Mumbai: Take home salary of an employee is set to increase as Employees Provident Fund Organisation has taken up a proposal that favours a 2 per cent cut in companies' or employers' contribution towards retirement corpus of their staff.
At present an employee forgoes 12 per cent of his or her basic salary towards their provident fund contributions. Similarly, companies or employers too make similar amount of contributions to PF corpus.
EPFO has on its table a proposal to slash employers' contribution to 10 per cent that will lead to employees getting more money on their hands when they receive their salaries.
Once the proposal is discussed and approved and gets government's go ahead, the take home salary of an employee will rise significantly as PF part in the salary will cut less money every month.
An employer contributes 8.33 per cent of employee's basic salary towards pension benefits and remaining 3.67 per cent towards provident fund scheme. "Employers also pay 0.5 per cent towards EDLI, 0.65 per cent as EPF administrative charges and 0.01 per cent as EDLI handling fee, taking the total contribution to 13.61 per cent," the FE report explained.
The proposal will be placed before the Central Board of Trustees (CBT), the highest decision-making body of the Employees’ Provident Fund Organisation (EPFO), at its meeting on Saturday," a report in The Financial Express said.
The news report quoted chief provident fund commissioner V P Joy who confirmed that the proposal was on agenda of CBT that was meeting in Pune on Saturday. "Opinion of the CBT members would be sought," Joy said.
However Joy denied the rumours that Naredra Modi-led government at the Centre was pressuring his organisation it to raise the issue with members of CBT, highest decision making body at EPFO.