The cut in Employees' Provident Fund (EPF) contribution from 12% to 10% of the monthly PF pay by both employer and employee announced by the government has raised a question in the minds of the employees: Will the cut impact the contribution made to the Employee' Pension Scheme (EPS)? By how much will my take home pay increase and how will it impact my tax outgo.
The Employees Provident Fund Organization (EPFO) has released a set of FAQs addressing the potential issues around its implementation. The key clarifications made in the FAQ document include:
- The temporary reduction in contribution rate will not impact the Employees' Pension Scheme (EPS), therefore employers would have to continue contributing 8.33% of the applicable wages capped at Rs 15000 p.m. towards the EPS plan.