After Another Provident Fund Controversy, Government Puts New Rule On Hold

Confronted by protests - including a riot in Bengaluru that saw public buses set on fire - the government has put on hold for three months controversial new rules on provident funds, which serve as retirement savings for employees everywhere.

The latest controversy is centred on the government's decision that to claim what your employer deposits for you, you must wait till you turn 58 (the age limit was earlier 54). The new rule has been suspended at least till the end of July, the government said today.

"The notification (tightening PF withdrawal norms) will be kept in abeyance for three months till July 31, 2016. We will discuss this issue with the stakeholders," Labour Minister Bandaru Dattatreya told reporters.

A provident fund sees your employer matching the amount deposited from your salary.

Mr Dattatreya said a meeting of the Central Board of Trustees would be called "to see how best the employers' contribution to EPF (3.67 per cent of basic wages) can be utilised for workers."

In February, the government had proposed that employees would have to pay income tax (according to their income tax slab) on 60 per cent of the amount they withdraw from their provident fund. That rule has been withdrawn after it triggered public outrage with critics and workers associations.

The Labour Ministry is now considering whether you should be able to withdraw the entire savings accumulated in your provident fund for a fixed set of criteria like medical treatment for a serious illness, a home purchase, or the education or marriage of an employee's children

The matter has been referred to Law Ministry for clearance.

Now, the EPFO subscribers who are out of job for more than two months can file for full and final settlement of provident fund till July end.