At present, contribution to the EPF is calculated on the basis of 12% of basic pay and dearness allowance, which will be deducted from the salary of the employee and remitted to EPFO. Same amount is to be contributed by the employers also. To reduce contribution to EPF, many employers, corporates etc. are not increasing the salary, but will increase the allowances etc. on which EPF contribution need not be remitted. The contribution to ESI also is not increased. But at the same time, the employee will have to pay tax for the entire amount including the allowances.
The Employees Provident Fund Organisation (EPFO) had already proposed that all the allowances should be included for calculation of the EPF contribution. The EPFO is going to notify the provision so that the employees will get the benefit. But the employers and corporates are opposing the same and trying to influence the government so aas to avoid contributing the increased amount.
The government should take a strong stand and ensure that the workers’ rights of getting higher contribution is implemented.