Like the limit on annual contribution to a Public Provident Fund (PPF) account – which currently is Rs 1.5 lakh – there will be a cap on the total yearly subscription amount for General Provident Fund (GPF) as well. GPF is used by government employees entitled to receive benefits under the Old Pension Scheme (OPS) for building their retirement corpus.
After making the interest on GPF subscriptions over Rs 5 lakh in a financial year taxable, the government has now barred employees from depositing over Rs 5 lakh in a financial year, starting from the current financial year (FY 2022-23).
According to an Office Memorandum (OM) No. 3/6/2021-P&PW(F) dated 11/10/2022 by the Department of Pension & Pensioners’ Welfare (DOPPW), the sum of monthly GPF subscriptions for FY 2022-23 cannot exceed Rs 5 lakh. So, if the total subscription of a government employee has exceeded Rs 5 lakh till October 2022, deductions of GPF subscriptions from the salary will be stopped.
As per the OM, the monthly subscriptions for the next financial year (FY 2023-24) should be regulated as per Rule 8(i) sub-clause (b) in such a manner that the sum of the subscription shouldn’t exceed the limit of Rs 5 lakh.
However, the mode of adjustment of the extra subscription, if any, exceeding Rs 5 lakh made till October 2022 – whether the extra amount will be refunded or adjusted with the subscriptions of the FY 2023-24 – is not clear.
However, it is not clear whether the extra subscription, if any, exceeding Rs 5 lakh made till October 2022, will be refunded or adjusted with the subscriptions of the FY 2023-24.
So far, that is before the new OM became effective, the minimum amount of subscription to the GPF was 6 per cent of the emoluments and the maximum was equal to the emoluments received by an employee, without any cap on yearly subscriptions.