The Provident Fund is another government plan for employees that facilitates monetary independence and social protection. Organizations that have more than 20 employees are required to obtain a number from the Employees’ Provident Fund (EPF). The employees having wages up to ₹15000/-, which include Basic Pay as well as Dearness Allowance, pay 12% of their wages to the said fund.
New Changes in Provident Fund Limits
The Union Budget is scheduled to be delivered on July 23 by Finance Minister Smt. Nirmala Sitharaman. Employees expect enhancement of the Provident Fund where the upper ceiling remains limited and has been raised for around a decade to ₹ 15000/- only.
How a Provident Fund Works
According to the EPF, any organization that has more than or equal to twenty workers is supposed to register with the EPF. The PF contribution scale for the employees is 12% of the basic wage or salary, where the amount does not exceed ₹ 15,000/- PM, and the employer’s PF contribution is also. The employer contribution is divided into the EPF (3.67%) and the EPS (8.33%), whereas the entire employee contribution goes into the PF.
Table of Changes in the Salary Limit
1952-1957: ₹300
1957-1962: ₹500
1962-1976: ₹1000
1976-1985: ₹1600
1985-1990: ₹2500
1990-1994: ₹3500
1994-2001: ₹5000
2001-2014: ₹6500
2014-present: ₹15000
Benefits of the Provident Fund
The main objective of the Provident Fund is to provide funds for employees who pay punishments after their retirement. It also enables one to withdraw before reaching retirement age for any necessary needs.
Management of the Provident Fund
The Provident Fund is controlled by a Central Board of Trustees that selects members from the federal government, state government, employer, and employees. This board is helped by the Employees’ Provident Fund Organization (EPFO).
Expected New PF Limit
The last change in the setting of the PF limit was in 2014, specifically in the month of September, when the limit was raised from ₹650,000 to ₹150,000. Still, the Ministry of Labour and Employment is discussing increasing the limit up to ₹25000, the same as ESIC defined in the year 2017.
Allowed, the new limit will lead to increased employee and employer contributions. Millions of employees stand to gain since at least 23 states have a minimum wage range of ₹18000 to ₹25000.
