PF-EPF Passbook Balance latest update: The Narendra Modi Government is in the mood to implement New Wage Code Bill from 1st April 2021. In this New Wage code, there is provision that the minimum basic salary of an employee will be 50 per cent of the net CTC.
PF-EPF Passbook Balance latest update:
The Narendra Modi Government is in the mood to implement New Wage Code Bill from 1st April 2021. In this New Wage code, there is provision that the minimum basic salary of an employee will be 50 per cent of the net CTC. This means one’s monthly allowance won’t go beyond 50 per cent of net CTC. According to experts, it will have a huge impact on the private sector employees as an increase in basic salary will lead to higher Employees’ Provident Fund (EPF) contribution and gratuity contribution. However, they said that it will have very little impact on the central government employees as they are governed under the 7th Pay Commission (7th CPC) in which the basic monthly salary is already to the tune of that level.
Impact on central government employees
On whether the New Wage Code Bill 2021 will impact central government employees Pankaj Mathpal, MD & CEO at Optima Money Managers said, “The New Wage Code won’t have much impact on the central government employees as they are already government under the 7th Pay Commission (7th CPC). In the Seventh Pay Commission, wages of the central government servants are already to the tune of 50 per cent of the net CTC. So, central government employees will be least affected by this New Wage Code Bill.”
Impact on private sector employees
Speaking on the New Wage Act 2021 SEBI registered tax and investment expert Jitendra Solanki said, “Once the New Wage Act 2021 is implemented in India, government sector employees won’t get much affected as they already have their basic salary around 45-50 per cent of their net monthly CTC.” Solanki said that the New Wage Code Bill will impact private sector employees more as their monthly basic salary will go up from around 25-30 per cent of their net CTC to at least 50 per cent.
Income Tax on PF-EPF
On New Wage Code 2021 leading to one’s Provident fund (PF) or EPF interest rate taxable as the Modi Government has levied income tax on PF or EPF interest earned beyond Rs 2.5 lakh investment in a particular financial year; Kartik Jhaveri, Director — Wealth Management at Transcend Consultants said, “PF or EPF monthly contribution is going to remain 12 per cent of the monthly basic salary. So, in order to invest beyond Rs 2.5 lakh in one’s PF or EPF account, one needs a basic salary of around Rs 21 lakh which means monthly CTC of Rs 42 lakh, which is very uncommon. Remember, one’s CTC will remain same, only the basic and allowances will get affected by this.”