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FM likely to raise PF wage cap to Rs. 15,000 per month

The objective is to reduce the government's borrowing costs and bring long-term savings into the infrastructure sectors

October 07, 2013 3:41 IST | India Infoline News Service
The finance ministry is considering a proposal suggested by the labour ministry to raise the statutory wage limit for provident fund contributions to Rs. 15,000 per month from Rs 6,500, according to a media report.

The objective is to reduce the government's borrowing costs, bring long-term savings into the infrastructure sectors and enhance investment in corporate bond market, the report added.

Employees’ Provident Fund—commonly called PF—is a retirement benefit scheme that is available to all salaried employees. It is a very important tool of retirement planning. The tax-free interest (compounding) and the maturity ensures a good growth of our money.

Both employees and the employer contribute to PF at the ‘rate of 12%’ of the basic wages and dearness allowance (if any) per month. Thus, the total contribution to PF is 24% per month. PF provides retirement benefit to us to secure a better standard of living at retirement.

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