In-hand Salary May See 4 Per Cent Increase as Government Mulls Lowering PF Contribution

New Delhi, Aug 1: The Ministry of Labour and Employment is mulling reducing overall contribution towards universal social security for all workers, a move that could increase an employee's take-home salary. A committee under the ministry may propose to lower the provident fund (PF) contribution by 2 per cent. A recommendation in this regard is likely to be made by the end of August.

At present, 24 per cent of an employee’s basic salary is deducted for his/her provident fund account, which is maintained by Employees’ Provident Fund Organisation (EPFO). Out of this 24 per cent, 12 per cent is contributed by an employer, and the remaining 12 per cent is taken from the employee’s salary. The government could fix it at 10 per cent for both, making employees take a higher salary home.

“We are enhancing the scale of coverage by five-fold. Hence, we think that going forward the contribution by and for each worker eligible for a social security cover will come down, benefitting both employee and the employer," a government official was quoted as saying. With this move, the government plans to bring 50 crore people under the social security scheme.

If the proposal gets the government's approval, employees will get an additional 4 per cent salary. This will reduce their savings, but increase consumer spending.

(The above story first appeared on LatestLY on Aug 01, 2018 02:07 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).