The government will motivate employers’ contribution to the Employees’ Provident Fund (EPF) , so that they are encouraged to hire more people .
The Budget for 2018-2019 claims that the government would bear the 12% contribution to the to the retirement corpus of salaried individuals in the Employees’ Provident Fund for the first 3 years of their employment .
Previous years budget for 2016-17, the government had first introduced a contribution of 8.33% of Employee Pension Scheme for new employees for duration of 3 years, which was applicable for those who were earning upto Rs 15,000 per month . Each month, 12% of an employee’s (basic) salary goes into the EPF account and the employer matches the contribution. 8.33% of the total employer’s contribution, goes into the Employees’ Pension Scheme (EPS), which has a scheme which offers pension to individual from the age of 58 years .
Thegovernment’s intention is to improve women’s participation in the workforce, which is a good thing. But analyst say that reduction in the EPF contribution should not have been done .
Arora says that ” Some might hope that employers will pass on the benefit of lower provident fund contribution rate to the employee by way of increasing take-home, as against reduced Cost to Company ” .
The employers contribution remains at existing rate of 12% .
The government looks forward with more incentives to boost employment for each sector in the coming months .