The recommendation, if passed and applied, could help boost employees’ take-home salary — but at the cost of their savings
The government is considering bringing into effect universal social security contribution by reducing the ceiling by two percent. A labour ministry committee is drafting recommendations on lower contribution and is expected to finalise it by August-end, reports The Economic Times quoting a government official familiar with the development.
The recommendation, if passed and applied, could help boost employees’ take-home salary — but at the cost of their savings.
Currently, the social security contribution is 24 percent of an employee’s basic salary. This includes 12 percent from the employee, which entirely goes to one’s provident fund account. The remaining 12 percent is contributed by the employer and is split among pension account, provident fund account and deposit-linked insurance scheme.
This contribution is currently at 10 percent for establishments with less than 20 workers. However, the government is planning to make it uniform for every establishment.
In talks with the publication, the official said, “We are enhancing the scale of coverage five-fold. Hence, we think that, going forward, the contribution by and for each worker eligible for a social security cover will come down, benefitting both the employee and the employer.”
