Budget Speech - PART A
Employees' Provident Fund & Gratuity
- The Central Board of Trustees of the Employees' Provident Fund (EPF) has made specific proposals to make the EPF schemes financially more attractive. Government has also looked at the matter from the point of view of augmenting savings. I am happy to announce the following decisions:
- The rate of contribution in all industries and establishments will be increased from 8.33% to 10% for both employers and employees with effect from March 1, 1997.
- In the scheduled industries where the rate of contribution is now 10%, the Act will be amended to make the rate 12% for both employers and employees.
- The requirement of keeping 20% of incremental PF amounts in the Special Deposit Scheme (SDS) will be withdrawn with effect from April 1, 1997 and the Board of Trustees will be free to invest this portion of the funds in any of the other three kinds of permitted securities.
- In 1995, the Central government enhanced the ceiling on the amount of gratuity payable from Rs.1 lakh to Rs.2.5 lakh for Central government employees. I am now pleased to announce that the benefit will be extended to all employees covered under the Payment of Gratuity Act, 1972, which will be amended for this purpose.
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