Do you also want more in-hand salary? So this change is going to happen in PF account:

News India Live, Digital Desk: The biggest suspense in the life of a working person happens on the first day of every month. Many times, when the message “Salary Credited” comes on the mobile, the face hangs. We think, “Man, the CTC was worth lakhs, but why did it get so little in my hands?”

The biggest reason for this is EPF (Employee Provident Fund) That means PF deduction. Nowadays there is a lot of discussion about the new Wage Code and PF rules. The question is, can your in-hand salary increase by reducing the PF share? Or is there a catch in it?

Come, let us understand in simple and native language what effect this is going to have on your pocket.

1. What is the basic rule of PF?

First let us understand what is happening now. According to the rules, your Basic Salary + Dearness Allowance (DA) Of 12% share Deposited in your PF account. Your company (employer) also deposits the same amount.
This is the portion that is deducted from your total salary every month and you get ‘in-hand’ salary.

2. Inverse relationship between ‘in-hand salary’ and ‘PF’

This is simple math, think of it like a scale:

• If PF is deducted more then the salary (take home) in hand will be reduced.
• If PF is reduced then the salary in hand will increase.

Now the discussion is that if under the rules ‘Minimum Capping’ Or if PF is deducted as per the wage ceiling (Rs 15,000), then employees can have more money in their hands to spend.

3. What does the new rule or wage code say? (The Twist)

The new Wage Code (Code on Wages) of the government which is under discussion, has a slightly different foundation. It is provided that your Basic salary should be at least 50% of the total CTC.
Currently, most of the companies keep the ‘Basic Salary’ low and ‘Allowances’ high to save tax and deduct less PF.

What will happen if this rule is strictly implemented?

• Your basic salary will increase.
• If basic increases, then it will be 12% i.e. PF money will also be deducted more,
• outcome: In-hand salary will decrease,
  But don’t worry, it also has a big advantage.

4. Today’s pain, tomorrow’s relief (Pros and Cons)

If PF is deducted more and in-hand salary is less, you may feel bad now, but it is a ‘jackpot’ for your future.

• Retirement Fund: The more money deposited in PF, the bigger fund and pension you will get in old age.
• Tax Saving: Money going into PF also helps in saving tax.
• More Cash: On the other hand, if you reduce PF, you will be happy now (more money in hand), but at the time of retirement you may find the piggy bank empty.

What should you do?

If your company gives you the option to choose PF contribution (especially for high salary people), then take the decision as per your need.

• If you are facing difficulty in running your household and need cash, then you can keep the PF portion within the limit.
• But if you want saving, let the PF grow. This is forced saving which comes in handy later.