Budget Expectations: Many steps may be announced to provide relief to EPFO members. Under this, employees associated with the Employees’ Provident Fund Organization (EPFO) can be given the option to convert their PF funds into pension.
The central government is considering options to provide comprehensive benefits to the elderly under social security after retirement. Under this, employees associated with the Employees’ Provident Fund Organization (EPFO) can be given the option to convert their PF funds into pension. This will enable employees to get more pension after retirement. It is expected that the government may also make an announcement regarding social security in the budget for the upcoming financial year 2025-26.
Sources say that on the instructions of the Central Government, the Ministry of Labor and Employment is already working on options to expand the scope of the Social Security Scheme. Under the new options, many types of facilities will be given to the workers. Workers associated with EPFO will be able to convert the amount deposited in the PF fund as pension at the time of retirement.
This means that if at the time of retirement an employee feels that he needs more pension in old age, then he can put the amount deposited in the fund in the pension fund. This will increase the amount received as pension.
These facilities can also be available
1. Interest will be available on PF fund even after retirement
Similarly, if at the time of retirement an employee feels that he has other income options and he does not want pension on retirement at the age of 58, but he wants to start pension from 60-65 or any other age, then this option will also be provided. In such a situation, annual interest will keep getting added on the amount deposited in the pension fund and the pension will start being received according to the age from which he wants to start.
2. Arrangement for depositing lump sum amount in PF account
The ministry wants that EPFO members should be allowed to deposit lump sum amount in their account in addition to the regular fixed monthly contribution. This option has been under discussion for a long time, but now consensus seems to be emerging at many levels.
If such a facility is provided, then more contribution will be deposited in the PF account. This will enable employees to keep more funds in their account under social security and get more pension on retirement.
3. Consideration of income tax exemption on additional contribution
The ministry believes that there are many people who have savings but they do not make FD in banks because the annual interest there is only seven percent or less. Whereas, the amount deposited in the PF account gets more than eight and a quarter percent interest.
In such a situation, if the facility of lump sum deposit is provided, then people will start putting money in the EPF account for future security. Sources say that in this regard, discussions have also been held with the Finance Ministry that it should also give the benefit of income tax exemption limit on such contribution, so that people can be encouraged to put lump sum money as contribution.
4. Consideration on increasing the scope of IT system
At present, work is going on to make the system of EPFO like banking. IT System 3.0 is expected to be completed in June, which will allow people to get banking-like facilities. Along with this, the government is also working on options to increase benefits under social security, which can be announced in the budget or even after that. Regular discussions are going on between EPFO and Ministry of Labor and Employment regarding this.
How is tax exemption on HRA calculated?
- How much HRA is given by the employer.
- If you live in metro cities then 50 percent of basic salary and dearness allowance.
- If you live in non-metro cities, then 40 percent of basic salary and dearness allowance.
- The amount of rent you have paid should be less than 10 percent of the basic salary and dearness allowance.
The least amount in the above four conditions will be exempted from tax.
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