You might not be aware of the fact but it is true that the Employee Provident Fund Organization used to charge an administrative fee to the employers. Until now, these administrative charges were equal to 0.65% of the total salaries paid by the employer in a financial year. This was certainly a huge charge that employer had to deal with and at the same time, it also discouraged many employers from registering under EPFO.
As per a new notification, the charges have been reduced by 15 bps and hence the new charges are 0.50%. This move will now only benefit the employers but it will also benefit the employee. Now, you must be wondering that how would this benefit the employee. Let us look at the things from a different perspective. check pf balance here. Until now, many of the employers didn’t complete the formal registration and hence they didn’t fall under EPFO. This way, they were able to save administrative charges and at the same time, the employee was deprived of the benefits of EPF. But the reduced charges will encourage the employer to register with EPFO. If the employer registers with EPFO then the employee will have an EPF Account which will benefit the employee in long term. This will also make the business more sustainable as the expenses of the business would reduce. For a service based company, the major expense is the salaries of the employee so the reduction is this expense can again have a positive impact on the industry as well as the employee. These changes have been in effect since 1 June 2018 and as per one of the sources, the main reason for this cut is the rise in the subscription base of the employers. This is certainly a positive move by the EPFO.
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