The Narendra Modi government made an announcement about the employee’s liability for the Employees Provident Fund (EPF) to 10 percent in the construction sector from 12 percent of basic pay from now. It estimated that around three crore people are working in construction and building industry. But out of them only 15 lakh have EPF cover at present.
It is made mandatory for the units who are employing 20 workers or more have to provide EPF benefits to them. But the labour ministry said that by reducing the employee’s contribution it could do something more building or construction units to extend perfect EPF benefit to their workers.
The construction industry has mentioned that they are mainly paying one percent of the construction cost to the government as the labour tax. According to the reports, employees paying 12% of their basic pay as EPF, 8.33% as employee’s pension scheme and about 3.67% EPF itself. In addition to these, employers also pay about 0.5% as EDLI, 0.065% towards EPF administrative charges and 0.01% as the handling fee.
Upon all these, employees are paying around 13.61 percent from their basic pay. Now the government introduced the new system by cutting the contribution of EPF/EPS from 12 % to 10 %. “The labour ministry found the concern of builders and developers as genuine and was considering whether builders’ contribution towards EPFO could reduce to 10%, an official source said.
Brick, Jute, Beedi, guar gram and coir factories are now responsible for lower 10% EPF contribution to their employees. Under the special package for textile and garment factories unveiled in the last year of June, the government announced to bear 12% EPF for the first three years for new employees.
Employees Provident Fund is a retirement planning tool which used for financial matters like education, child’s marriage and buying the home before retirement.