- LIVE: Republic Day 2022 Parade: Timing changed - know when, where and how to watch TV telecast, online streaming - Check latest
- Republic Day 2022: Check 73rd R-Day parade timings, when and where to watch LIVE and other details
- Top recognition of India's tech talent: Padma Bhushan for Satya Nadella and Sundar Pichai
- Republic Day: Top 5 ‘Made In India’ stocks that could give bumper returns on strong fundamentals
- Unlocking financial freedom this Republic Day: 5 Things to know before embarking on financial journey
PF Calculator: Your EPF balance will grow by a whopping 66 pct? Check this EPFO calculation
PF Calculator: Media is buzzing with New Wage Code getting implemented from the new financial year. This buzz is from the cue given by the Finance Minister Nirmala Sitharaman who made an announcement in this regard in the Budget 2021.
PF Calculator: Media is buzzing with New Wage Code getting implemented from the new financial year. This buzz is from the cue given by the Finance Minister Nirmala Sitharaman who made an announcement in this regard in the Budget 2021. However, there is less than a fortnight left for commencement of the new financial year and the central government is yet to make any announcement in this regard. However, whenever the New Wage Code gets implemented, it would be a huge relief for the private sector employees. As per the tax and investment experts, this is because the New Wage Code bars allowance to be more than 50 per cent of an employee's net salary. In other words, it has a provision that says one's basic salary would be at least 50 per cent of the net CTC. It will be a huge relief in terms of Employees Provident Fund (EPF) balance accumulation as EPFO rule will still press for 12 per cent monthly PF contribution of the basic salary by both employer and the employee.
As per the EPFO rules, entire PF withdrawal is tax exempted and hence this rise in EPF balance due to the implementation of the new wage act is going to provide huge relief to EPF account holders.
How? This would become possible as the monthly EPF contribution of an employee will go up, leading to higher EPF balance at the time of retirement.
WATCH | Zee Business Live TV streaming below:
Speaking on the New Wage Act 2021, SEBI registered tax and investment expert Jitendra Solanki said, "Once the New Wage Act 2021 is implemented in India, for the private sector employees who are also EPF account holders, it will be a huge relief in terms of retirement fund accumulation."
Solanki went on to add that in the private sector, it has been found that a recruiter doesn't pay more than 30 per cent of employees net CTC as their basic salary. So, after the implementation of the New Wage Act 2021, their EPF balance will leapfrog.
On how one's EPF balance will grow once the New Wage Code Bill is implemented, Kartik Jhaveri, Director — Wealth Management at Transcend Consultants said, "Once the New Wage Code gets implemented, basic salary of an EPF account holder will become at least 50 per cent of the net CTC, which is currently not more than 30 per cent. In that case, the EPFO rule for EPF contribution for both recruiter and employee will remain 12 per cent. So, the EPF balance at the time of retirement will definitely grow as more investment leads to more retirement corpus."
PF calculation in the wake of New Wage Act
Let's assume an EPF account holder is 35 year old and monthly salary is Rs 60,000. In that case, if the yearly increment is assumed at tepid 10 per cent, keeping current 8.5 per cent PF interest rate for the coming period, then due to the new wage code implementation, one's net PF balance at the time of retirement will be Rs 1,16,23,849.
Comparing this PF balance with the current EPF contribution, which is not more than 30 per cent in majority of the EPF account holders, the EPF balance post-retirement of the same employee in the current circumstances will be Rs 69,74,309.
So, an EPF account holder's EPF balance will shoot up by 66.67 per cent if the New Wage Code 2021 gets implemented.
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.