Employees in the organised sector may see some relief in the new year as a new bill set to be tabled in Parliament aims to moderately increase their net take-home salary.??
The development comes at a time when moderate salaries in varied Indian sectors have come under the scanner as inflation and rising expenses have crippled the working class even as there is no respite for tens of thousands of job seekers in Indian metropolitan cities.?
The employees in the organised sector, whose taxes are deducted at source, have seen a lower increment as compared to the inflation that has unfolded in the country over the past few years. As it is, the sentiment is low among the employees and they are looking for some relief soon.?
That¡¯s where the Social Security Code bill 2019, which is all set to be tabled in Parliament later this week, comes into play. It will allow the employees to reduce their EPFO contribution, which is also deducted at source along with taxes.?
Currently, the employees pay 12% as a contribution towards employees provident fund (EPF) while the employer is also required to bear the equal sum. This bill may allow employees to contribute less than 12 per cent of their monthly salary towards EPFO whereas the employer¡¯s contribution will remain constant at 12 per cent.?
However, according to reports, this formula may be difficult to apply in all sectors but the government will aim to introduce it in full vigour in major organised sectors, as well as the MSMEs. According to sources quoted in Mint newspaper, the employee share may fall between 9 to 12 per cent whereas the employer¡¯s share will remain at 12 per cent.?
Though it will have no direct impact on their income, it may slightly increase the employee¡¯s net take-home salary by about 3 per cent.?There is a flip side too. While it may help to increase the employee¡¯s net take-home salary every month, it will reduce the retirement saving corpus of the employees.?
In other words, it will not be any special grant or incentive to employees in the organised sector but merely a fraction of their actual earnings will be added to their net take-home salaries every month instead of their provident fund.?
It may also, on the other hand, be helpful to several people as living expenses have risen manifold in metropolitan cities with the prices of basic everyday utilities such as vegetables, edible oil and spices climbing at a rapid pace. Fruits and healthy food are costlier still and people have to further squeeze their wallets if they wish to opt for organic vegetables.??