Govt considers PF cap hike in boost to salaried employees

The government may hike the threshold salary limit for provident fund contributions in a move that will bring cheer to millions of employees in the private sector. According to current norms, contribution towards provident fund is mandatory for those employees, whose salary is up to Rs. 6,500.

A hike in salary limit will not only help more people contribute toward their retirement benefits, but will also enable the Employee Provident Fund Organization (EPFO) to draw more long-term savings into its kitty. EPFO is a statutory body that manages provident fund contributions.

(Also read: Now on, know your current PF balance instantly)

Higher provident fund contributions will also help the government to lower its borrowing cost. At present, the EPFO invests a sizable amount of its kitty in government securities.

The Rs. 6,500 limit for PF contribution was last revised in 2001.

According to the current norms, 12 per cent of an employee's salary is contributed towards provident fund account. Another 12 per cent is contributed by the employer.

(Also read: EPFO to start online service for transfer claims soon)

Out of the 24 per cent around one-third of the total provident contribution (8.33 per cent of salary) goes toward employee's pension scheme. The government contributes 1.16 per cent of the overall salary towards the pension scheme as a subsidy.

The government had recently made more people eligible to avail healthcare benefits under the Employees' State Insurance (ESI). Earlier, workers with monthly salary up to Rs. 15,000 were eligible for ESI benefits. Now the salary cap has been increased to Rs. 25,000, making for people eligible for ESI benefits.

Every month, eligible employees contribute 1.75 percent of their salary and employers contribute 4.75 percent toward the ESI corpus.

Railways likely to hike passenger fares soon

Indian Railways is considering increasing passenger fares to offset rising fuel cost. Railway Minister Mallikarjun Kharge said he has received a proposal to increase fares and a decision would be taken soon.

In the last rail budget, then Railway Minister Pawan Kumar Bansal had linked passenger fares and freight rates with a separate fuel component called Fuel Adjustment Component (FAC) to offset an increase in diesel and electricity prices for the national transporter. The fuel component is supposed to be revised twice a year based on changes in fuel cost.

The fuel tab for the Railways is estimated to increase by Rs. 1,200 crore in the next six months.

As per the budget proposal, the fuel surcharge should have been implemented from October 1. The then Railway Minister Pawan Kumar Bansal had announced the implementation of fuel-component-linked revision in only freight tariff from April 1. The passenger fares were not revised as they were hiked only in January this year.

"The file containing the FAC proposal has come to me and I am examining it and a decision will be taken shortly," Kharge said.

Petrol price cut by Rs. 3.05 a liter, diesel price hiked by 50 paise

New Delhi: Petrol price was today cut by Rs. 3.05 per litre, the first reduction in rates in over five months and the steepest in over five years, while diesel prices were raised by 50 paise a litre.

The price changes announced by oil companies are excluding local sales tax or VAT and will be effective midnight tonight.

While petrol price cut has been made possible because of appreciation in rupee value against US dollar, diesel rates are being hiked as per the practice of increase in rates by small monthly doses to cover losses.

The petrol price in Delhi will be cut by Rs. 3.66 to Rs. 72.40 per litre, while it will cost Rs. 79.49 per litre in Mumbai as against Rs. 83.63 currently.

The cut in petrol price is the first reduction in rates since May. Petrol price was last cut on May 1 by Rs. 3 per litre, the steepest reduction in rates in over five years.

Since June petrol prices have been raised seven times, totalling Rs. 10.80 per litre, excluding VAT (Rs. 13.06 after including state tax) as the rupee depreciated sharply against the rupee.

In a parallel move, diesel price was hiked by 50 paise, excluding VAT, in line with the January decision of the government allowing oil companies freedom to raise prices in small doses every month to wipe out mounting losses.

The diesel price in Delhi has been hiked by 57 paise to Rs. 52.54 per litre while it would cost Rs. 59.46 in Mumbai from tomorrow as compared to Rs. 58.86 currently.

Today's hike in the ninth since the January 17 and most of the losses on diesel sales should have been wiped out by now to make the fuel market priced. But the fall in rupee, around 25 per cent since April, has worsened the situation and losses mounted to Rs. 14.50 per litre.