Mumbai: The Employees Provident Fund Organisation (EPFO) which comes under Ministry of Labour and Employment has issued a circular which states that allowances paid to employees will now have to be added to the basic salary on which provident fund (PF) contributions will be deducted.  The new circular will certainly reduce the take away salary of employees but the good part is that the company’s contribution in the employee’s provident fund will amplify.

In an internal review meeting of the EPFO held in Mumbai on November 30, a circular was issued to all the EPFO offices.  Under the current law, companies till date deduct 12 percent of the salary and transfer it to EPFO for provident fund and pension schemes.

But now when the new circular comes into effect, the companies will be restricted from any kind of rigging. Indeed the companies bifurcate its employee’s salary into many heads to reduce its contribution into the provident funds. But now the employers will have to consider various allowances such as conveyance, educational allowance, medical allowance etc while computing the PF contribution.


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