- Advertisement -
Home Uncategorized After this decision of the government, your salary will increase! Know how...

After this decision of the government, your salary will increase! Know how much will increase

0

Finance Minister Nirmala Sitharaman recently announced that the EPF contribution will be reduced from 12 per cent to 10 per cent for three months. Since then, questions are arising as to how much will take place in the take home salary of the employees. The EPFO ​​has given information about this.

new Delhi. The Employees’ Provident Fund Organization (EPFO) has given many information regarding the reduction of EPF Contribution Rules by the Central Government from 12 per cent to 10 per cent. After this announcement in the economic relief package, employees and employers were demanding clarity on some things. After the government notified it, the EPFO ​​has informed about this from its official Twitter handle.

Finance Minister Nirmala Sitharaman had announced in the Self-Reliant India Package that the EPF contribution would be reduced from 12 per cent to 10 per cent for the next 3 months. The government had taken this decision so that in this crisis of Kovid-19, the take home salary of the employees increases and they do not have any shortage of money. The Finance Minister said that this decision will benefit 4.3 crore employees and subscribers of about 6.5 lakh employers. However, this deduction will not be made in the PF of central employees.



Now EPFO ​​has made it clear that if employers who follow the Cost to Company model have decided to make 10 percent EPF contribution, then they will have to give the benefit to the employees. However, according to information provided by EPFO, it is not mandatory for employees and employers. The EPFO ​​said, during these three months the amount of 10 per cent for contribution is minimum. Employees and employers can both contribute more.

what will be the effect on Mathematics CTC?
The EPFO ​​has made it clear that if an employer decides to contribute 10 percent to his employee’s PF account, then it will have to compensate the loss on the employee’s CTC. This means that if the employer also contributes 10 per cent, then he will have to pay another 2 per cent to his employee, because the entire amount is part of the employee’s CTC.

In such a situation, there are 4 types of possibilities, depending on how much the salary of the employees will increase.

1.Firstly, both these employees and employers contribute 10-10 per cent to the EPF. In such a situation, the salary of the employee will increase by 2–2 percent from the other side i.e. 4 percent of the total salary. Explain that this 12 percent of EPF contribution is calculated on the basis of basic salary and dearness allowance of the employee.

Suppose the basic and dearness allowance of an employee together becomes 10 thousand rupees. On this basis, EPF contribution from both makes Rs 1,200-1,200. But, according to the 10 per cent rule, it will be Rs 1,000-1,000. In this way, the total salary of the employee will increase by Rs 400 per month.

2.Second, if both the employee and the employer continue to contribute 12–12 per cent. In such a situation there will be no increase in the take home salary of the employee. They will get the same salary as before.

3. In the third case, if the employee continues his contribution at 12% and the employer increases his contribution to 10%, then the take home salary of the employee will increase by 2% of his basic + dearness allowance.



4. In the fourth situation, if the employee keeps his contribution 10 percent, but the employer continues his contribution only 12 percent. Even in such a situation, the take home salary of the employee will be increased by 2% of basic + dearness allowance.

Also read: PM Vaya Vandana Scheme For Senior Citizens Extended, Interest Rate Lowered

tax will be affected
Lower EPF contribution and increase in take home salary will also affect the employee’s tax. Actually, the tax will be applicable only on the basis of income tax slab. In such a situation, your increased salary for these three months will also come under the income tax slab.



For example, suppose your salary increases by Rs 1,000 per month and if you fall in the higher tax bracket then take home salary will increase by only Rs 700. The remaining amount will be deducted as tax.

The problem of saving tax will increase
Employees avail tax exemption on EPF contributions under section 80C of Income Tax Act (1961). Since, now the EPF contribution is reduced, the employee will have to turn to other investment option to take full benefit of section 80C. If the employee does not do so, then they will have to pay more tax.

- Advertisement -DISCLAIMER
We have taken all measures to ensure that the information provided in this article and on our social media platform is credible, verified and sourced from other Big media Houses. For any feedback or complaint, reach out to us at businessleaguein@gmail.com

Exit mobile version