Employees Provident Fund Organization
EPFO Rules: The scheme of Employees Provident Fund Organization (EPFO) is not only a means of savings, but it is also a support for old age. But do you know that by staying within the rules, you can deposit more money in it than your prescribed limit? EPFO has given some clear rules to remove this dilemma of the employees. If you also want to speed up your retirement savings, then it is very important for you to understand the contribution limit and these special provisions related to it.
Can the ‘Lakshman Rekha’ of 12% be crossed?
Often many people think that EPF 12% cut in salary is a set stone which cannot be changed. But the reality is a little different from this. According to EPFO rules, any employee can deposit more amount than the normal deduction of 12% through ‘Voluntary Contribution’ as per his wish.
It completely depends on the wishes of the employee. Its biggest advantage is that when you deposit more money than the basic limit, your retirement savings grow faster. Additionally, the compounding interest on EPF is also applied on your increased amount, thereby creating a bigger fund in the long term.
The company will pay the same amount
There is a catch here which is important to understand. Even if you decide to deduct more than 12% from your salary, your employer i.e. your company is not obliged to do so. As per the rules, the company is responsible to contribute only up to the legal rate i.e. 12%. That means the extra money will go only from your pocket, the company will not ‘match’ it.
Also read- EPFO Pension: Will private employees get ₹ 7,500 pension? The government replied in the Parliament
Apart from this, the rules also provide that normally the calculation of contribution is based on the salary ceiling of Rs 15,000. But if your salary is more than this and you want PF to be deducted on your ‘Actual Salary’, then a special procedure has to be followed for that.
What is the condition for those with higher salaries?
If the salary of an employee is more than Rs 15,000 and he wants to get EPF deducted on his entire actual salary, then just giving him an application will not suffice. Under Para 26(6) of the EPF Scheme, for this he is required to obtain permission from the Assistant Provident Fund Commissioner (APFC) or Regional Provident Fund Commissioner (RPFC). You can start PF contribution on your entire salary only after getting government permission. This rule ensures that the process remains transparent and there are no problems at the time of claims in future.