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FICCI opposes move to club basic pay and perks for PF

Updated: May 28, 2013 05:51:46pm
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New Delhi, May 28, (KNN) The move to consider pay and allowances together as the basis for calculation of employee provident fund (EPF) has come in for opposition from the industry which says it will have serious financial implication both for the business firms and the government.  
 
 “The reported proposal re-notify the definition of ‘basic wages’ under the Employees Provident Fund & Miscellaneous Provisions Act (EPF and MP Act) 1952, is fraught with huge financial implications both for industry and Government,” said Federation of Indian Chambers of Commerce and Industry.
 
It further said that it is counterproductive to the EPFO, as organizations which are extending coverage to employees receiving salaries above Rs. 6500 may choose to opt out, depriving the employees coverage under a globally renowned social security scheme.
 
Most of the employees today join an organization above this statutory limit and they are voluntarily covered by the industry.
 
Currently, there are more than 50 million EPF subscribers from both organized and unorganized sectors and assets worth Rs. 5 lakh crores with the EPFO are available for investment. Almost, 40 per cent of these assets go to the Central and State Government securities, said FICCI President, Naina Lal Kidwai.
 
“”The move is ill- conceived and if brought into force will dampen business and investment sentiments which are already at a low ebb,” the FICCI said.
 
However, FICCI strongly supports PF deduction on full amount of ‘minimum wages’ where such wages are being paid under the Minimum Wages Act, 1948. For employees who are on a higher salary bracket and receiving allowances as incentives or performance based rewards to promote business, the PF contribution should be restricted to basic salary. (KNN)
 

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