EPFO monthly donation take home salary.
NEW DELHI: The take home wages of employees in the organised industry may go up marginally as the marriage government looks to allow pick sectors to cut monthly obligations due to employees provident fund (EPF).
But, the side effect of the move will lower the retirement saving corpus of employees in the long term.
The change of principles, which will be made part of the Social Security Code bill 2019, to be tabled in Parliament this week, may allow employees to cover less than the current 12% statutory contribution. In contrast the employer contribution will remain at 12%.
Currently, both employers and employees of a industry establishment contribute 12% all the salary every month. The rules may not be universal for many sectors and government may allow this in certain sector such as MSME, textile, and start up firms, according to two government officials familiar with the development who spoke on condition of anonymity.
“The worker share of EPFO contribution might change between 9% and 12%, depending on businesses.
The program has been on the desk for last five decades however with the social safety code bill set to be tabled in Parliament, the central government has taken a call on this.
However, the change cannot be seen as a move to spur domestic consumption. The EPFO annual accruals because of statutory contribution of worker and employer would be to the tune of Rs. 1.3 trillion per annum. And, reducing contribution of workers by two or three percentage points in some industries will lead to less than Rs. 3,000 crore per annum growth in spending. It is very little to boost consumption at a time when the GDP has shrunk to some six-year low.