Is EPF going to Shrink Your In hand Salary?

 

Most of EPF beneficiaries complain of compulsory deduction of EPF from their basic salary and if you are one of them than be ready for more painful deduction in coming time. You may have to give a larger portion of your hard earned money towards contribution towards your Provident Fund. This is because EPFO is trying to increase your addition in EPF by increasing area of salary.

Guidelines for adding allowances in Basic Salary

As per guidelines of Central provident fund commissioner all the allowances which are given to any employee in form of Conveyance, Travel and any other special allowance should be included in salary as basic salary for calculating EPF contribution. If these guidelines will apply to all the employees under EPFO and a new law is passed then me you and all other EPF beneficiaries should become ready for a bigger deduction in the take away salary and management of monthly budget. It will make a huge cut in In hand salary of all EPFO beneficiaries.

For now take a deep breath these guidelines are on a hold for the time being by Union government. But be ready because no one knows when these guidelines may get converted into law and we will have to forcefully go for a larger contribution for our retirement benefits.

As all of us know right now both employer and employee contribute 12% each towards EPF. But most of us face that employer contribution is added in CTC (Cost to Company) so it is we I mean employee who is contributing all EPF. In past also it has been noticed that salary of contract workers etc. are calculated in such a way that it minimizes the EPF contribution of employer.

Who will be exempted?

This rule does not apply to employees whose basic salary is more than Rs. 6,500/- This is because EPF deduction is compulsory for those whose basic salary is upto Rs.6,500/- per month.

According to new guidelines basic salary comprise of Basic salary, Dearness allowance. Conveyance allowance and Special allowance and should be added to calculate EPF contribution of any employee.

He further recommended that Over-time allowance, Housing rent allowance, Commission, Performance bonus, Cash value of any food concession and Gifts and presents should not be added for calculation of EPF contribution.

If you have any queries or question regarding these new guidelines you are most welcome to post your query I would try to get it solve as per my knowledge.

 

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