this scheme.
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