The government has approved an interest rate of 8.25 percent on the Employees Provident Fund (EPF) for the financial year 2024-25. This decision will benefit more than seven crore EPFO ​​​​shareholders across the country, in whose accounts this interest rate will be credited in the coming months.

This interest rate was decided by the Employees’ Provident Fund Organization (EPFO) in the 237th meeting of the Central Board of Trustees held on 28 February 2024. The meeting was chaired by Union Labor and Employment Minister Mansukh Mandaviya. In this meeting, it was decided that the interest rate for the financial year 2024-25 will be retained at 8.25 percent, which is equal to the rate given in the last financial year 2023-24.

Labor Ministry gave information

To finalize the interest rate, it was sent to the Finance Ministry for approval, which has now received formal approval. The Labor Ministry has informed EPFO ​​in this regard on Thursday, after which EPFO ​​will start the process of depositing interest in the accounts of the subscribers.

Compared to previous years, the interest rate on EPF was 8.15 percent in the financial year 2022-23, while in 2021-22 it was reduced to 8.1 percent, which was the lowest level in more than four decades. Earlier in 2020-21, the interest rate was 8.5 percent.

Why was this decision taken?

Regarding stability in interest rates, experts believe that this decision has been taken keeping in mind the economic stability and financial balance of EPFO. This will maintain the trust of employees in the provident fund and will ensure security after retirement. The consistency in EPF interest rate makes it clear that both the government and EPFO ​​are committed to providing balanced and sustainable returns. This decision is a relief news for millions of employees, especially at a time when the demand for assured and safe returns on investment is high.

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According to the estimates released by the Labor Ministry, AICPI data has been released for the period from July to October. The data of November and December is yet to come, only after which it will be clear how much DA will increase in the new year. It is believed that the government may announce increase in DA in the budget.

Salaries of government employees will increase in the new year

Central employees get the benefit of 46% DA. This has been implemented from July to December 2023. The next hike in DA will be in January 2024, expected to be announced around Holi. The DA and DR rates of employees-pensioners are revised in January and July based on the half yearly data of AICPI index. A total of 8% DA has been increased in 2023 including January and July and now the next DA will be revised in the year 2024, which will depend on the AICPI index data from July to December 2023.

DA may reach 50 percent in the new year

In fact, on November 30, the Labor Ministry has released the October figures of AICPI index, in which after an increase of 0.9 points, the number has reached 138.4 and the DA score has reached close to 49%. It is believed that DA may increase by 4% or 5% in the new year. However, the figures for November and December are yet to come, after which it will be decided how much DA will increase in 2024?

If the DA score becomes 50% or more after the increase in November and December figures, then after increasing by 4% the DA will become 50%. In such a situation, the salary of the employees will be revised. Under the 7th Pay Commission brought by the Central Government, when DA reaches 50 percent, DA will be added to the basic salary. Then the calculation of DA will start from zero.

Announcement may be made in the budget 

The next rates of DA may be announced at the time of budget or in the month of February-March, because the dates of Lok Sabha elections are expected to be announced between April and May next year, during which the code of conduct will also come into force. After this the central government will not be able to increase DA.

In such a situation, it is believed that Modi government can take a decision on DA during the budget session itself to woo the central employees. If DA is increased by 4% more, it will become 50%, its benefit will be available to more than 48 lakh central employees and 68 lakh pensioners.

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Employees’ Provident Fund Organization (EPFO) has once again extended the deadline for the option of getting more pension under the Employees’ Pension Scheme (EPS). Amidst all this, the question that is troubling people the most is how will the calculation of higher pension be done… The Labor Ministry has now shared its formula with the people.

Clarification of Ministry of Labor

The Labor Ministry on Wednesday made it clear that it will use an additional 1.16 per cent contribution from the employer’s total contribution of 12 per cent to the PF to calculate the higher pension. This will be in line with the Supreme Court’s decision of 4 November 2022. Along with this, the Ministry of Labor has also told that this step to reduce the burden on the subscribers of the Employees Pension Scheme will be retrospective, that is, this decision will not be applicable from the day of arrival but from the back.

Money will go to pension fund from here

The ministry said in its statement that along with the Employees’ Provident Fund and Other Provisions Act, it has been told in the Social Security Code that contribution cannot be taken from the employees for the pension fund. Keeping this in mind, it has been decided that an additional 1.16 per cent will be taken from the 12 per cent contribution of the employers towards the Pension Fund, which is going to the Provident Fund.

There will be no burden on the employees

Let us tell you that in EPS the employee does not make any contribution on his behalf. Out of the total 12 per cent contribution made by the company, only 8.33 per cent goes to EPS. Whatever amount is more than this in the contribution of the company, it goes to EPF. The Ministry of Labor has clarified that the increased contribution to EPS will also go from the company’s share, which means that there will be no impact on take home salary or in hand salary even if you opt for higher pension.

There will be loss

Although it also has its disadvantages. If you choose a higher pension option, then the amount deposited in PF by the company will be less, which will affect your PF fund. Employees get the benefit of compound interest in PF. Now since part of PF will go to EPS, the benefit of compounding will also reduce. Similarly, the lump sum amount that is received from PF on retirement or already leaving the job, this amount will also be affected if the option of higher pension is selected.

Deadline extended till this date

The deadline for opting for higher pension was ending on 03 May. EPFO has increased this and now interested subscribers can opt for higher pension till 26 June 2023. Its deadline has been extended for the second time. First of all, in an order given on 4 November 2022, the Supreme Court had fixed the deadline till 3 March in this regard. EPFO had then extended the deadline till May 3 to opt for higher pension. Now it has been pushed further.

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For the employees who retired before September 2014, the last date of this scheme was earlier March 3, 2023. The Labor Ministry said in a statement on Monday that now, on the demand of the workers/employers union, chairman, the Central Board of Trustees has decided to extend the last date for receiving applications from such workers to May 3, 2023. Let us also tell you how you can apply online to get higher pension.

This is how you can apply by visiting the EPFO ​​portal

1. Go to the Member e-Services Portal.
2. Click on the higher pension present on the pension, use the joint option.
3. Select ‘Application Form for Joint Option’.
4. Add details including UAN, name, DOB, Aadhaar number, mobile number linked to Aadhaar and captcha.
5. Enter the OTP received on your Aadhaar-registered mobile number.
6. submit application.
7. An acknowledgment number will be generated on submission of the application form.

How to check your service history and joining date on EPFO ​​portal?

1. Visit the Member e-Service Portal, which can be accessed at https://unifiedportal-mem.epfindia.gov.in/memberinterface/
2. Enter Universal Account Number (UAN), Password and Captcha to login.
3. Now choose Service History from the View menu.
4. The ‘Service History’ option displays the list of organizations the person has worked for. Check the date you joined the DOJ or any organization.
5. If the portal displays DOJ before 1st September 2014, then the person is eligible to apply for High Pension. If the person changes jobs after this date, they will still be able to opt for higher pension as long as their pension account is active with EPFO.

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Actually, the Ministry of Labor has changed the formula of calculation regarding dearness allowance. An important information related to DA Hike has come out for the employees working for the Central Government. Actually the thing is that the government has created a new calculation formula for the dearness allowance to increase for the next year. Apart from this, some other important changes can be seen by the government.

Labor Ministry has changed the tax formula

In the new year, the dearness allowance will be calculated with the new formula under the 7th pay commission. Apart from this, the central employees will also have to pay tax on the dearness allowance received. Actually, the Ministry of Labor has changed the formula of calculation regarding dearness allowance.

Changes in the base year of DA Hike

The Labor Ministry had changed the base year of dearness allowance in 2016. A new series of Wage Rate Index has been released. According to the Labor Ministry, the new series with base year 2016=100 in the 7th Pay Commission will replace the old series with base year 1963-65.

This is how DA Hike will be calculated

Under the 7th Pay Commission, the amount of Dearness Allowance (DA Hike) is calculated by multiplying the current rate of Dearness Allowance with the Basic Pay. The current rate of percentage is 12%, if your basic pay is Rs.18000 DA (18000 x12)/100. Dearness allowance percentage = Average of CPI of last 12 months-115.76. Now whatever comes will be divided by 115.76. The number that comes will be multiplied by 100.

Tax will have to be paid on dearness allowance

Dearness Allowance is fully taxable under the 7th Pay Commission. Under the income tax rules in India, separate information about dearness allowance has to be given in the income tax return. You will have to pay tax on the amount you get in the name of Dearness Allowance (DA).

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Because, in the new year, the calculation of Dearness allowance will be done with the new formula. Apart from this, the central employees will also have to pay tax on the DA Hike received. Actually, the Ministry of Labor and Employment has changed the calculation formula regarding Dearness allowance.

Changes in the base year of DA Hike

The Labor Ministry had changed the base year of DA Hike in 2016. A new series of Wage Rate Index (WRI-Wage Rate Index) has been released. According to the labor ministry, the new series with base year 2016=100 will replace the old series with base year 1963-65.

Under the 7th Pay Commission, the amount of dearness allowance (DA Hike) is calculated by multiplying the current rate of dearness allowance with the basic pay. The current rate of percentage is 12%, if your basic pay is Rs.18000 DA (18000 x12)/100. Dearness allowance percentage = Average of CPI of last 12 months-115.76. Now whatever comes will be divided by 115.76. The number that comes will be multiplied by 100.

Will you have to pay tax on DA Hike?

Dearness allowance is fully taxable. Under the income tax rules in India, separate information about dearness allowance has to be given in the income tax return. You will have to pay tax on the amount you get in the name of Dearness Allowance (DA).

How much benefit do you get?

For salary calculation under the 7th Pay Commission, DA is calculated on the basic salary of the employee. Suppose the minimum basic salary of a central employee is Rs 26,000, then his DA calculation will be 38% of 26,000, which means the total will be Rs 9,880. On the next DA hike, there can be an increase of Rs 910 in the salary every month. If DA increases at the rate of 4 percent and it reaches 42%. This is an example. Similarly, the salary of other central employees will also be different in the 7th CPC Pay Matrix. It can be calculated by looking at your basic salary.

What is Dearness Allowance (DA)?

Dearness allowance is given to the government employees for their living and food. Even after the increase in inflation, there is no difference in the standard of living of the employee, so it was started. This money is given to government employees, public sector employees and pensioners. Dearness Allowance (DA) was first introduced in India in 1972 from Mumbai. After this, the central government started giving dearness allowance to all the government employees.

What are the types of Dearness allowance?

Dearness Allowance (DA Hike) is given in two ways. Industrial dearness allowance and variable dearness allowance. Industrial Dearness Allowance changes every 3 months. This is for the employees working in the Public Sector (PSU) of the Central Government. It is calculated on the basis of inflation rate of Consumer Price Index (CPI). At the same time, the revision of variable dearness allowance is done every 6 months. It is also calculated on the basis of inflation rate of Consumer Price Index (CPI).

How much can DA increase?

DA is expected to increase by 4% in January 2023. With this increase, DA will reach 42 percent. However, it is not yet clear when that will happen. But, it can be announced in March 2023 to be given around Holi. Due to increase in DA, about 50 lakh central employees and 65 lakh pensioners will get its benefit.

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7th Pay Commission DA Hike: If you yourself or someone in your family is a central government employee, then great news is waiting for them in the new year. Yes, on the basis of the figures released by the Labor Ministry, the way has been cleared for the increase in Dearness Allowance in January. Before the new year, the way for DA Hike of central employees has been cleared.

AICPI index figures for August have been released by the Labor Ministry. 1.2 point increase in AICPI index Compared to September 2022, there has been an increase of 1.2 points in the AICPI index figure for October. It has increased to a level of 132.5 in October, while it was 131.3 percent in September. Earlier in August this figure was 130.2 points.

There has been a steady increase in this since July. Due to its continuous increase, the way for DA hike (Dearness allowance) of 65 lakh employees to be held in January on the new year is almost clear. On the basis of this, there is a definite increase of 4 percent in the DA of the employees. By how much will the DA increase? After increasing the DA by 4 percent in July, the dearness allowance of the central employees had increased to 38 percent.

Now after increasing it again by 4 percent, it will increase to 42 percent. After this increase, there will be a significant increase in the salary of the employees. Let us tell you that under the Seventh Pay Commission (7th Pay Commission), the DA (DA Hike) of central employees is increased twice a year. DA of January 2022 and July 2022 has been announced. Now the DA of January 2023 will be announced.

Who releases the data?

Let us tell you that it is decided on the basis of AICPI index that how much will be the increase in dearness allowance? On the last working day of every month, the figures of All India Consumer Price Index (AICPI) are released by the Labor Ministry. This index has been prepared for 88 centers and for the entire country.

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The first one is the increase in Dearness Allowance again and the second one is the revision in the Fitment Factor. If this happens, then in the new year 2023, there will be a huge jump in the salary of central employees. According to an estimate, the salary of central employees will double.

Actually, the dearness allowance of central employees is reviewed every 6 months. Dearness allowance is hiked twice a year on the basis of AICPI figures. One hike takes place in January and the other in July. Like every year, in the year 2023 also there will be an increase in the dearness allowance of central employees.

Dearness Allowance (DA) for January 2023 is usually announced before Holi. Looking at the inflation figures so far, it seems that there may be an increase of 4 percent in the DA of central employees next year as well. If this happens, the cost of central employees will increase from the current 38 percent to 42 percent.

The Labor Ministry has released the figures of All India Consumer Price Index- Industrial workers (AICPI). In September this figure stood at 131.2. The overall AICPI index rose by 2.1 per cent till September 2022 as compared to June. Compared to August last month, there was a jump of 1.1 percent. However, the AICPI index numbers for October, November and December are yet to come.

How much will the salary increase , calculation on the minimum basic salary of Rs 18,000

• Employee’s basic salary Rs 18,000
• New Dearness Allowance (42%) Rs.7560/month
• Dearness Allowance till now (38%) Rs.6840/month
• How much dearness allowance increased 7560-6840 = Rs 720/month
• Increase in annual salary 720X12= Rs 8640

Calculation on maximum basic salary of Rs.56900

• Employee’s basic salary Rs 56900
• New Dearness Allowance (42%) Rs 23898/month
• Dearness Allowance till now (38%) Rs 21622/month
• How much dearness allowance increased 23898-21622 = Rs 2276/month
• Increase in annual salary 2276X12 = Rs 27312

More than one crore employees and pensioners will be benefited

Significantly, the increase in dearness allowance by the central government will benefit about 47 lakh employees and 68 lakh pensioners of the country. The government had increased DA by 3 per cent at the beginning of the year, after which the dearness allowance had gone up to 34 per cent. Now with the increase in DA by 4 per cent, the dearness allowance will increase to 38 per cent.

Dearness allowance is revised twice a year.

Actually the dearness allowance of central government employees is revised twice a year. The first is given from January to June, while the second comes from July to December. Let us tell you that the AICPI index plays an important role in deciding the dearness allowance of central employees.

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This will completely change the take home salary, PF and gratuity. In this code, the salary coming in the hands of the private employer can be reduced. However, the government is making better arrangements regarding old age. According to experts, the monthly in-hand salary will undoubtedly decrease, but due to the increase in basic, more money will be deposited in the retirement fund. This will create a huge fund for retirement. Apart from this, there will also be benefit in Gratuity.

Understand the calculation here

If the age of an employee is 30 years and his monthly salary is 50 thousand rupees and basic salary will be 15 thousand rupees. So if the average appraisal is taken in 5% salary every year till the age of retirement i.e. 60, then according to the current interest rate of 8.1%, the total amount in the PF account from regular investment will be Rs 65,36,758.

Now the basic salary of an employee will be 25 thousand rupees per month. Then the amount of PF on retirement will be Rs 1,08,94,586. Here the annual increment of 5 percent has been taken, due to which the PF fund will increase further.

What is Cost to Company 

New Wage code benefits: CTC is the expenditure incurred by a company on its employee. This is the complete salary package of the employee. CTC includes Monthly Basic Pay, Allowances, Reimbursement. At the same time, products like gratuity, annual variable pay, annual bonus are included on an annual basis. The amount of CTC is never equal to the employee’s take home salary. CTC has many components so it is different. CTC = Gross Salary + PF + Gratuity

What is the basic salary?

Basic salary is the base income of an employee. It is fixed based on the level of all the employees. It varies according to the rank of the employee and the industry in which he is working.

What is Gross Salary?

The salary which is made by adding basic pay and allowances without deducting tax is called gross salary. This includes bonus, overtime pay, holiday pay and other itemized allowances.
Gross Salary = Basic Salary + HRA + Other Allowances

What is net salary?

Net salary is also called take home salary. The salary that is made after deducting tax is called net income.
Net Salary = Basic Salary + HRA + Allowances – Income Tax – EPF – Professional Tax

What allowances will be included?

The company gives allowances to the employee in lieu of the job. This may vary from company to company.

> HRA : House Rent Allowance is given to the employee in lieu of the house on rent.

> LTA : LTA is the cost of domestic travel to the employee. This does not include food, hotel fare.

> Conveyance Allowance: Conveyance allowance is given to the employee in lieu of the expenses incurred in going home from office.

> Dearness Allowance: DA is a living allowance. It is given in lieu of inflation. Its eligible are government employees and pensioners.

> Other allowances include special allowance, medical allowance and incentive or incentive.

How much will be the reimbursement

According to experts, in many companies, there is a provision to reimburse the employee for treatment, phone expenses, newspaper bills. This amount is available separately from the salary. But only after paying the bill. Under the Income Tax Act, every reimbursement is tax exempt up to a limit.

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There is great news for more than 73 lakh pensioners of the country. More than 73 lakh pensioners of Employees’ Provident Fund Organization (EPFO) will now be able to get pension together. For this, the government is preparing to set up a central pension distribution system. The EPFO ​​meeting is going to be held on July 29 and 30 in this regard. According to the information, this proposal can get green signal in this meeting.

In fact, at present, 138 regional offices of EPFO ​​in the country send pension to the accounts of pensioners of their area. Due to which pensioners get the pension amount in their account at different days and times. If this system continues to be approved, then pension amount can be sent in one go to the accounts of more than 73 lakh pensioners across the country.

Let us tell you that in the 229th meeting of CBT held on 20th November, 2021, the trustees had approved the proposal for development of centralized IT based system by C-DAC. The Labor Ministry had said after the meeting that thereafter the details of regional offices would be transferred to the central database in a phased manner. This will facilitate the operation and delivery of services.

With the implementation of the centralized system, EPFO ​​subscribers will get many benefits. With this there will be no duplication, as well as multiple PF accounts of a member will become a single account after merger. If someone changes jobs then the hassle of transferring PF account will also end.

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Now you will get 38 percent dearness allowance

In June, the Labor Ministry released the data of AICPI i.e. All India Consumer Price Index Industrial Workers, only then it became clear that the dearness allowance is set to increase by at least 4 percent. Now the government has also announced this. With this, dearness allowance has increased from 34 percent to 38 percent.

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The demand has once again intensified to remove the ceiling on the Employee Pension Scheme (EPS). The matter is still pending in the Supreme Court. But, the union says that the Labor Ministry should take a decision in this. Settlement can also be done out of court. In the existing structure, there is a ceiling of Rs 15000 for pension under the EPS scheme. Due to this ceiling, pensioners are getting very less pension for many years. According to sources in the Ministry of Labor, the Ministry of Labor has received a note in this regard. In this, a warning of movement has also been given.

What is the rule now?

When an employee becomes a member of Employee Provident Fund (EPF), he also becomes a member of EPS. Contribution of 12% of the basic salary of the employee goes to PF. Apart from the employee, the same part also goes to the employer’s account. But, a part of the contribution of the employer is deposited in the EPS ie Employee Pension Scheme. The contribution of basic salary is 8.33% in EPS. However, the maximum limit of pensionable salary is Rs 15,000. In such a situation, only a maximum of Rs 1250 can be deposited in the pension fund every month.

Understand by example

According to the existing rules, if the basic salary of an employee is Rs 15,000 or more, then Rs 1250 will be deposited in the pension fund. If the basic salary is 10 thousand rupees, then the contribution will be only 833 rupees. The calculation of pension on the retirement of the employee is also considered as the maximum salary of 15 thousand rupees only. In such a situation, after retirement, employees can get only Rs 7,500 as pension under EPS rule.

What if the limit of 15,000 is removed?

According to EPFO’s Retired Enforcement Office Bhanu Pratap Sharma, if the limit of 15 thousand rupees is abolished from the pension, then more than Rs 7,500 can be got pension. But, for this, the contribution of the employer to the EPS will also have to be increased.

How is pension calculated?

Formula for EPS Calculation = Monthly Pension = (Pensionable Salary x Number of Years Contribution in EPS Account)/70.

If someone’s monthly salary (average of last 5 years salary) is Rs 15,000 and the duration of the job is 30 years, then he will get a pension of only Rs 6,828 per month.

How much pension will you get if the limit is removed?

• If the limit of 15 thousand is removed and your basic salary is 20 thousand, then the pension you will get according to the formula will be this. (20,000 X 30)/70 = Rs 8,571
• Existing Conditions for Pension (EPS)
• Must be an EPF member.
• Must be in job for at least 10 regular years.
• Pension is available at the age of 58 years. Option to take pension after 50 years and even before the age of 58.
• On taking the first pension, the reduced pension will be available. For this, Form 10D has to be filled.
• On the death of the employee, the family gets pension.
• If the service history is less than 10 years, then they will get the option to withdraw the pension amount at the age of 58 years.

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According to the news, the Labor Ministry can take a decision in this regard in the meeting to be held in February. In this meeting, there are speculations that a decision on the new Wage Code will also be taken. It is being told that the main agenda of this important meeting is to increase the minimum pension under the Employees’ Pension Scheme.

There has been a demand for a long time, pensioners have been demanding
for a long time to increase the minimum pension. There have been several meetings and discussions of the Ministry of Labor regarding this. Apart from this, the Standing Committee of Parliament has also given suggestions in this regard. It is believed that in the February meeting, it can be finalized.

Know how much will be the pension?
According to media reports, the central trade unions have demanded an increase in the existing minimum pension from Rs 1,000 to Rs 9,000, while the Central Board of Trustees or CBT may increase it to Rs 6,000. The controversial issue of investing EPFO ​​money in private corporate bonds will also be a topic of discussion in the meeting. Also, a decision can also be taken on the issue of what should be the interest rate of the pension fund for 2021 22.

What is Employee Pension Scheme?
The Employees’ Pension Scheme (EPS) was started in the year 1995. Under this, people working in the organized sector at the age of 58 years get pension. To take advantage of the scheme, it is necessary for the employee to have at least 10 years of service. The employee contributes 12 percent of his salary to the EPF. The same amount is also given by the company. A part of the company’s contribution is deposited in EPS.

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