The Central Board of Trustees (CBT) of Employees’ Provident Fund Organisation (EPFO) is likely to consider a proposal to reduce the share of mandatory contribution by employees and employers to 10 per cent each from 12 per cent of the income as of now in its meeting on Saturday. Also, the Board, in its 218th meeting, is likely to discuss raising the investment limit in Exchange Traded Funds (ETFs) to 15 per cent from 10 per cent.
The proposal to reduce the contributions by employers and employees to 10 per cent of basic wages, including basic pay and dearness allowance follows demands from various quarters that there is a need to hike the present rate of EPF contribution and to bring it at par with other social security schemes, such as the National Pension System (NPS).
“Lowering the rate of contribution may facilitate widening the coverage of all employees, as a lower social security contribution rate reduces the incentive for evasion. Even employees may wilfully become a party to evasion if the social security contribution is very high,” the agenda said.
An official said that the option of hiking the contribution will continue to stay with employee and also, voluntary provident fund contribution will be allowed under the present law. Trade unions have decided to oppose the proposal saying this will dilute these social security schemes.