PF norms to be tweaked, may cover companies with 10 employees
The Provident Fund norms seem all set for a change, as according to the latest proposal put up before the Employees Provident Fund Organisation (EPFO). The proposal seeks to ensure that companies having even 10 employees should be required to comply with PF rules. Currently, the limit is set at 20 employees, and very small companies often do all they can to avoid getting into this situation by keeping some employees off the rolls.
The PF amount is 12% of the basic salary, subject to a maximum of Rs.6,500, which is deducted every month from the total pay, and credited to the employee’s PF account. The employer also matches this contribution at the same rate. As per the Provident Fund Act, employees getting more than Rs.6,500 are not required to subscribe to this scheme. However, quite a few companies cap it at Rs.6,500 (PF Amt = Rs.780), because it also comes with a couple of benefits like,
- It encourages saving in some form
- It has tax benefits under Section 80C
This proposal is likely to be taken up at the next board meeting of the EPFO.
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