This new EPF rule will change the CTC and increase your in-hand salary for this month and the next two months

The change in the EPF rules will change the in-hand salary you get, this month but the overall CTC will not be affected. According to this new change, the contribution rate of both employer and employee will be modified from 12% to 10%. The EPF body says that this could ease the pressure on both of them in these tough times.

Currently, both the employer and employee contribute 12% each, making it 24% whole of the basic salary and dearness allowance to the retirement savings maintained by the EPFO. With this new rule in place, for this month and next two months, the contribution from both the parties will be 20% combined(10% from the employee and employer)

The in-hand salary of an employee gets will increase by 4% of the basic salary and DA. As a simple example, if the basic salary of the employee is Rs.1000 and Rs.1200 is the usual contribution towards EPF, this month it will be only Rs.1000 and the employee will get in hand salary of Rs.9400, instead of the usual Rs.9000 every month.

The labour ministry also announced that with this reduction of the PF contribution from the employee and employer, the employee will take home a higher pay.

The labour ministry also said that employee can choose to contribute more than 10% of their basic wages in the next three months, but employers are not required to do the same.

This new rule and reductions are not applicable to entities like Center and State Public Sector Enterprises or any other entity which is owned or controlled by the Central or State Government. These entities will contribute 12% of their salaries as usual

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