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 Perfect Employee Provident Fund by Connect 2 Payroll Solution the ESI PF Consultant in Ahmedabad in India.

Section 80C allows for the deduction of employee contributions. Section 80C does not allow for the deduction of employer contributions. Importantly, contributions made by the employer to the employee's provident fund account are often tax-free in the employee's possession and have no upper limit in rupees, so long as they don't exceed 12% of the base pay. However, the Finance Act of 2024 has ruined the party and changed the rule to place an absolute cap of INR 7.50 lakh on the total amount of employer contributions to the National Pension Scheme, any authorized superannuation fund, and recognized provident funds (including employers provident funds) made collectively during a fiscal year. Even the interest income on the additional contribution is taxed if the employer's contribution to a recognized provident fund (including employers provident fund), National Pension Scheme, or any other authorized superannuation fund exceeds INR 7.50 lakh.

Within 15 days at the end of each month, the employer must pay the employee's contribution, which is withheld from the employee's pay, as well as the employer's payment, which is due on his own behalf. Employers will be responsible for paying damages if they fail to make their contributions to the fund. Following the realization of the dues, the employer will be assessed punitive interest (to compensate the interest owed to his employees) and penal damages (a type of punishment), and the PF members will get full interest for each due month as if the employer had never failed. EPF contributions take precedence over other debts in the event that the employer files for bankruptcy.

Perfect Employee Provident Fund by Connect 2 Payroll Solution the ESI PF Consultant in Ahmedabad in India. If the employer fails to deposit the required amount, EPFO has the authority to seize the bank account, collect the employer's debt, and seize and sell real estate. The employer might also be confirmed by EPFO.

According to the New Wage Code, which will take effect on April 1, 2024, an effort appears to have been made to standardize and simplify the definition of the minimum wage required to qualify for a number of social security-related benefits, such as leave encashment, gratuities, and provident fund contributions. Other benefits will be limited to 50% of total compensation under the new definition of basic pay, which means that take-home pay will go down but retirement perks like greater gratuities and PF contributions would go up.

Let's examine the employee provident fund's interest rate history over time. 8.5% interest has been declared for the previous year (FY 2023–24), and member accounts will shortly be rewarded with the same amount. The rate history for the remaining years is shown in the image below.