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gautam kar
68

Your in-hand salary is likely come down significantly, if the Employee Provident Fund Office (EPFO) goes ahead with its proposal to redefine the salary component used for calculation of provident fund contribution.

In its circular issued on 30 November, EPFO said, "All such allowances which are ordinarily, necessarily and uniformly paid to the employees are to be treated as part of the basic wages." This necessarily means that conveyance, transport and special allowance would also be included in the salary component used for calculation of EPF contribution, effectively reducing your take-home salary. The EPFO later put the guidelines on hold.

However, recent reports, citing sources, say that Government will go ahead and notify the norms.

At present, 12 per cent of your basic salary is deducted for contributions towards EPF account. Your employer is also required to make a matching contribution. The employer contribution in most cases is included in the cost-to-company (CTC) or the gross salary of the employee.

An employee's salary is divided into various components, the major being the basic, conveyance, housing rent allowance (HRA) and special allowance. Besides, the salary could also include overtimes and performance incentives in form of bonus and commissions.

Bonus, HRA, overtime, present from employer, commission or any other similar allowances have been specifically excluded from the definition of basic wages.

But if the new guidelines come into effect, all such allowances would be included under basic wages, thereby increasing your provident fund contribution.

For any further clarification feel free to write or discuss.

__________________

Regards,

GAUTAM KAR - 09331148166

Find me at,

http://www.facebook.com/GAUTAMBKAR

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From India, Kolkata
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Shailesh Parikh_HR Pro
300

Good analysis by Mr. Gautam Kar.

Still the fingers are crossed. Let’s watch the development. Perhaps some "via media" solution may emerge. The claim that the burden on employees will increase is not absolutely true. Since nowadays be it workmen or executives employer count burden of each rupee- direct or indirect as salary (CTC). All they may do is restructuring of wage/salary.

Of course from employee end it’s a constraint, since each individual is unique and each ones' needs are different based on his age, phase of life and philosophy of Life. The person who is in need of money now will have to adjust with reduced take home.

Normally for executive cadre 40% of their CTC constitute of the Basic component. The present deduction of 24% (as employers' contribution is also accounted in CTC) ON 40% of CTC will shift to 24% of 100%.

Apart it may have Macro level impact on nation’s economy as less amount of money will be transacted.

Let’s monitor closely- and keep on sharing views.

Regards

Shailesh Parikh

Vadodara, Gujarat

99 98 97 10 65

From India, Mumbai
gautam kar
68

Industry body Ficci on Tuesday opposed any move to club allowances with the basic wages for PF deductions stating besides increasing financial burden on it and government, it will "dampen" investment sentiments.

"The proposal to renotify definition of 'basic wages' under the Employees Provident Fund & Miscellaneous Provisions Act 1952, has huge financial implications both for industry and the government", the industry body said in a statement.

"The move is ill-conceived and if brought into force will dampen business and investment sentiments," it said.

"This may even be counterproductive to the Employees' Provident Fund Organisation (EPFO) as organisations who are extending coverage to employees receiving salaries above Rs 6,500 may choose to opt out, depriving employees coverage under a globally renowned social security scheme," Ficci said.

According to the provisions of EPF scheme 1952, every employer has to contribute 12 per cent of the basic pay and dearness allowance towards the PF deposits of workers every month. Thus with increase in basic wages, the employers' liability would increase.

Out of employers' 12 per cent contribution, 8.33 per cent is deposited into workers' Employees' Pension Scheme 1995 accounts.

Central Government also contributes 1.16 per cent of the basic wages of workers toward their pension account.

Therefore, the decision would also result in higher contribution by the central government towards workers' pension accounts.

At present, there are over 50 million subscribers of the scheme. EPFO has a corpus of over Rs 5 lakh crores in EPF and EPS schemes.

As per the notification issued by the EPFO on November 30 last year, all allowance which are 'Ordinarily, Necessarily and Uniformly' paid to workers were to be clubbed with basic wages for the purpose of PF deductions.

However, the notification was put on hold later on. EPFO had constituted a committee to deliberate on the issue. The panel had reportedly suggested to allow clubbing of wages with minor changes in the provisions to Labour Ministry.

The final decision to notify the clubbing of wages, has not taken so far by the ministry.

__________________

Regards,

GAUTAM KAR - 09331148166

Find me at,

http://www.facebook.com/GAUTAMBKAR

https://twitter.com/GAUTAMKAR4U

From India, Kolkata
vinothkumr.V
Hi Good morning to all
I have confused this one employee left from 5 June in the previous company and exit is the same And he joined the new company on 3 June and the appointment letter is on the same date. Is there any problem in pf account .please advise me
Thanking you

From India, Chennai
aaqib-chaudhary
Dear sir
Let me know that I am HR assistant manager, i have taken new portal for ESIC, we had already esic portal. By mistake i have paid esic challan in both portal for same employe. I have paid by fault in old esic. I want to paid in new esic portal.
How i can recover my 69000 amount

From India, Patna
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