Saturday, December 29, 2012

How the proposed PF rule may cut your take-home salary

 How the proposed PF rule may cut your take-home salary

The recent EPFO circular, stating that certain allowances must also be added to the salary while computing the PF contribution, could upset millions of household budgets if it were to be enforced. On the face of it, this looks good for employees because a higher amount will flow into their PF accounts every month. However, the employers, who are supposed to match the contribution, may not want to absorb the rise in the wage bill. They are likely to rejig the compensation structure to ensure that the cost to company doesn't go up. ET Wealth estimates that the average salaried person could see his take-home pay dip by 6-8% if the revised interpretation of rules is implemented (see graphic).

Currently, 12% of an employee's basic salary is deducted from his income and put in the EPF by his employer. The company also contributes a matching sum on behalf of the employee. However, last year, the Madras high court and the Madhya Pradesh high court held that the various allowances paid to employees should also be considered while computing the PF contribution. Last month, the EPFO issued a circular, stating that the base figure for calculating the PF contribution must include many of the allowances given to the employee.

Higher savings for retirement

The change is welcome if one considers retirement planning. The latest demographic data shows that though Indians are living longer, their sunset years are not very comfortable due to poor health. The problem worsens if the retiree runs out of money in his twilight years. It prevents him from availing of healthcare facilities that could improve the quality of his life. For a comfortable retirement, you need to save more and the new EPF rule enforces higher savings. As our calculation shows, the average employee would be putting away 50% more into his retirement savings if the rule comes into force. With employers making a matching contribution, the EPF may well become the most important retirement planning tool for the salaried class.

However, the households that are paying huge loan EMIs and have other financial commitments, such as SIPs and insurance premiums, could feel the pinch. The worst hit would be individuals whose current expenses are so high that saving for retirement, however important, will just not be possible.

It is still early to say how the change will pan out. For, despite the clarification, there is a lot of ambiguity about the allowances that should be included in wages while computing the PF. As accounting firm PricewaterhouseCoopers notes, "There are conflicting judgements by high courts on the interpretation of the term 'basic wages' provided in the EPF Act." According to the EPF rules, 'basic wages' means all emoluments paid to the employee, excluding house rent allowance, dearness allowance, cash value of any food concession, overtime allowance, bonus and commission. This means only a few allowances, such as special allowance and transport allowance, would be included in the calculation, besides the basic salary.

Besides, the issue is now before the Supreme Court. "The decision of the Supreme Court will provide a direction in the matter. Till then, this circular is a wake-up call for employers to review their position in relation to their compensation structure," says PricewaterhouseCoopers.

What you should do

While your company readies its strategy to deal with the new definition, you must also formulate a plan of action. The change will definitely bring down your take-home salary by a few percentage points.

Calculate the total amount you are putting away in various investments for retirement. This should ideally be 10-15% of your income (see page 18). If your PF contribution under the new rule pushes this beyond the ideal level, you can reduce the quantum of investment in some other option. However, we don't recommend this unless you are facing a real cash crunch.

Source: economictimes

EPF: THE EMPLOYEES’ PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT, 1952

EPF: THE EMPLOYEES’ PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT, 1952

(Act No. 19 of 1952)
4th March, 1952

An Act to provide for the institution of provident funds, pension fund and deposit-linked insurance fund for employees in factories and other establishments.

2. Definitions. - In this Act, unless the context otherwise requires, -

(m) “Tribunal” means the Employees’ Provident Funds Appellate Tribunal constituted under section 7D.

7D. Employees’ Provident Funds Appellate Tribunal. – (1) The Central Government may, by notification in the Official Gazette, constitute one or more Appellate Tribunals to be known as the Employees’ Provident Funds Appellate Tribunal to exercise the powers
and discharge the functions conferred on such Tribunal by this Act and every such Tribunal shall have jurisdiction in respect of establishments situated in such area as may be specified in the notification constituting the Tribunal.

(2) A Tribunal shall consist of one person only to be appointed by the Central Government.
(3) A person shall not be qualified for appointment as a Presiding Officer of a Tribunal hereinafter referred to as the Presiding Officer, unless he is, or has been, or is qualified to be, -
    (i) a Judge of a High Court; or
    (ii) a District Judge.

7E. Term of office. - The Presiding Officer of a Tribunal shall hold office for a term of five years from the date on which he enters upon his office or until he attains the age of sixty-two years, whichever is earlier.

7F. Resignation. – (1) The Presiding Officer may, by notice in writing under his hand addressed to the Central Government, resign his office;

Provided that the Presiding Officer shall, unless he is permitted by the Central Government to relinquish his office sooner, continue to hold office until the expiry of three months from the date of receipt of such notice or until a person duly appointed as his successor enters upon his office or until the expiry of his term of office, whichever is the earliest.

(2) The Presiding Officer shall not be removed from his office except by an order made by the President on the ground of proved misbehavior or incapacity after an inquiry made by a Judge of the High Court in which such Presiding Officer had been informed of the charges against him and given a reasonable opportunity of being heard in respect of those charges.

(3) The Central Government may, by rules, regulate the procedure for the investigation of misbehavior or incapacity of the Presiding Officer.

7G. Salary and allowances and other terms and conditions of service of Presiding Officer. - The salary and allowances payable to, and the other terms and conditions of service including pension, gratuity and other retirement benefits of, the Presiding Officer shall be such as may be prescribed:

Provided that neither the salary and allowances nor the other terms and conditions of service of the Presiding Officer shall be varied to his disadvantage after his appointment.

7H. Staff of the Tribunal. -

(1) The Central Government shall determine the nature and categories of the officers and other employees required to assist a Tribunal in the discharge of its functions and provide
the Tribunal with such officers and other employees as it may think fit.

(2) The officers and other employees of a Tribunal shall discharge their functions under the general superintendence of the Presiding Officer.

(3) The salaries and all allowances and other conditions of service of the officers and other employees of a Tribunal shall be such as may be prescribed.

7 – I. Appeals to the Tribunal. – (1) Any person aggrieved by a notification issued by the Central Government, or an order passed by the Central Government, or any authority, under the proviso to subsection 3, or sub-section4, of section I, or section3, or sub-section 1 of section 7A, or section 7B except an order rejecting an application for review referred to in sub-section 5 thereof, or section 7C, or section 14B may prefer an appeal to a Tribunal against such order.

(2) Every appeal under sub-section 1 shall be filed in such form and manner, within such time and be accompanied by such fees, as may be prescribed.

7 – J. Procedure of Tribunals. –

(1) A Tribunal shall have power to regulate its own procedure in all matters arising out of the exercise of its powers or of the discharge of its functions including the places at which the Tribunal shall have its sittings.

(2) A Tribunal shall, for the purpose of discharging its functions, have all the powers which are vested in the officers referred to in section 7A and any proceeding before the Tribunal shall be deemed
to be a judicial proceeding within the meaning of sections 193 and 228, and for the purpose of section 196, of the Indian Penal Code (45 of 1860) and the Tribunal shall be deemed to be a civil court for all the purposes of section 195 and Chapter XXVI of the Code of Criminal Procedure, 1973 (2 of 1974).

7K. Right of appellant to take assistance of legal practitioner and of Government, etc., to appoint presenting officers. – (1) A person preferring an appeal to a Tribunal under this Act may either appear in person or take the assistance of a legal practitioner of his choice to
present his case before the Tribunal.

(2) The Central Government or a State Government or any other authority under this Act may authorise one or more legal practitioners or any of its officers to act as presenting officers and every
person so authorised may present the case with respect to any appeal before a Tribunal.

7L. Orders of Tribunal. – (1) A Tribunal may, after giving the parties to the appeal, an opportunity of being heard, pass such orders thereon as it thinks fit, confirming, modifying or annulling the order appealed against or may refer the case back to the authority which passed such order with such directions as the tribunal may think fit, for a fresh adjudication or order, as the case may be, after taking additional evidence, if necessary.

(2) A Tribunal may, at any time within five years from the date of its order, with a view to rectifying any mistake apparent from the record, amend any order passed by it under sub-section 1 and shall
make such amendment in the order if the mistake is brought to its notice by the parties to the appeal:

Provided that an amendment which has the effect of enhancing the amount due from, or otherwise increasing the liability of, the employer shall not be made under this sub-section, unless the Tribunal has given notice to him of its intention to do so and has allowed him a reasonable opportunity of being heard.

(3) A Tribunal shall send a copy of every order passed under this section to the parties to the appeal.

(4) Any order made by a Tribunal finally disposing of an appeal shall not be questioned in any court of law.

7M. Filling up of vacancies. – If, for any reason, a vacancy occurs in the office of the Presiding Officer, the Central Government shall appoint another person in accordance with the provisions of this Act, to fill the vacancy and the proceedings may be continued before a Tribunal from the stage at which the vacancy is filled.

7N. Finality of orders constituting a Tribunal. – No order of the  Central Government appointing any person as the Presiding Officer shall be called in question in any manner, and no act or proceeding before a Tribunal shall be called in question in any manner on the ground merely of any defect in the constitution of such Tribunal.

7–O. Deposit of amount due, on filing appeal. – No appeal by the employer shall be entertained by a Tribunal unless he has deposited with it seventy-five per cent of the amount due from him as determined by an officer referred to in section 7A:

Provided that the Tribunal may, for reasons to be recorded in writing, waive or reduce the amount to be deposited under this section.

7P. Transfer of certain applications to Tribunals. – All applications which are pending before the Central Government under section 19A, shall stand transferred to a Tribunal exercising jurisdiction in respect of establishments in relation to which such applications had been made as if such applications were appeals preferred to the Tribunal.

Source: epfindia.com

KV Schools in India: Fees likely to increase in KV Schools

KV Schools in India: Fees likely to increase in KV Schools:

The KV Sangathan board of governors meeting held on Friday and decided to increase with a principle approval. The meeting presided over by Human Resource Development Minister M.M.Pallam Raju. It was the principal approval to the proposal of hike in fees. The fees may be hike as Rs.1250 per month from the existing fee of Rs.300.

The last time KVS hiked fee in 2009. At present 1090 KV schools in India as on 01.08.2012 with 10,91,931 students.

Current Fee Structure as follows…

Description AMOUNT
ADMISSIN FEE Rs.25
CLASS 1 TO VIII Rs.240 PER MONTH FOR VIDYALAYA VIKAS NIDHI (VVN).
CLASS IX TO X Rs.240 PER MONTH (VVN) +  TUITION FEE Rs.200 PER MONTH
CLASS XI TO XII NON SCIENCE STUDENT Rs.240 (VVN) + TUITION FEE Rs.300 PER MONTH FROM BOYS ONLYSCIENCE STUDENT Rs.300 (VVN) + TUITION FEE Rs.400 PER MONTH FROM BOYS ONLY.
COMPUTER FEE III TO X Rs.50 PER MONTHXI & XII STUDENT OFFERING INFORMATICS PRACTICES OR COMPUTER PRACTICES OR COMPUTER SCIENCE AS AN ELECTIVE SUBJECT Rs.100 PER MONTH.

ADMISSION / RE-ADMISSION FEE :
An Admission Fee of Rs.25 shall be paid at the time of fresh admission to the school.
An admission Fee of Rs.25 is also charged on for transfer from other Kendriya Vidyalaya.
Re-Admission Fee of Rs.100 for names struck off due to any reason.

MODE OF PAYMENT :
Quarterly in advance by the 10th of April, July, October, January, Fees paid up for a quarter shall not be refunded.

Fine :
A fine of Rs.5 per day for VVN and Rs.5 per day tuition fee will be charged up to last working day and after which the name shall be struck off the roll due to non payment of dues and re-admission will be done on payment of Rs.100 along with late payment fine.

Source: Central government news

Now Trending

Holidays to be observed in Central Government Offices during the year 2020

Holidays to be observed in Central Government Offices during the year 2020 CENTRAL GOVERNMENT HOLIDAY LISTS 2020 F.No.12/1/20...

Disclaimer:

All efforts have been made to ensure accuracy of the content on this blog, the same should not be construed as a statement of law or used for any legal purposes. Our blog "Central Government Staff news" accepts no responsibility in relation to the accuracy, completeness, usefulness or otherwise, of the contents. Users are advised to verify/check any information with the relevant department(s) and/or other source(s), and to obtain any appropriate professional advice before acting on the information provided in the blog.

Links to other websites that have been included on this blog are provided for public convenience only.

The blog "Central Government Staff news" is not responsible for the contents or reliability of linked websites and does not necessarily endorse the view expressed within them. We cannot guarantee the availability of such linked pages at all times.

Any suggestions write to us
centralgovernmentnews@gmail.com