Employees’ Provident Fund: “Take Home Salary” May Increase, Know When New Pay Scale Will Be Implemented
The new wage code or new pay scale created by the central government will be implemented from April 2021. Meanwhile, some changes have been recommended by the Ministry of Labour to exciting pay scale. If the government accepts these recommendations then the take-home salary of the Government employees, that is the salary that they get after all the deductions and cuts, will increase.
At present, both employees and employers deposit 12-12% in Employees’ Provident Fund (EPF). The Labour Ministry proposed that it should be reduced to 10–10 per cent.
If this proposal gets approval of the government, then the Take Home Salary of the government employees will surely increase. In actual fact, since the introduction of the new wage code, many questions were raised that the take-home salary of the employees will decrease, but gratuity and pension will increase.
Thus these objections were presented before the Ministry of Labuor and the ministry prepared an amendment proposal and brought it before the government. However, the disadvantage of the new system will be that the pension amount will be reduced as the contribution to PF will reduced.
The new pay scale law has been passed in Parliament in 2019. According to its rules, pension of the employees cannot exceed 50% of the total compensation.
That is, from April 2021, the basic salary (including basic pay and dearness allowance in government jobs) will be 50% or more of the total salary. The second aspect of this is that the social security amount of employees will increase.
With this, the ‘Take Home Salary’ will decrease while the contribution for the Provident Fund (PF) will increase as PF is calculated from a percentage of basic salary.
However, the proposal of the Ministry of Labour to increase the Take Home Salary will be considered in the coming days. It is expected that the government will accept the proposal. This will provide relief to the employees who were facing difficult situations in the Corona time period. Most of the employees say that they are more concerned about fulfilling their current needs than the security fund.