PF Balance Check – New wage code invoice: Narendra Modi’s government is considering implementing the New Wage Act 2021 from April 1, 2021. Finance Minister Nirmala Sitharaman has already made an announcement in her Union budget for 2021. According to the provisions of the New Wage Act 2021, the base salary of an employee must not be less than 50 percent of the net monthly salary. If the new pay code rolls out by April this year, the Employees’ Provident Fund Organization (EPFO), which manages the EPF (Employees Provident Fund) account of the private sector worker, has some good news to report. After the implementation of the new wage law, an EPF account holder’s EPF balance would increase dramatically at the time of retirement.

As per EPFO ​​norms, the entire PF payout is tax free and therefore this increase in EPF balance due to the implementation of this new wage law in India will bring tremendous relief to EPF account holders. How? Because their monthly EPF contribution will increase, resulting in a higher PF deduction at the time of retirement.

Regarding the New Wage Act 2021, SEBI-registered tax and investment expert Jitendra Solanki said: “Once the New Wage Act 2021 is implemented in India, public sector workers will no longer be severely affected as they already have a base salary of around 45 -50 per have. ” For the private sector workers who are EPF account holders, this will be a tremendous relief in terms of pension fund accumulation. “Solanki said that in the private sector it has been found that a recruiter pays no more than 30 percent of their net CTC as a base salary. So after the New Wage Act 2021 is implemented, their EPF balance will jump many times over.

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PF calculation according to the New Wage Act

Let’s say an EPF account holder is 35 years old and their monthly salary is Rs 60,000. In this case, assuming the monthly increment at a lukewarm 10 percent and maintaining the current PF interest rate of 8.5 percent for the coming period , the net PF balance at retirement due to the new implementation of the wage code is Rs 1,16,23,849.

Source: Good Return PF Calculator

Comparing this PF balance with the current EPF contribution, which is no more than 30 percent for the majority of EPF account holders, the PF balance after the retirement of the same employee is Rs 69,74,309 under the current circumstances.

Source: Good Return PF Calculator

The PF account balance of an EPF account holder will thus increase by 66.67 percent when the new wage code 2021 is introduced.