The Govt proposes to lower employees’ PF contribution


According to ET report, The government is considering to lower the employees’ contribution towards EPF from the existing rate 12% to 10% of the basic salary, while the employer’s share will remain unchanged.

The suggestion is a part of the proposed Employees’ Provident Fund and Miscellaneous Bill, 2019, As per a proposal, the government will decrease the rate of contribution for a specific class of workers like domestic help, drivers, maids, and other self-employed workers. The worker’s eligibility would depend on their age, gender or pay grade,

This can have an impact on your take-home pay and on the corpus accumulated at the time of retirement. Further, the cost-to-company (CTC) will change. 

Currently, the contribution paid by an employee is 12 percent of basic wages plus dearness allowance plus retaining allowance. An equal contribution is payable by the employer as well. In the case of establishments which employ less than 20 employees or meet certain other conditions, as per the EPFO rules, the contribution rate for both employee and the employer is limited to 10 percent. 

This is in-line with announcements by late Finance Minister Arun Jaitley in Budget 2016. However, Jaitley specified “below a certain threshold of monthly income, contribution to EPF should be optional”, the report noted.


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