The Indian government might be paving the way for higher takehome salaries by reducing the amount that has to be deposited with the Employees Provident Fund, reported Business Standard.
As per a proposal, the government will decrease the rate of contribution for a specific class of workers like domestic help, drivers, maids and other self employed workers. However, the law does not suggest any change in the contribution of the employer’s.
Currently, all the employees who are earning up to ₹15,000 a month have to pay 24% of their salary. As of now, both the employers and the employees contribute 12% of the salary to the Employee Provident Fund Organisation.
The government aims to relax the mandatory 12% contribution by the employee.
Along with this, the government also wants to give employees an option to choose between all the schemes provided by the Employees Provident Fund Organisation (EPFO) and the National Pension System (NPS). If approved, an employee who is not satisfied with NPS can make a switch to EPFO.
A first draft of the EPF & MP (Amendment) Bill, 2019, has sought comments from stakeholders till September 22.