EPFO likely to increase basic salary ceiling on March 4
There is a possibility of a decision on interest rates for the FY20-21 following the CBT meeting on March 4
A big decision is likely to be taken for 6.5 crore employed people following the Central Board of Trustees’ (CBT’s) meeting in Srinagar on March 4. Keeping social security in mind, the government is likely going to take important steps. The new wage code is to come into force from April 1, 2021. Under this, the contribution of any salaried person to the provident fund will increase and also get benefit in gratuity.
There is a possibility that CBT might increase the ceiling of basic salary for PF contribution. The current ceiling is Rs 15,000.
Due to this ceiling, 8.33% of the basic salary (Rs15,000) is deposited in pension fund, which comes to about Rs1,250 a month. If the ceiling is increased, then this share will be fixed at the limit of Rs25,000, meaning Rs2,083 will be deposited in the pension fund. The second aspect is that more people will come under the ambit of EPFO as the ceiling is increased. EPFO regulations mandate PF deduction for people with a salary of Rs 15,000.
Most people do not get their PF deducted if the salary is more than Rs15000, because, as of now, it is optional. But, once the ceiling is increased to Rs 25,000 more people will come under the ambit of EPFO.
According to Bhanupratap Sharma, Retired Enforcement Officer of EPFO, the government is taking more care of retirement. At the same time, keeping social security in mind, there is an attempt to bring more people under the purview of PF.
What will happen if the ceiling is increased?
Members of the Central Board of Trustees are in favor of increasing the ceiling of the basic salary. There are two arguments behind this. First, the universal minimum wage formula is being implemented across the country, in which salary can be fixed at about Rs18,000. Second, it will help to bring more people to EPFO.
What is the discussion on interest rates?
According to media reports, there is a possibility of a decision on interest rates for the FY20-21 following the CBT meeting on March 4. However, there was no mention of discussion on the interest rate in the agenda for the meeting.