News: Provident Fund set to be deducted on total pay

Employee Relations

Provident Fund set to be deducted on total pay

The Employee Provident Fund Organisation (EPFO) is set to re-notify the norms for PF calculation proposing clubbing of all allowances with basic pay for deduction of provident fund. 

The Employee Provident Fund Organisation (EPFO) is set to re-notify the norms for PF calculation proposing clubbing of all allowances with basic pay for deduction of provident fund. 

The clubbing of allowances was first proposed by the circular issued on November 30, 2012 that stated that all allowances which are uniformly paid to the employees are to be treated as basic wages. At present, the ‘basic’ is only a fraction of the total cost-to-company, and employees and employers contribute 12 per cent of the basic salary each to the PF.
A tripartite committee, which was set up to look into the matter, endorsed the circular earlier this month and sent it to the labour ministry for further approvals. Sources say the government will notify the norms even as the ministry is yet to take a call. 

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Topics: Employee Relations, Compensation & Benefits, #Updates, #TotalRewards

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