SUNNYVALE, Calif. -
Oct. 9, 2013 -
PRLog -- Further to our previous news (http://www.nair-
co.com/IndiaIncreasesESIandPFCeiling-
12-04-2013.aspx)
on this topic, the Finance Ministry is considering the proposal put forth before it by the Labor Ministry to raise the statutory wage ceiling for PF contributions to INR 15,000 per month (from the existing monthly ceiling of INR 6,500).
Also, a decision was recently taken at a meeting of the Employees' State Insurance Corporation (ESIC) to hike the monthly salary ceiling from INR 15,000 to 25,000. ESI contributions are associated to gross salary and many younger people in jobs like BPOs and IT services would possibly fall under the ambit of the new ceiling.
Implications to Employers:* Significant increase in the number of employees covered
* Considering the compensation/
remuneration range of white collar employees in India, the wage ceilings are low. However, the ceilings for PF are ‘basic salary’ ceilings (usually 30%-50% of total salary) and do not cover the entire compensation of an employee. The new proposed regulation will cover many junior to mid level employees who may be currently exempt. There will also be a substantial increase in the employees covered by the new ESI limit.
* Increase in costs for companies
* Employers’
contributions towards employees may increase with the increase of salary ceilings and number of employees covered. For example: Employers’ contribution for PF may go up approximately by 130% per employee. As both contributions require monthly payments and returns, the compliance burden of companies is likely to increase.
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About Nair & Co.Nair & Co., the leader in international business expansion services, provides accounting, HR, legal, tax and compliance services for the set up and management of your international operations. Our model of a single-point-
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