Good news for both new employees and employers covered by Employees Provident Fund Organization (EPFO). Government announced reduction in contribution that new women employees make to EPFO, from 12 per cent to 8 per cent, to promote women’s participation in labour force as well as increase your take-home pay. So, let’s take a look how will this year’s budget affect women of our country.
Government decided to contribute 12 per cent of wages to new employees in all sectors in EPF
In this budget, government will contribute 12 per cent of wages of new employees to EPFO for all sectors for next three years. This means companies across sectors will not have to pay employers share of provident fund contribution when they hire new employees. Also read EPFO members will get equity investment benefit from March 2018
Now, an employee contributes 12 per cent of basic salary as statutory monthly contribution to EPF and matching contribution is made by employer. In coming month’s government looks forward with more incentives to boost employment for each sector. This means women employees will be able to get higher take home pay.
No change in Employer contribution
Under EPF scheme, an employee has to pay some contribution towards scheme and an equal contribution is paid by employer. However, employee gets lump sum amount including self and employer’s contribution with interest on both on retirement.
On other hand, employer contribution, do not decrease so your total savings in provident fund will not decrease when you retire. As per EPFO rules, contribution rate for both employee and employer is limited to 10 percent. For most employees of private sector, it is basic salary on which contribution is calculated.
Lower EPFO rates for new women employees
Government announced reduction in women employees’ contribution to EPF to 8 per cent for first three years and extended fixed-term employment facility to all sectors to create more jobs. Besides, it also extends facility of payment of 12 per cent employer’s contribution by government.
If you are woman who is about to join in workforce, then this budget has provided to reduced rate of EPF for new women employees for first three years of your employment. Before, 12 per cent of your basic salary will be diverted to PF. However, under new rules, only 8 per cent will be diverted which means that your take home pays will increase.
What does Budget 2018 have for women?
Under social security scheme run by EPFO, employees contribute 12 per cent of their basic wages which goes into their Employees Provident Fund account. Also, employers also make matching contribution of 12.5 per cent out of which 8.33 percent goes into Employees Pension Scheme and 3.67 per cent is deposited into employees EPF account. Read How to solve Aadhaar Authentication Error in Unified EPF Portal?
Apart from this, employer also pays 0.5 per cent of basic wages toward employees deposit linked insurance scheme. Further, for new employees coming under EPFO will be provided 12 per cent contribution from government. This means only new employees getting EPFO membership for first time will be eligible for this provision.