Economy 20201744 views
- EPF for salaried women reduced to 8% for next three years.
- Government to contribute 12% to the new employees' EPF.
The Finance Minister Arun Jaitley has made some very effective announcements on February 1, in the Union Budget 2018. One amongst them was the reduction from women employees in Employee Provident Fund (EPF) account. The initiative has surprised salaried women and surely has given them a reason to smile.
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For the next three years, the share of EPF deduction for salaried women has been lowered. The amendments in the Employees Provident Fund and Miscellaneous Provisions Act, 1952 will be made to reduce women employees’ contribution to 8 per cent from 12 per cent. The initiative gives women the remaining 4% of the EPF in their bank account. The contribution of the employer, however, remains unchanged with 12 per cent.
Look at the table below wherein we have considered women with variable in-hand salaries. The calculation of the EPF deductions per month pre and post the amendment made under Union Budget 2018 and the savings at the end of three years has been done.
|In-hand Salary per month||Basic Salary per month||12% EPF Monthly Deduction (Previous Regime)||8 % EPF Monthly Deduction (New Amendment)||Monthly Savings||Yearly Savings||Savings in 3 Years|
What about the non-salaried employees?
Even though there is no specific change in the EPF share of the male employees, a standard deduction of Rs. 40,000 has been given. It has come with the replacement of the transport allowance and medical reimbursement. The standard deduction is likely to benefit 2.5 crore people and the government expects that the middle-class people would find Budget FY 18-19 in their favor only.
How is this going to benefit women in India?
The change in the EPF share would not only give women the extra money, but women employment ratio is also going to increase. Also, since the employer’s share remains the same as earlier, the saving amount in the EPF account is not affected much.
What would be the difference pre and post EPF change?
As per the rules under EPF scheme, a certain contribution is made by an employee towards the scheme and an equal contribution is paid by the employer. If the person continues the same job throughout the career, he/she gets a lump sum amount including self and employer’s contribution with interest on both, on retirement.
Thus, the change in the EPF share would not make much difference in the lump sum women would get.
Budget 2018 for New Employees
Another announcement made by the Arun Jaitley was that the new employees coming under the ambit of EPFO would be provided 12 percent contribution from the government. The provision is, however, available for only new employees getting the EPFO membership for the first time.