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New Delhi: The Employees' Provident Fund Organization (EPFO) has decided to stop deductions under the Group Insurance Scheme (GlS) for government employees who joined the job after September 1, 2013. EPFO issued a circular on June 21 to inform about this decision. Due to this, these employees will get the benefit of a salary hike. Along with this, they will also get back the amount deducted from September 2013 till now. EPFO has said in its circular, 'lt is directed that the deduction is made under GlS from the salary of all employees who joined EPFO after 1.9.2013 should be stopped immediately.
This decision will not apply to all government employees who joined EPFO before September 1, 2013. Speaking to our partner Economic Times, Akhil Chandna, partner at tax and business consultancy company Grant Thornton India, said that employees who joined after September 1, 2013, will no longer be covered under GlS. Any deductions already made from their salary will be refunded to them.
There will be an increase in salary
Experts say that government employees for whom GlS has been discontinued will see a hike in their salaries. Chandna says, "The discontinuation of deductions under GlS will lead to a rise in take-home salary. Earlier, deductions were made from the monthly salary of employees as per their pay scale to fund GlS. For these employees, now that the scheme is not in force, the deductions will stop. They will get a higher net-in-hand salary. However, it is not yet clear how much the salary will increase. Jasmine Damkewala, SeniorPartner, Circle of Counsel (law firm), says that due to no deduction for GlS, the take-home salary of the employees will increase. However, the real thing to be seen is how much difference this move will make in the monthly salary of the eligible employees. This amount deducted as a small percentage of the salary every month becomes a large lumpsum amount over the years at the time of retirement.
Apart from the hike in salary, these employees will also get a lump sum amount instead of deductions made after September 1, 2013, or after joining (whichever is earlier). "Further, the deductions made so far in such cases are to be refunded to the employees," the EPFOcircular said.
What is EPFO's GlS scheme?
The Central Government Group Insurance Scheme (GlS) came into effect on January 1.1982. lt came into effect under the name of the Central Government Employees Group Insurance Scheme in 1980. GlS is a social welfare scheme under the Employees' ProvidentFund Organization (EPFO), which is being run under the Ministry of Labor and Employment, Government of India. its objective is to provide socio-economic security to employees and their dependents. Under the GlS scheme, financial assistance is provided to the family of the insured person in case of his death. This amount depends on the salary and period of service of the employee. Apart from this, under this scheme, the employee also gets additional benefits in case of death or disability in an accident during service. Experts say that it cannot be said that the GlS scheme itself has been discontinued. The reason is that the notification of June 21, 2024, mentions the discontinuation of deductions under the GlS scheme only for specified employees.