The Ministry of Finance finally rolled out a brand-new provision by updating the new PF Limit, which is going to positively impact both employers and employees. This was done in the hope of boosting the employer’s contribution and overall savings for employees.
But what exactly is the new provision, and what can you expect from it? Scroll below to learn all about it in-depth.
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New Revision in Employees Provident Fund (EPF) Limit
Soon after the commencement of a new proposal directly from the Ministry of Finance, EPF interest rates witnessed an upsurge from 8.10% in the year 2021-22 to 8.15% in the year 2022-23.
- The EPF cap limit for FY 2022-23 is Rs. 2.5 lakh for non-government employees and Rs. 5 lahks for government employees.
- Include a minimum of INR 1,000 as a provision for pension.
- The current EPF Admin charges are 0.50 %
According to an official order issued on July 24, 2023, the EPFO (Employees’ Provident Fund Organisation) has instructed its field offices to credit the interest at 8.15 per cent on EPF (Employees’ Provident Fund) for the financial year 2022-23 into the accounts of its members. The process of crediting the interest into subscribers’ accounts will now commence at the EPFO field offices. Notably, the hike has been made from a 4-decade low of 8.10% for FY 2021-22.
EPF Limits
EPF, or Employees’ Provident Fund, is a government provision to which employers tend to contribute 12% of their basic salary. Altogether from that part, a chunk of 8.33% of their individual salary is deposited into the account of the Employees’ Pension Scheme. Furthermore, the amount cannot exceed INR 1250 monthly, which is 8.33% of INR 15,000 under the Employees’ Pension Scheme.
Employers are required to make a monthly contribution to the Deposit Linked Insurance (EDLI) Plan of Employees, which turns out to be equal to 0.5% of an employee’s total income, up to a maximum of INR 15,000 in their monthly compensation. Employer contributions to the Employees’-Deposit-Linked-Insurance Scheme (EDLI) are limited to 0.5% of the employee’s monthly income of INR 15,000 per year.
EPF contributions must be made by both the employer and the employee and cannot exceed 12% of INR 15,000, or 12% of (basic income + daily allowance, if applicable), in a given month.
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Frequently Asked Questions
Can a Member Pay a Contribution Beyond The Wage Ceiling Limit?
Yes, the member may make additional contributions over the INR 15,000 pay limitation.
What is The Contribution Limit for The EPF?
Employers are only allowed to contribute 0.5% of employees’ monthly salaries up to a maximum of INR 15,000 towards the Employees’ Deposit Linked Insurance (EDLI) Programme.
When Does an Employee Become Eligible for EPF Contributions?
Everyone who receives a wage is eligible for the EPF. Also, enrolling in the EPF is required of all employees making less than INR 15,000 per year. Employees who make more than 15,000 rupees per year might elect to remain in the EPF program.
Is it Compulsory to Deduct 12% of the Employee's Salary as EPF Contribution?
No, it is not required to withhold from an employee’s monthly income more than 12% of INR 15,000. EPF contributions are either 12% of the first INR 15,000 earned or 12% of the basic salary plus any relevant Dearness Allowance. The maximum monthly EPF contribution is 12% of INR 15,000 (about).
What is The Age Limit for EPF Contributions?
The maximum age for pension vesting is 60 years, while contributions to the EPF can be made up to that point.
Can an Employee Join The Pension Plan Without Making EPF Contributions?
No, according to the regulations of the Workers’ Pension Plan, a person is qualified to receive a pension from EPS if they have accrued 10 years of service. In order to be eligible for EPS pension benefits, an employee must have contributed to their EPF account for a minimum of ten years.
