The amount accumulated by the Fund is 68 percent higher than the amount collected in the previous fiscal year. [break]
“We probably would have been able to collect more last fiscal year, but we found many companies were depositing the amount under the heading of tax deductible at source (individual income tax), rather than under the heading of social security tax,” Kebal Prasad Bhandari, executive director of the Fund, told Republica. “We have already started sending circulars to all companies in the formal sector to rectify their mistakes.”
The Fund started collecting the amount from fiscal year 2009/10 by slapping one percent tax on basic salary of employees working in the formal sector and government-owned entities.
Although there is no official data on the number of people working in the formal sector is available, some estimates put it at 1.5 million, while the number of government employees stands at around 500,000.
From these workers, the Fund collected an estimated Rs 540 million in the first year of the launch of the program, followed by Rs 742.46 million in the fiscal year 2010/11.
Together with these amounts, the Fund is mulling over channeling additional 10 percent of workers´ basic salary, which is currently being deducted to contribute to the provident fund to gradually roll out nine core social security programs, which among others include, schemes ranging from unemployment, workplace accident and medical to disability, maternity, dependent and old-age benefits.
In addition, the Fund is also planning to mobilize another 20 percent of employees´ basic salary, which includes money contributed by employers to provident fund and extended it as benefits. In total, the Fund is planning to collect 31 percent of basic salary of every employee to roll out different social security schemes.
To give legality to these schemes, the Ministry of Labor and Employment has already finalized the draft of Social Security Bill.
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