EPFO proposes to raise salary ceiling

Employee Provident Fund Organization (EPFO) forwarded a proposal to increase the salary limit for paying Employee Provident Fund (EPF) to the Labour Ministry is awaiting an approval. Further, EPFO has proposed to cover companies with a minimum of 10 employees under the Employees Provident Funds Act, 1952, against the present requirement for a minimum of 20 employees.

At present, employers have to contribute a minimum of 12% towards EPF on less than or up to Rs 6,500 (basic + dearness allowance). Sources reported that the move is in favour of contractual workers. These workers suffer because their supervisors pay them a lump sum, due to which their basic + dearness allowance earning exceeds the limit. As a result, they are not covered under the Act and hence cannot be penalized by EPFO.

The change, if approved, could be a positive move. But in industries, like the beedi industry, which pays at a lower rate, it will attract higher outgo due to lower turnover.



Also Check: Other Legal Aspects