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EPF interest rate witnessed a raise from 8.55% for FY 2017-18 to 8.65% for the FY 2018-19, post the proposal being approved by the Ministry of Finance.
Initially, there were talks of the EPF limit being raised from Rs. 6,500 to Rs. 10,000 in the first phase, and then further increase it to Rs. 15,000 later. The reason behind this was to control the sudden sharp rise in the EPF limit. One of the reasons cited for the resistance is that the sudden rise in EPF limits and the provision for pension is a labour and time-intensive initiative. It also requires improvement in infrastructure that is cost-intensive.
There were also some reservations expressed by Micro, Small and Medium Establishments (MSMEs) as they were of the opinion that such a move would adversely affect their business. However, the decision to introduce a pension of Rs. 1,000 was well accepted by all.
What is the contribution limit for EPF?
The contribution limit for employers towards Employees’ Deposit Linked Insurance (EDLI) Scheme is 0.5% on a maximum of Rs. 15,000 monthly salary.
Can we contribute more than 12% in EPF?
Yes, one can pay at a higher rate; however, the employer is under no obligation to contribute more than 12% towards Employees’ Provident Fund.
Is it mandatory to deduct more than 12% of Rs. 15,000 from the monthly salary of an employee?
No, it is not mandatory to deduct more than 12% of Rs. 15,000 from an employee’s salary every month. The EPF contribution is either 12% of Rs. 15,000 or 12% of (Basic Salary + Dearness Allowance, if applicable). The upper limit of EPF contribution every month is 12% of Rs. 15,000.
What is the age limit for EPF contribution?
Contributions towards EPF can be made till 58 years of age, while the upper age limit for vesting of pension is 60 years.