Labour Ministry seeks Cabinet approval for EPF amendment bill

NEW DELHI: The Labour Ministry has sought Cabinet approval to the EPF Amendment Bill which seeks to provide an option to EPFO subscribers of choosing between EPF and New Pension System.

"The Law Ministry has already approved the amendment bill to change Employees' Provident Fund & Miscellaneous Provisions Act 1952. The Labour Ministry has circulated the Cabinet proposal," a source privy to the development said.

"The ministry will push the bill for passage in the forthcoming Budget Session of Parliament beginning later this month," the source said.

Finance Minister Arun Jaitley has announced in his Budget speech last year that the Employees' Provident Fund Organisation (EPFO) subscribers will be given an option to choose between the schemes run by the body and New Pension System ( NPS) run by Pension Fund Regulatory Authority.

Earlier the NPS was introduced for government employees joining service on or after January 1, 2004. Besides, people can subscribe the scheme on voluntary basis.

The bill also aims to amend the definition of wages, which include all remuneration paid or payable to an employee excluding house rent allowance; any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment and any gratuity payable on discharge.

The definition change would increase PF contribution by workers and employers, but result in higher savings for employees.

As a normal practice, some employers split wages of workers into numerous allowances to reduce PF liability and the bill seeks to address that issue for workers' benefit.