Madhu.T.K
Industrial Relations And Labour Laws
Pdteraiya
Sr. Executive Hr

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Please confirm how much % of EPF contribution employee will benefited ? 2% or 4% means only employee share or both employee & employer?
No way the employee will get any benefit. On the other hand, if the reduction in the contribution payable by the employer, ie, 2%, is not passed on to the employee under other allowances, he will lose that 2%.
If you are following CTC based salary structure then employee will be benefited 4%.
Can you explain how?

Suppose your PF qualifying salary is Rs 15000. Your employer contributes at 12% and the CTC is Rs 16800, ie, 15000+1800.

Now when your employer contributes at 10%, the CTC would be Rs 16500, ie, 15000+1500.

If the employer pays the difference is CTC, ie, Rs 300, to the employee under other allowances (taxable) again the CTC would become Rs 16800. Then what is the benefit that the employee gets? Nothing. If this employee under tax bracket, obviously, 30% 0f 900 (300 for three months) would be a cost for the employee only. Moreover, in the case of employees whose PF contribution is on actual without restricting it to Rs 15000, this amount would be much higher and ultimately the taxable income would increase.

Only benefit that the employee gets is that for three months he will get more cash in hand since his take home salary would increase by 600 rupees. In the case of a salary structure which does not consider employer contribution as part of remuneration, it will be just 300 rupees. In that case the employer is at a loss of 2% or 300 rupees per month.

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