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Govt may reduce PF contribution to increase take home salary

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The labour ministry has proposed to reduce the employer´s contribution to the Employees´ Provident Fund (EPF) from 12 per cent to 10 per cent.

The proposal, which will be opposed by trade unions, will come up for approval in the meeting of the Central Board of Trustees (CBT) on Saturday.

Around 50 million employees in the country receive provident fund contributions.

The move, according to the labour ministry, will increase the takehome salary of employees.

But trade unions opposing the move termed it an attack on social security.

According to the agenda paper of the meeting, the Employees´ Provident Fund Organisation´s (EPFO´s) CBT will consideraproposal to lower “the rate of contribution to be paid by employer and equal contribution by employees from the present 12 per cent to 10 per cent by issue of appropriate order by the Central Government”.

The Employees´ Provident Fund and Miscellaneous Provisions Act, 1952, empowers the Central government to lower the contribution rate and the government intends to issueanotification to effect the change.

The ministry has also said that the main grounds on which it has requested the EPFO to place the proposal in the agenda are that there were “demands from various quarters on many occasions to review the present rate of EPF contribution and placing it at par with other social security schemes, such as the National Pension System”.

Business Standard New Delhi, 27th May, 2017

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