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All of us make different contributions as working professionals for society and our own betterment. Be it contributing to the growth of the organization by working hard to meet our targets or by making deductions from our salaries to pay taxes or deposit funds. Talking about the contributions we make for our own good, there are several plans, policies and governance regimes that are introduced as benefits schemes in favor of the working class. Two such chief and familiar government policies include EPF (Employees’ Provident Fund) and ESI (Employees’ State Insurance).
The former, being a post-retirement and income benefits plan and the latter, a health insurance scheme. Now, there’s no doubt about the fact that these plans are laid out to secure the employee’s interests, but there were times when change was required. Now that steps have been taken and advancements made, some professionals still face problems due to lack of information about issues like how to withdraw pf online among others. Let’s see what were the prevalent problems and how they got resolved:
Problem With ESI Contribution
Earlier, the rate of contribution towards the ESI fund was quite high. A total of 6.5% of the registered employee’s Gross Salary out of which, the employee’s share was 1.75% and the remaining 4.75% was the employer’s part. This made the low wage workers a little reluctant to pay such a huge amount. But, since the contribution is compulsory, it couldn’t be escaped. However, the concern was raised to the concerned authorities.
Resolution:
In July 2017, the Government of India decided to reduce the rate of ESI contribution from 6.5% to 4% in which the employer’s share was reduced to 3.25%, making the employee’s part only 0.75%. This was a huge relief for the eligible working professionals.
Problem with PF Withdrawal
Back in the day, employees who had INR 15,000 or less (eligible for EPF) had to spend time and energy standing in queues outside offices and waiting for the required bundle of documents to get signed so that they could withdraw the PF amount they had saved.
Resolution:
With the advent of technology, the option of online PF withdrawal came into existence, making the lives of employees much easier. Now, not only withdrawing the saved money, but everything from checking the remaining balance to getting the latest updates can be done through the official government EPF website, i.e., unifiedportal-mem.epfindia.gov.in
Problem With EPF Rate Calculation
When the EPF policy was introduced and the employers started making deductions from the monthly salary of the employees, it gave birth to a lot of hassle. The reason being that the workforce did not know either about the basis or the formula for the rate of contribution.
Resolution:
There is now a formula that needs to be followed to calculate the amount from the employees’ salary that goes into their PF accounts. From the employer’s side as well as from the employee’s end, 12% of the employee’s basic salary is contributed in favor of EPF. However, only 3.67% of the employer’s share goes into the account and remaining 8.33% is diverted to the Employee’s Pension Scheme (EPS)
Problem With Taxation Policies
Another confusion that the people faced was the amount of tax implemented on the EPF and ESI schemes. Though everyone was aware of the procedure and the calculation formula, this particular information was still remaining to be comprehended by everyone.
Resolution:
Now that we know how to withdraw PF online, it is also imperative to understand the taxation policies that are implemented on these government plans. The EPF is exempt from tax until it gets withdrawn after 5 years. If the 5-year term breaks and the amount is withdrawn before it, the EPF amount will be considered as taxable income. On the other hand, ESI contribution is completely exempt from taxes.
