Sep 152014
 

Impact on employees of Enhancement of wage ceiling from Rs. 6500/- to Rs. 15000/-

Vide notification dated 22.08.2014 Ministry of Labour and employment has enhanced the ceiling of wage from Rs. 6500/- to Rs. 15000/- for the computation of contribution to Provident fund for both employer and employee contribution.

Extract of the Notification

608(E)- In exercise of powers conferred by section 6A read with sub section (1) of section 7 of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952), the central government hereby makes the following, further to amend the Employees’ Provident Funds Scheme, 1952, namely:-

  1. (1) This Scheme may be called the Employees’ Provident Funds (Amendment) Scheme, 2014.
    (2) It shall come into force on and from the 1st day of September, 2014.
  2. In the Employees’ Provident Funds Scheme, 1952,-

(a)    In paragraph 2, in clause (f), in sub-clause (ii), for the words “six thousand and five hundred rupees”, the words “fifteen     thousand rupees” shall be substituted;
(b)   In paragraph 26, in sub-paragraph (6), for the word “six thousand and five hundred rupees” the words “fifteen thousand rupees” shall be substituted;
(c)    In paragraph 26A, in sub-paragraph (2), in the proviso, for the words “six thousand and five hundred rupees” wherever they occur, the words “fifteen thousand rupees” shall be substituted.

[F No.- S-35012/1/2012-SSII]

609(E)- In exercise of powers conferred by section 6A read with sub section (1) of section 7 of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952), the central government hereby makes the following, further to amend the Employees’ Pension Scheme, 1995, namely:-

  1. (1) This Scheme may be called the Employees’ Pension (Amendment) Scheme, 2014.
    (2)    It shall come into force on and from the 1st day of September, 2014.
  2. In the Employees’ Pension Scheme, 1995 (hereinafter referred to as the principal Scheme), in paragraph 3, in sub- paragraph 2, in the proviso, for the words “rupees six thousand and five hundred”, whenever occur, the words “fifteen thousand rupees” shall be substituted.
  3. In the principal scheme , in paragraph 6, in clause (a), after the words, figures and letter “or 27A of the Employees’ Provident Fund Scheme, 1952”, the words “and whose pay on such date is less than or equal to fifteen thousand rupees” shall be inserted.

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Impact on Employees

On Take Home

As a result of the above notification every employee whose salary is less than Rs. 15000 is comes under the mandatory requirement of contribution to the Provident fund.

Earlier the limit was Rs. 6500/- PM and employee was required to pay Rs. 780/- as contribution through his employer, and employees whose salary was in excess of Rs. 6500/- was not required to contribute to the fund.  The same provision is continued in the above notification.

Through this notification, the department has widened the scope Provident Fund by enhancing the salary limit. As a result of the notification employees getting salary more than Rs. 6500/- and up to Rs. 15000/- also comes the umbrella of Provident fund. The above enhancement will reduce their take home ranging from Rs. 781/- to Rs. 1800/- depending upon the salary bracket in which falls.

However, this step will encourage saving and investment in the economy. Therefore, this will positively impact employee in terms of enhances capital receipt at the time of retirement.

Impact on Computation of Taxable Income

The above contribution will be eligible for deduction u/s 80C under the income tax Act 1961.

Impact on Employers Cost:

As a result of the above amendment in the provisions of Employees’ Provident Fund and Miscellaneous Provisions Act, 1952, employer cost will increase from 780 to 1800 depending upon the slab of the employees.

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Mar 262014
 

Enclosed is the Circular in regards to Mandatory registration of Digital Signature Certificate (Class 2 and above) of the authorized signatories of the establishments (having more than 100 ECR members) with EPFO.

Download Circular

Sep 192013
 

Digital Signature for Employee Online Transfer Claim Portal

The transfer of the EPF accounts is now possible online for all the EPF subscribers. The form for the same is made available on Online Transfer Claim Portal. The submission of claims for transfer of Provident Fund Account of the Employee Provident Fund Organization members is now possible online. The employers are supposed to get their email ids registered on the portal. For the launch of this facility, the EPFO has introduced a claim form for the purpose.

The Employees Provident Fund Organization has directed its over 120 field offices to delegate a nodal officer for the purpose of registration of digital signatures of the firms. Firms may upload their digital signatures online through the EPFO website(WWW.epfpindia.gov.in) on the online transfer claim portal.Depending on how many people register their digital signatures, will determine the success of online transfer of PF account as the digital signatures are a prerequisite for providing the facility.

The revised transfer claim form is verified by the previous employer or the present employer before submission. Earlier the form could be verified only by the previous employer alone. The members can apply for the transfer through their employers.

A central clearance house has been set up for the purpose of application of PF withdrawals and transfer claim settlements by the subscribers. The service has made the transfer process easy, convenient and less time consuming, and the 13 lakh subscribers every year will now benefit from this service. Online Testing of the service has yielded positive results and the outcomes have proved its success.

Sources have informed that the live online testing of the service was planned prior to its launch. And for this purpose workers from selected organizations will be allowed to transfer their online claims. The IT sector constitutes 80 percent of the transfer claims, and as per the data available, the body has managed 6.9 lakhs organizations in 2011-12. For this year, i.e. 2013-14, the expected claims are estimated to come up to 1.2 crores including 13 lakh PF claims.

According to the citizen charter, the transaction process should be completed in 30 days. But this time, with the new online transfer service coming up, the body has decided to complete the transfer of PF account in 3 days.

Mar 052013
 

EPF interest rate increased to 8.5% for the year 2012-13

EPF has come up with a mount in interest rate, taking it to 8.5%  for the year 2012-13. The interest rate for the new fiscal year is 8.5% , as compared to the 8.25% in the previous year. As one basis point equals 0.01%, the 50 million subscribers of the employees’ Provident Fund Organisation will earn 8.5% with the 25 basis point increase. The trade unions’ demand of 8.6% interest still remains unfulfilled . The Central Board Of Trustees (CBT) explains that with the proposal of paying 8.6% interest , they would be left with a Rs 240 crore deficit, while  the 8.5% rate allows a surplus of Rs. 400 crore.

But , the trade unions whose proposal was not accepted, have argued upon as to if the banks pay 9-10% and the government pays up to 8.8% , then why only 8.5% is being paid. Albeit there is a   rise from previous year’s 8.25 to 8.5%,it is much less than the PPF rates or Bank fixed deposits rates.  The previous years’ interest rate has been a considerable decline from 9.55 in 2011-12 to 8.25% in 2011-12. The EPF rates in 2011-12 were decreased to 8.23% from the 9.25%  in 2010-11,while there was an increase in PPF rates from 8.6% in 2012-12 to 8.8% in 2012-13. The CBT  has relaxed the rules in order to permit the EPFO invest in corporate bonds up to 25 year maturity from the present 15 years.

Also, the EPFO has allowed the fund manager to invest in debt market in order to improve earnings. The CBT commissioner has stated that a bit of relaxation in the rules is done so as to ease investment in debt market.

The EPFO can invest in the following seven firms along with the investments in bonds of PSUs.

  • HDFC Bank Ltd
  • ICICI Bank Ltd
  • Axis Bank Ltd
  • LIC Housing Finance Ltd
  • IL&FS Ltd
  • IDFC Ltd
  • Housing Development Finance Corp. Ltd.

The EPFO has come up to the decision to invest in AA or AAA rated bonds of companies that have a minimum net worth of Rs 3000 crore with a 15% dividend paying track record. However, they will refrain from investing in stock market as decided by the organization.

The new investment pattern is expected to yield higher returns, as per the central provident fund commissioner.

Jan 152013
 

New EPF Form No 11

A New Amendment has been arrived in Form-11 for identification of Indian International Workers – HO No. IWU/7(29)/2012/Review IW/22134 dated 17/10/2012

Update the same in your records & in joining formalities.

Download New EPF Form11

“Courtesy: http://blog.pcsmgmt.com”