Government may raise EPFO wage ceiling to ₹21,000, allowing you to retire with ₹1 crore: Report

September 19, 2024

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September 19, 2024 0 comment

Sep 19, 2024 04:46 PM IST

The current wage ceiling of ₹15,000 (Which used to be ₹6,500 in 2014) for employees’ contribution may get raised for investing more into the EPFO corpus

The government is looking to raise the limit on contributions made by subscribers to the Employees’ Provident Fund Organisation (EPFO) as well as the Employees’ Pension Scheme (EPS) according to a Financial Express report which cited Union Labour Minister Mansukh Mandaviya.

15,000 or less each month currently.(HT Photo)” title=”Both the employee and the employer contribute 12% of the employee’s salary each if the employee earns ₹15,000 or less each month currently.(HT Photo)”>

Both the employee and the employer contribute 12% of the employee’s salary each if the employee earns ₹15,000 or less each month currently.(HT Photo)

The current wage ceiling of ₹15,000 (Which used to be ₹6,500 in 2014) for employees’ contribution may get raised for them to invest more into their EPF corpus, according to the report.

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How do EPFO contributions work?

Both the employee and the employer contribute 12% of the employee’s salary each if the employee earns ₹15,000 or less each month.

However, the employer’s contribution is divided into two parts. 8.33% is allocated to the Employee Pension Scheme (EPS) while the remaining 3.67% goes to the provident fund.

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So if the salary is ₹15,000 a month, the employee’s provident fund contribution will be ₹1,800. The employer’s provident fund contribution will be ₹550.50 and EPS contribution will be ₹1,249.5.

What may be the new EPFO contribution limit?

The government may consider raising the wage ceiling to ₹21,000, Financial Express reported, citing unidentified sources.

If that happens, then with a salary of ₹21,000, the employee will contribute ₹2,520 and the employer will contribute ₹770.70 to the EPFO and ₹1,749.30 to EPS.

How much can the revised wage ceiling increase the EPFO interest amount?

An employee joining the EPFO scheme at the age of 23 to contribute to the fund for 35 years with a basic pay of ₹15,000 will get a total corpus of ₹71.55 lakh, with the compounded interest amount alone being ₹60.84 lakh from the total contribution of ₹10.71 lakh at an 8.25% interest rate per annum.

If the limit is hiked to ₹21,000, the total corpus would reach ₹1 crore, with an invested amount of ₹15 lakh and interest amount of ₹85 lakh, meaning the employee can earn an extra ₹28.45 lakh if the salary is ₹21,000 and the hike also happens.

What is the EPFO withdrawal limit?

The EPFO withdrawal limit has also been increased from ₹50,000 currently to ₹1 lakh, with the report quoting Mandaviya as saying that the withdrawal limit has been raised especially if there is some family emergency and money must be withdrawn.

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Copyright 2024 - All Rights Reserved - Janashakti.News

The current wage ceiling of ₹15,000 (Which used to be ₹6,500 in 2014) for employees’ contribution may get raised for investing more into the EPFO corpus

How do EPFO contributions work?

What may be the new EPFO contribution limit?

How much can the revised wage ceiling increase the EPFO interest amount?

What is the EPFO withdrawal limit?

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Copyright 2024 - All Rights Reserved - Janashakti.News

Government may raise EPFO wage ceiling to ₹21,000, allowing you to retire with ₹1 crore: Report

The current wage ceiling of ₹15,000 (Which used to be ₹6,500 in 2014) for employees’ contribution may get raised for investing more into the EPFO corpus

How do EPFO contributions work?

What may be the new EPFO contribution limit?

How much can the revised wage ceiling increase the EPFO interest amount?

What is the EPFO withdrawal limit?

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