Context
The Employees’ Provident Fund Organisation’s (EPFO) long-pending proposal to reduce administrative charges for employers may face further delays till March due to the model code of conduct coming into force in various states going for polls beginning next month
The Proposal
The EPFO had sent a formal proposal to the Labour Ministry on January 4 to,
- Decrease administrative charges for companies from 0.85% to 0.65% of worker’s salary for its EPF scheme
- Rationale: Considering the need to promote ‘ease of doing business’ in India and to make Indian business more competitive, and in response to the financial efficiency gained by EPFO, the Central Board decided to recommend further reduction of administrative charges to 0.65%
- Reduction in collection: According to EPFO’s estimates, decreasing administrative charges for EPF scheme by 0.20 per cent will lead to a reduction in collection by ₹1,000 crore
- Remove administrative charges: It also proposed doing away with administrative charges 0.01 per cent of worker’s salary levied to implement the Employees’ Deposit Linked Insurance (EDLI) scheme, 1976
Present situation
At present, employers contribute 9.69% as their own share and 12 per cent as employee’s share towards EPFO schemes. All companies with at least 20 workers are covered under the EPFO
- Collection of administrative charge: EPFO collects administrative charges from employers to meet its administrative and inspection costs, including staff pension and gratuity. In 2015-16, the EPFO had collected Rs 3,758 crore from administrative charges towards both EPF and EDLI schemes
- Meeting costs: The EPFO collects administrative charges from employers to meet its administrative and inspection costs, including staff pension and gratuity
