1. What Is EPF and EPS?
· EPF (Employees’ Provident Fund): A retirement savings scheme where a portion of your salary is deducted every month and contributed towards your future.
· EPS (Employees’ Pension Scheme): A pension scheme linked to EPF, ensuring financial security post-retirement.
· Both schemes are mandatory for employees earning below a certain limit, with contributions shared by employees and employers.
2. Current Salary Deduction Rules
· At present, employees contribute 12% of their basic salary and dearness allowance towards EPF.
· The salary cap for contribution is ₹15,000 per month, meaning if your basic salary is above this, only ₹15,000 is considered for EPF deduction.
· Employers contribute an equal amount, with a portion going into EPS to secure your pension.
3. Proposed Changes by EPFO
· The Employees’ Provident Fund Organisation (EPFO) is planning to raise the salary limit from ₹15,000 to ₹25,000 per month.
· This means employees earning above ₹15,000 will now have a higher EPF contribution, increasing retirement savings.
· The change will also affect EPS contributions, resulting in better pension benefits in the long term.
4. How This Impacts Your Take-Home Salary
· Higher EPF contributions mean slightly lower take-home pay, as more money will be deducted for retirement savings.
· However, this boosts your retirement corpus, ensuring more financial security after you stop working.
· Employees can also claim tax benefits under Section 80C on EPF contributions, making this an efficient savings strategy.
5. What Employees Should Do
· Check your EPF account: Ensure current contributions are being correctly calculated.
· Plan finances accordingly: With a higher deduction limit, adjust monthly budgets if needed.
· Stay updated: Follow EPFO notifications for official implementation dates of the new limit.
💡 Takeaway: Increasing the EPF salary limit from ₹15,000 to ₹25,000 is a step toward stronger retirement planning, benefiting both current and future employees.
If you want, I can also create a simple chart showing old vs new EPF deductions and how much your retirement corpus could grow. It makes this update much easier to visualize.
Do you want me to make that chart?
Disclaimer:
The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any agency, organization, employer, or company. All information provided is for general informational purposes only. While every effort has been made to ensure accuracy, we make no representations or warranties of any kind, express or implied, about the completeness, reliability, or suitability of the information contained herein. Readers are advised to verify facts and seek professional advice where necessary. Any reliance placed on such information is strictly at the reader’s own risk.
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