Recently Employee Provident Fund Organization (EPFO) changed a few rules related to EPF, EPS and EDLI. These changes will come into effect from 1st September 2014.

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Below is the graphical representation of how your EPF contribution along with employer contribution will distribute monthly.

EPF ChangesPlease note that Salary for this purpose means Basic along with DA.

Let us discuss the above four changes in detail.

  • 1) EPF is now mandatory for all those whose salary is less than Rs.15, 000Previously the limit was Rs.6, 500. However, this now rises to Rs.15, 000. Therefore, whoever falls below Rs.15, 000 of salary per month will have to contribute compulsorily to EPF Scheme.2) The minimum monthly pension will be Rs.1, 000 per month. Under the new rules, widow of a member will get a minimum monthly pension of Rs.1, 000. For children, it fixed at Rs.250 and the orphans it is Rs.750 per month. In addition, to arrive at pension, salary will be average of 60 months last drawn salary instead of earlier rule of last 12 months average salary.3) Insurance coverage to member increased to Rs.3, 00,000Earlier each member who is part of the EPF scheme had an insurance coverage of Rs.1, 56,000. This insurance coverage has now risen to Rs.3, 00,000.4) EPS contribution from employer raisedEarlier whether your salary was Rs.6, 500 or at a higher level, employers used to contribute fix EPS contribution of Rs.541 i.e. 8.33% of Rs.6, 500. This is increased now to Rs.1, 250 i.e. 8.33% of Rs.15, 000.

    The overall effect on you will be lesser take home salary. Because earlier, whoever earning more than Rs.6, 500 might contributed 12% of Rs.6, 500. Now onward it will be 12% of your salary if you fall under Rs.15, 000 and if more than Rs.15, 000 then also 12% of Rs.15, 000. So compared to earlier, you will see higher outgo to EPF and lesser take home salary. However, do remember that you are indirectly investing rather than spending. So be happy 🙂

    Any doubts about EPF? All major doubts listed in below post. Please go through it.

    Note-We stopped readers comment for this particular post. If you have any doubts related to this post, you are free to raise the same at our BasuNivesh Forum. I will be happy to help you.

 

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