As we have stepped into the next financial year i.e., 2018-2019. It is very important to know the latest updates that are applicable to this financial year.
Updates:
They have replaced the previous year’s 3% Education Cess with a 4% rate.
What is the Conveyance Allowance?
Organizations provide the Transport Allowance, or Transport Allowance, to employees as compensation for commuting between their residence and workplace. Employers typically offer these allowances in addition to the basic salary, and the Income Tax Act may subject them to taxation.
Until the last financial year, the Income Tax Act considered amounts up to INR 1600 per month non-taxable. However, now it is completely taxable income, irrespective of the amount.
What is the Employees Provident Fund?
The EPFO of India offers this saving scheme to Indian and international workers. The scheme allows the accumulation of funds as well as the accrual of interest on the accumulated funds. The funds collected consist of contributions from both employees and their employers.
The Pradhan Mantri Rojgar Protsahan Yojana (PMRPY) Plan Scheme incentivizes employers to create new employment opportunities. Under this scheme, the Government of India covers the 8.33% EPS contribution of the employer for new employees. This scheme benefits both employers, encouraged to expand their workforce, and many workers who can secure jobs in these establishments.
- The Government will fully reimburse employers who contribute 12% of the basic wages of newly added employees (whether employed directly or through a contractor) towards the provident fund for three years after the date of registration, subject to the following conditions:
- Applicable for newly added employees, after the date of registration.
- Salary of the newly added employee’s, shall be less than or up to Rs. 15,000.
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The scheme will update employees already covered under it to contribute 12% instead of 8.33% for the remaining duration of the first three years.
- Contribution from women employees towards their provident fund shall be 8% of their basic wages instead of 12%, for three years.
- However, the employer’s contribution would still be 12% of her basic wages towards EPF contribution and shall be subject to full reimbursement by the Government as proposed in Budget 2018.
However, it’s important to note that not all of the Employer’s share goes into the EPF kitty. The Employer’s contribution, precisely 8.33%, diverts to the Employees’ Pension Scheme, with the calculation based on Rs 15,000. So, for every employee with basic pay equal to Rs 15,000 or more, the diversion is Rs 1,250 each month into EPS. If the basic pay is less than Rs 15000 then 8.33% of that full amount will go into EPS. The balance will be retained in the EPF scheme. Upon retirement, the employee will receive their total share and the remaining balance of the Employer’s share held in their EPF account.
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