Back
Home » Business
  •  
    Filmi Bollywood
    • Taapsee Pannu Supports Gulabo Sitabo And Shakuntala Devi’s Digital Release!
    • Sonakshi Sinha To Auction Her Art To Raise Funds For Daily Wagers: I’ve Created These With My Heart
    • Sonam Kapoor Says ‘Masakali’ Made Her Famous; ‘I Went From Being A Nobody to Somebody’
    • VIRAL VIDEO: Shah Rukh Khan And Kajol Groove To Salman Khan’s Prem Ratan Dhan Payo Song
    • Goldie Behl Talks About Sonali Bendre’s Illness: It Was A Life Altering Situation For All Of Us
    • Zareen Khan Took Up A Job At A Call Centre After Class 12 To Provide For Her Family
    • Salman Khan And Jacqueline Fernandez Starrer Love Song ‘Tere Bina’ Breaks Records
    • Ali Fazal Wishes He Could Go And Meet Richa Chadha, Opens Up About Spending Time In Quarantine
    • When Rishi Kapoor Slammed Vyjayanthimala For Denying Her Affair With Raj Kapoor: I Was Livid
    • Flashback Friday: Aishwarya Rai Is Beauty Personified In Her Look Test As Paro For SRK's Devdas
    • PVR Opens Up About Producers Opting To Release Films Directly On Streaming Platforms
    • Nawazuddin Siddiqui And Anurag Kashyap Starrer Ghoomketu Teaser Out Now
    • Lilly Singh’s Dancing Tribute To Madhuri Dixit Has Forced Us To Reminisce Our Childhood!
    • Producers Guild Slams INOX And PVR For Criticising Direct-To-OTT Film Releases Amid COVID-19 Crisis
    • Kareena Kapoor Khan Says Homemade Masks Are Summer Essentials In Her Latest Post
    • Ranbir Kapoor-Alia Bhatt Ask Paparazzi To Stay Safe And Wear Masks Amid COVID-19 Pandemic
New EPF Rule: How Will Your Salary Change From May?
Good Returns | 20th May, 2020 06:18 PM

To address the liquidity concerns, the Finance Minister Nirmala Sitharaman as part of her Covid 19 bail-out package announced a cut in EPF contribution rate to 10% from 12% for the next 3 months beginning May for both employees as well as employers covered under the EPFO. Nonetheless central and state public sector enterprises shall not be part of this ruling and will continue to contribute 12% of basic wages plus DA to EPF account of subscribers.

Further, to this there has come a word from the ministry of labour which suggests that employees basis their discretion can even contribute a higher percentage than the statutory rate of 10% to their EPF account, but employer need not match the higher contributions.

Now as the EPF rule becomes applicable to the entire private workforce, here is detailed how the change will impact your overall salary from May which you will get paid in June.

Interestingly, for employees it may mean reduced CTC or cost to company (if the CTC or salary package comprises employer's contribution to the EPF) and increased take home pay for the month of May, June and July.

Until now, both the employer and employee subject to some conditions were mandatorily required to contribute 12% each of basic salary and DA or dearness allowance i.e. in total 24% to EPF subscriber's account.

What Changes after the EPF Contribution Rate is cut to 10% for both Employer and Employee?

Now as there will be a total 20% contribution i.e. 10% each by the employee and employer to the EPF account, the 2% reduced contribution by the employee shall be paid out as increased take home pay to the employee. But the savings to the employer by way of reduced contribution rate to the EPF may or may not be given to the employee. So, this means a net loss to the employee to that extent.

Say for instance, in a case when your basic salary and DA is Rs. 10000, now after the new rules set in your employer and employee would contribute 10% each i.e. Rs. 1000 each as against Rs. 1200 each and this difference of Rs. 200 per party and Rs. 400 in totality i.e. including both employer and employee, will be paid out to you as increased in hand salary. This is when the employer's share to the EPF contribution is also paid out to the employee which may rather not be the case actually.

So most probably, take home pay of a salaried class individual will go higher by 2% of the basic wages and dearness allowance for the salary that is due in June, July and August 2020.

Also read EPF Rate Reduction Will Increase Take-Home Pay But Will Have Income Tax Implications

This has been clarified in a statement by the labour ministry which said, "As a result of reduction in statutory rate of contributions from 12% to 10%, the employee shall have a higher take home pay due to reduction in deduction from his pay on account of EPF contributions and employer shall also have his liability reduced by 2% of wages of his employees," the ministry said.

"If Rs. 10,000 is monthly EPF wages, only Rs. 1,000 instead of Rs. 1,200 is deducted from employee's wages and employer pays Rs. 1,000 instead of Rs. 1,200 towards EPF contributions. In Cost to Company (CTC) model, if Rs. 10,000 is monthly EPF wages, the employee gets Rs.200 more directly from employer as employer's EPF/EPS contribution is reduced and Rs. 200 less is deducted from his/her wages," it said.

GoodReturns.in

   
 
Health and Life
  • 10 Home Remedies That May Help Heal Mouth Ulcers
  • Zoonotic Diseases: Types, Risk Factors, Transmission And Prevention
  • Lazy Eye (Amblyopia): Causes, Symptoms, Risk Factors, Diagnosis And Treatment
    • Did You Know That Crying Is Actually Good For Your Health?
    • Kabasura Kudineer: Ingredients, Benefits And Side Effects Of This Polyherbal Medicine
    • Premenstrual Syndrome (PMS): Causes, Symptoms, Diagnosis And Treatment
      • Why Small Pulse Oximeter Is Becoming A Major Tool For Doctors During The COVID-19 Pandemic
      • Oral (Tongue And Lip) Piercing: Risks, Dos, Don’ts And Self-care Tips
      • The Human Body: Know About Anatomy, Facts And Chemical Composition
        • 12 Home Remedies To Relieve Pneumonia Symptoms
        • COVID-19: List Of Drugs That May Fight Coronavirus Symptoms
        • International Nurses Day 2020: 8 Nutrition Tips For Nurses To Stay Fit And Healthy
          • Food Allergy Awareness Week 2020: What Is A Food Allergy? Common Allergens, Symptoms & Risk Factors
          • Osteoarthritis (Knee Osteoarthritis): Causes, Symptoms, Diagnosis, Treatment And Prevention
          • COVID-19: Scientists Identify Mutation In Coronavirus, Similar To SARS
            • Mother’s Day 2020: Health Tips For Busy Moms
            • COVID-19 & Hypertension: What You Need To Know
            • COVID-19: Is It Safe To Wear Contact Lenses During The Pandemic?
              • Can HIV Transmit Through Oral Sex?
              • International No Diet Day 2020: What Are Eating Disorders?
              • 10 Tips To Stay Healthy In Summer