Provident Fund New Rules: The Supreme Court has administered that special allowances paid to the employees by employers must be considered a part of the “basic wage” for deduction of amount towards provident fund. According to the new rule of the provident fund, both the employers and employees have to pay an equal amount of basic pay towards the contribution of EPF which results in 12%.
The decision of the Supreme Court came after it dealt with a question which arose on whether special allowances should be categorised under the Basic Wage under the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 for computation of amount deduction towards employment provident fund.
Moreover, the companies or firms which doesn’t abide by the new rules given by the Supreme Court will have to face stringent action by the Employees Provident Fund Organisation (EPFO). Moreover, the Employees Provident Fund Organisation (EPFO) is also going to automate the process of PF transfer for employees switching from one company to another for jobs.
This would benefit the employees who have subscribed retirement fund service to keep track of the contributions made by their previous employers and the interest accrued on them, as per reports.