How much salary is currently deducted from employees' PF? Find out how much the EPFO is planning to increase.
The EPFO is now preparing to increase the salary limit for employee participation. This change will apply to both EPF and EPS. Currently, this limit is ₹15,000 per month, and it is proposed to increase it to ₹25,000 per month.
There is news of relief for private sector employees struggling with the burden of expenses. The EPFO is now preparing to increase the salary limit for employee participation. This change will apply to both EPF and EPS. Currently, this limit is ₹15,000 per month, and it is proposed to increase it to ₹25,000 per month. This change is expected to bring more than 10 million employees under the ambit of social security.
According to reports, the EPFO's Central Board may discuss this proposal in its next meeting, which is likely to be held in December or January. If the proposal is approved, this will be the first time since 2014 that the salary limit will be revised.
Currently, employees earning ₹15,000 per month or less are required to join the EPF and EPS schemes. Employees earning more than ₹15,000 have the option to opt out of these schemes. Employers are not legally obligated to include such employees in the EPF or EPS.
In addition, labor unions have long demanded an increase in the salary limit. They argue that in metropolitan areas, low- and medium-skilled employees earn more than ₹15,000, making them ineligible for the EPFO. However, implementing the new limit will eliminate this problem.
According to the rules, both employers and employees contribute 12 percent of their salary each month. The employee's full 12 percent goes into the EPF account, while the employer's 12 percent is divided into two parts.
Of which 3.67 percent goes to EPF and 8.33 percent to EPS. In such a situation, if the limit is increased to Rs 25,000, then the contribution of both the employer and the employee in the PF account will increase from Rs 1800 to Rs 3000 per month. This means that a total of Rs 2400 more will be deposited.
At the same time, due to the increase in the salary limit, there will be a significant increase in the corpus amount of both EPF and EPS. This will increase the pension received at the time of retirement, and the amount of interest rate will also increase.
At present, EPFO has approximately 7.6 crore active members, and its total fund is around Rs 26 lakh crore.
