NEW DELHI: With EPFO increasing the mandatory wage ceiling from Rs 15,000 a month to Rs 25,000, employees will now contribute Rs 3,000 (at 12% contribution of Rs 25,000 wage) towards their PF savings from Rs 1,800 earlier, govt said in a set of FAQs released. This will be along with a contribution of Rs 917 by employers (at 3.67%), up from Rs 550, taking the mandatory monthly PF contributions to Rs 3,917.In addition, Rs 2,083 – an 8.3% contribution from employers’ share – will now go towards the pension kitty from earlier Rs 1,250. On Sept 17, govt increased EPFO wage ceiling to bring one crore additional workers into the social security net as minimum wages in at least seven states and UTs – Delhi, Maharashtra, Karnataka, Haryana, Gujarat, Rajasthan and Uttarakhand – have crossed the Rs 15,000 threshold.In the case of an employee with a monthly wage of Rs 20,000, the mandatory PF contribution will be Rs 3,134 – the employee share Rs 2,400 and the employer share Rs 734, with an additional Rs 1,666 going towards EPS from employer’s share. But if an employee earns, say, Rs 35,000 a month, the mandatory PF contribution will be Rs 6,000 (Rs 3,000 from employee and employers each), with no amount going towards pension as EPS is available only to those whose wages do not exceed the EPFO wage ceiling. The retirement savings agency said the new regime kicked in from Sept 17 and asked employers to review contractor compliance, wherever contract labour is engaged, and update its payroll systems.Allaying employee fears of attempts to pass on the contribution by deducting more from salaries, it said an employer’s statutory contribution cannot simply be treated as an employee deduction merely by describing it as part of CTC.
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While the move will likely increase compliance costs for small and medium enterprises, the potential costs due to the rise in the wage ceiling can be partly offset by the incentive of up to Rs 3,000 per month for every additional employment created under PM Viksit Bharat Rojgar Yojana.
✍️ Vikrant Kharwar
Vikrant Kharwar is the Founder and Editor of News Us Media. He writes about trending news, sports, entertainment, technology, and viral stories. His goal is to make news simple, informative, and easy to understand for readers across the United States and around the world.
