One salary message brings a smile on our face and excites us to bring more happiness on the faces of our family. But we should know, salary is designed by master mind HRs of a company. They decide how one’s salary should be divided on the basis of different parameters. As a result, they try to set the base salary to the lowest as they know how much PF deducts from salary and they too get affected with PF deduction of one’s salary.
To know-how? and what is New PF rule, we must first consider the old one. Actually, there is an Amendment done in the PF deduction rule in the second week of April 2019.
How PF deducted from salary?
So, let’s come to the Rule!!
Under the EPF & MP Act, 1952, a Provident Fund account is mandatory for the employees having a salary of more than 15000/- per month. Equally considering the fact that the total number of employees in the company must be more than 20.
This rule states that 12% of the basic salary will be deducted from the employee’s salary and equal contribution of 12% will be there from the employer’s side. The total deducted amount will be deposited to the employee’s EPF account. He/she will get this amount at the time of retirement or leaving the company in the middle. Surely, an employee gets a little less in-hand pay. But he/she can have a good saving through EPF account.
Latest in the month of April, the Amendment in this Act/Rule is somehow good news for the employees. As the special allowance given in the salary is now be considered as a part of the basic salary. 12% of the equal contribution will be done on the sum of the basic salary and special allowance by the employer’s side as well as by the employee. So this is how PF deducts from salary. Now it’s up to you, how you consider this, good news or a little sad one. It will have an effect on your in-hand pay. But yes for sure, it’s your money in EPF account, ultimately, that is your savings.