The central government will not bring back its proposal to decrease rate of deduction from salary towards provident fund savings from 12% to 10% as even employers were against such a move, Labour and Employment Minister Bandaru Dattatreya said on Monday.
“I am happy to inform that employers have come forward to say that they will contribute 12% and not 10% (of income towards worker’s EPF account). It’s a healthy sign. Both employers and employees have opposed the proposal and now we will continue with our old notification,” Mr. Dattatreya said.
Trust meeting
The Employees’ Provident Fund Organisation (EPFO)’s Central Board of Trustees (CBT), chaired by Mr. Dattatreya, had discussed a proposal to decrease the rate of contribution towards provident fund savings on Saturday.
However, employers, employees and State government officials had opposed the move, EPFO Central Provident Fund Commissioner V.P. Joy said.
At present, 24% of a formal sector worker’s salary is deducted —with 12% counted as employer’s share and 12% as employee’s contribution — towards EPF savings. This is compulsory for all employees earning up to ₹15,000 a month. The Labour Ministry had proposed decreasing the rate of contribution from 12% to 10% of the salary for both employers and employees.
Mr. Dattatreya said Section 6 of the Employees’ Provident Fund and Miscellaneous Provisions Act 1952 had said employers and employees should equally contribute 10% towards EPF savings. However, the rate of contribution was enhanced to 12% in 1997 through a notification.
Senior Labour Ministry officials said the proposal to decrease contribution rate towards EPF came from a group of secretaries on commerce and industry. “We will soon inform them about the decision taken by EPFO’s CBT,” the official said.
