Increase in salary cap for PF deduction will burden SMEs, industrialists say
Updated: Jul 14, 2014 01:19:39pm
New Delhi, Jul 14 (KNN) The small industries reeling under the problem of labour shortage are upset over the government’s announcement of increasing the monthly wage ceiling to Rs 15,000 from Rs 6,500 currently, says an industrialist.
In his maiden Budget 2014-15, Finance Minister Arun Jaitley said, “The Government is notifying minimum pension of Rs 1,000 per month to all subscriber members of EP Scheme (Employees’ Pension Scheme) and has made an initial provision of Rs 250 crore in the current financial year to meet the expenditure.
“Further, increase in mandatory wage ceiling of subscription to EPS from Rs 6,500 to Rs 15,000 has been made and a provision of Rs 250 crore has been provided in the current budget,” he said.
To implement the two decisions, the government has set aside Rs 500 crore for the current financial year, and companies too may be required to increase the spending.
As a result of the decision, several workers who are currently in the unorganized sector will also be covered.
“Most of the labourers earn in the range of Rs 6,000 to Rs 15,000. Now that the government has increased the wage limit, more workers will be covered under the scheme,” said Managing Director of Dayachand Engineering, Naveen Jain from Meerut.
“The PF contribution is 12 per cent of basic salary from both employee and employer. The main problem that the SMEs will face now is that they will have to increase the wages of the labourers as they are only bothered about their in-hand salary and not about any deductions. They don’t want to contribute 12 per cent from their salary towards their PF fund,” Jain, who was also a Treasurer of Federation of Indian Micro & Small and Medium Enterprises (FISME), said.
“At a time when the industry is already facing labour shortage, we will have to agree to the demands of the labourers and increase their daily wage,” Jain said.
“The honest industrialists, who want to go by the laws and maintain proper records, will face 25 per cent of revenue loss. Instead of extending support to the small industries, the government has rather hurt them,” Jain added.
The labour ministry controlled Employees Provident Fund Organisation (EPFO) had increased the salary cap from Rs 6,500 to Rs 15,000 in February only for an employee to be eligible for employee PF deductions. The decision made five million more workers more eligible for social security and retirement benefits.
The central board of trustees (CBT), the apex-decision making body of EPFO, had also approved a plan to nearly double the minimum pension to Rs 1,000.
Some of the industry representatives also said that the salary ceiling should have gone up in phases as the decision might pass on the burden to the SMEs. (KNN/SD)
In his maiden Budget 2014-15, Finance Minister Arun Jaitley said, “The Government is notifying minimum pension of Rs 1,000 per month to all subscriber members of EP Scheme (Employees’ Pension Scheme) and has made an initial provision of Rs 250 crore in the current financial year to meet the expenditure.
“Further, increase in mandatory wage ceiling of subscription to EPS from Rs 6,500 to Rs 15,000 has been made and a provision of Rs 250 crore has been provided in the current budget,” he said.
To implement the two decisions, the government has set aside Rs 500 crore for the current financial year, and companies too may be required to increase the spending.
As a result of the decision, several workers who are currently in the unorganized sector will also be covered.
“Most of the labourers earn in the range of Rs 6,000 to Rs 15,000. Now that the government has increased the wage limit, more workers will be covered under the scheme,” said Managing Director of Dayachand Engineering, Naveen Jain from Meerut.
“The PF contribution is 12 per cent of basic salary from both employee and employer. The main problem that the SMEs will face now is that they will have to increase the wages of the labourers as they are only bothered about their in-hand salary and not about any deductions. They don’t want to contribute 12 per cent from their salary towards their PF fund,” Jain, who was also a Treasurer of Federation of Indian Micro & Small and Medium Enterprises (FISME), said.
“At a time when the industry is already facing labour shortage, we will have to agree to the demands of the labourers and increase their daily wage,” Jain said.
“The honest industrialists, who want to go by the laws and maintain proper records, will face 25 per cent of revenue loss. Instead of extending support to the small industries, the government has rather hurt them,” Jain added.
The labour ministry controlled Employees Provident Fund Organisation (EPFO) had increased the salary cap from Rs 6,500 to Rs 15,000 in February only for an employee to be eligible for employee PF deductions. The decision made five million more workers more eligible for social security and retirement benefits.
The central board of trustees (CBT), the apex-decision making body of EPFO, had also approved a plan to nearly double the minimum pension to Rs 1,000.
Some of the industry representatives also said that the salary ceiling should have gone up in phases as the decision might pass on the burden to the SMEs. (KNN/SD)
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