Government employee to get more salary as EPFO discontinues GIS

New Delhi, Jun 28, 2024 

EPFO scheme acts as a social welfare programme under the Ministry of Labour and Employment

The Employees' Provident Fund Organisation (EPFO) has stopped deductions under the Group Insurance Scheme (GIS) for government employees who joined work after September 1, 2013.

What is GIS

The Central Government Employees Group Insurance Scheme (CGEGIS) came into force in January 1982. It provides government employees two benefits: Insurance coverage to help their families and lump-sum payment on retirement.

What does EPFO order say

The EPFO order of June 21,2024 said two things,

Deductions under GIS will be discontinued for employees who joined EPFO post September 1 2013.

Deductions made so far shall be refunded to them.

"It is directed to discontinue the deductions under GIS wherever being made from the salaries of all employees who joined EPFO after 01.09.2013 immediately," said EPFO in a circular dated June 21, 2024.

Experts suggest that government employees may see an increase in their net in-hand salary after GIS is discontinued.

“Perceivable impact would be that employees will get increased net-in-hand salaries now along with a lump sum amount as refund in lieu of the deductions made so far,” said Mahip Singh, a lawyer at the Delhi High Court.

GIS deductions served the dual objectives of savings and insurance. Monthly GIS deductions were meagre compared to the large lump sum given at the time of retirement. So while the net-in-hand could increase, its impact may not be that significant, he said.

[The Business Standard]