Update March 2017: PF Administrative Charges Reduced to 0.65% from 0.85%

The Labour Ministry has informed the EPFO that its proposal to reduce PF Administrative charges will get approval after the upcoming polls are concluded in four states – Manipur, Goa, Uttarakhand, Punjab and Uttar Pradesh in March. The Election Commission of India have announced the poll dates earlier in the first week of January 2017.

The EPFO sent an official proposal to the Ministry of Labour on January 4th, 2017 to reduce administrative charges for companies from 0.85% to 0.65% of worker’s salary for its EPF scheme. It also proposed doing away with administrative charges 0.01 per cent of worker’s salary levied to implement the EDLI- Employees’ Deposit Linked Insurance scheme, 1976.

The decision to reduce administrative charges was taken at EPFO’s central board of trustees meeting, chaired by Labour Minister Bandaru Dattatreya, in December, 2016.

“Considering the need to promote ‘ease of doing business’ in India and to make Indian business more competitive, and in response to the financial efficiency gained by EPFO, the Central Board decided to recommend further reduction of administrative charges to 0.65%,” the EPFO said in December.

The EPFO had proposed reducing administrative charges from 0.85% to 0.65% in September 2015. However, the decision was deferred due to opposition from the trade unions.

EPFO collects administrative charges from employers to meet its administrative and inspection costs, including staff pension and gratuity. In 2015-16, the EPFO had collected Rs 3,758 crore from administrative charges towards both EPF and EDLI schemes.

According to EPFO’s estimates, decreasing administrative charges for EPF scheme by 0.20 per cent will lead to a reduction in collection by ₹1,000 crore.

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