EPF reduction: Your take home salary to increase but be prepared for income tax liability
New Delhi: Employees working in non-public sector will get extra take house wage for 3 months –May, June and July –as the federal government has introduced discount in EPF contribution for the month of May, June and July.
But, discount in worker’s share of contribution from 12% to 10% will make the remaining 2 % wage accountable for earnings tax. If an worker doesn’t select to spend the two % PF quantity in tax-saving investments, their earnings tax liabilities will improve.
It may also on the identical time cut back the contribution to the PF by an equal quantity. Meanwhile, some corporations are providing staff the choice to decide on to go for contribution of a further 2% for the aforesaid three months although there shall be no change to the Employer Contribution.
Finance Minister Nirmala Sitharaman had on May 13 introduced that for the following three months worker provident fund (EPF) contribution shall be 10 per cent every for workers and employers as in comparison with the statutory obligation of 12 per cent. The transfer is to extend take-home wage for workers and to offer reduction to employers in fee of provident fund.
The authorities has determined to proceed EPF assist for enterprise and employees for three extra months offering a liquidity reduction of Rs 2,500 crores, the FM stated. Under this new provision, the employers will proceed to pay 12 per cent, whereas staff can have the choice to pay 10 per cent for the following three months.
This will profit practically 4.three crore provident fund subscribers and and as many as 6.5 lakh institutions may also avail this profit from this.
However, this doesn’t apply to these corporations the place authorities is giving the whole 24 % contribution in direction of EPF.
Furthermore, within the case of the central public sector enterprises and state public sector, this exempt is not going to be relevant. They will proceed to pay 12% as EPF contribution.
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