Employees can expect a good news of the hike in their salary, as the government is likely to lower the contribution towards universal social security for all workers.
What is EPF?
The EPF is the main scheme under The Employees' Provident Funds and Miscellaneous Provisions Act, 1952. It is managed under the aegis of Employees' Provident Fund Organisation (EPFO).
Reason for the increase in take-home pay
According to reports, a Labour ministry committee is likely to recommend a lower contribution by the government towards universal social security. Therefore, the government might cut provident fund contribution by 2 percent.
In Hand, salary may see a 4 percent increase
At present, 24 per cent from an employee's salary is deducted for provident fund account, and this is maintained by Employees' Provident Fund Organisation (EPFO). Out if this, 12 per cent is contributed by the employer while another 12 per cent is deducted from employee's salary. The government could fix it at 10 per cent for both, making employees take a higher salary home.
For the private sector employees:
In case of private sector employees, their employers' contribution to their EPF and EPS is already factored in their cost-to-company, So, a reduction in employee and employer's contribution will become available to the employees on some other head, boosting their salary.