Parthw Started The Discussion:
Hi,

I've got an offer letter that states that Employers contribution to PF will be Rs 780/- per month out of the CTC. Though basic salary is shown as Rs 25,000/- p.m. however the employer states that he has the right to base his contribution on a basic of Rs 6500/-. Is he right? In that case, can I too limit my contribution as calcutated on Rs 6500/- basic per month, or I'm supposed to calculate PF on the full Rs 15000/- basic? Will my contribution be deducted by the company directly from my salary, or I have to separately pay my contribution?
Posted 24th July 2007 From India, Mumbai
Dear Parth,

According to PF Act, the maximum ceiling of amount to covered under the Act is rupees 6500/- basic per month. Even after anybody wants to be a member then normally his PF amount get deducted on the 6500/- per month only..
But sometimes with the approval of Company members it may be on actual too... And regarding the contribution Company deduct your contribution from your salary and their contribution from their part.. and they make deposit that with PF department.

Hope it must have cleared your queries..


Regards,


Amit Seth.
Posted 24th July 2007 From India, Ahmadabad
Hello:
Addressing your querry. The maximum PF deduction is 12% and is only on the basic salary and bifurcating this further your basic salary cannot exceed 40% of the CTC and now your Deduction is 780 which is 12% of your basic. The company has right to deduct your PF and in fact the PF is deducted twice from the total CTC.. i.e Employer & Employees contribution.

Regds
Nirzari Shah
HR
Posted 25th July 2007 From India, Pune
Hi All,

If the basic sal is 10K or more the employee is not eligible for PF Contribution.However it depends on the company if in this case are intrested in PF Contribution.Correct me if I am wrong.

Regards

Arya
Posted 25th July 2007 From India, Chennai
Hi Arya:

I would like to correct you. If you salary is = to 3000 or less than 3000 than your Pf is not deducted. PF is a contribution by both parties but than if your salay is 10k or less than u r liable for ESI deductions too.. that added in your salary stack.

Regds
Nirzari Shah
HR
Posted 25th July 2007 From India, Pune
Dear Amit ,

So PF deduction on 6500/- is mandatory and if the basic is more than 6500/-company have the option to restricted the PF deduction to only 780/-

That,s nice.

Can u kindly help with more details on this e.g ( what’s the process to have the PF limit deducted to 780 at all level .


Regards,

Amita
Posted 25th July 2007 From India, Mumbai
Dear Arya,

All employees who are earning wages/salary (including Basic+D.A.+Retaining Allowance, if any) upto Rs. 6500/- per month are covered under E.P.F. Act. In this it is mandatory to deduct PF contribution from the wages/salary of employee.

In other case i.e. employees who are earning more than Rs. 6500/- P.M. then it depends upon the company policy whether to deduct P.F. or not. OR deduct only upto Rs. 6500/- i.e. max limit Rs. 780/-.

Thanks.
Anuj
Posted 25th July 2007 From India, Lucknow
Dear All,

Thanks for the nice information. It it clear that the employer can choose to limit the PF contribution at the 12% on the basic of Rs. 6500/- i.e. Rs. 780/-.

Can an employee choose to not participate in PF and do not have any deduction or cap it at 780/- for his contribution?

Please clarify. Appreciate your time and help.

Regards,
Srini.
Posted 25th July 2007 From India, Hyderabad
Parthw 
Hi everybody,

Thanks for the prompt replies to my query.

I now understand that the employer may restrict his contribution to Rs. 780/- per month (He pays this out of my CTC amount). But I still don't know if I too can restrict my contribution to Rs. 780/- p.m. or I will have to pay according to my actual basic salary. Do clarify this for me.

Finally, does it really make any sense joining the PF at Rs. 780/- p.m. as this may not be worth much after 15-25 years even after earning interest considering inflation. Wouldn't it be better to make one's own arrangements towards pensions/retirement thorugh other investment routes rather than depending upon the government? Let me have your views.

Best wishes to all.

Parth
Posted 25th July 2007 From India, Mumbai
Hi In case of basic more than Rs.6500/-, the employee has a choice for not availing the PF facility depending upon the company policy. Regards...Darshana
Posted 25th July 2007 From India, Mumbai
Since we have a good participation in this topic I would like some one to help me about Full and final polices of BPO (call center)

At the time of FFS leave will be given @ of basic or gross
Notice period will be adjusted @of basic or gross


Thanks
Posted 25th July 2007 From India, Mumbai
Parth:
Dont decide on joining a company merely on PF amt.. If you have less deductions be happy , you end up getting more in hand. and yes the fixed minimum amt is 780/- Rs as pF but can be more if company decides for it.

I would like to share one thing with you all that PF is a kind of saving and interest on it woyuld be according to market rates.. aleast at the end of 58th year you have a security. PF is always advisisable to get it deductted from your salary.

Regds
Nirzari Shah
HR
Posted 25th July 2007 From India, Pune
Hi, You can also limit your contribution to Rs.780/- At interest rate of 8.5% on your annual contribution... the total amount after 20 years will become somewhere around Rs.4.5 Lacs..
Posted 25th July 2007 From India, New Delhi
Hi,

Balance privilege leave calculation will be on Basic . (Policy on ‘Privilege Leave’ should provide the guidelines on encashment).

Notice period calculation is also on basic. (That should be defined in the Appointment letter under termination/resignation clause or should be defined in the Separation Policy).

Darshana
Posted 25th July 2007 From India, Mumbai
Do we have rule that Notice period should be deducted @ of basic only or it can vary from company to company

As we are redoing the company policies can we work out Notice period on gross looking at a high rate of attrition in BPO’s

Is it possible or we have stander/fix law to have notice period deducted @ of basic only
:?:
Posted 25th July 2007 From India, Mumbai
Hi, You can also limit your contribution to Rs.780/- And at the interest rate of 8.5% on your annual PF Contribution, teh total amount after 20 years would be 4 - 5 Lacs..
Posted 25th July 2007 From India, New Delhi
swaks 
Hi all
This is Aakash and I am working as ?HR Executive for a private company
i too have some queries related to the same topic do reply ASAP

1) If we are deducting PF from employee's Salary and depositing Employers contri and Employee's contri from our side ... to what extend is it necessary to produce the PF A/c # if asked by any1?
2) as I know, if an employee leaves the company before 5 years than s/he is not liable for the amount of PF ... what happens to the amount already deposited?
3) what is the rate by which ESI is to be paid/deducted? what is the maximum salary(basic or Gross, Pl mention) on which the ESI is to be deducted ?

Pl reply with an Example
Thanks and Regards
Aakash Chaudhary
HR Executive
Posted 25th July 2007 From India, New Delhi
Dear Friends,
The statutory limit of PF Contribution (Basic+DA etc) is Rs 6500/-.
the above of this amout drawn employee is called "Execpted Employee" under the PF Act. Most of the organisation the employer is paying PF Contributions for the high paid salaries @ Rs. 6500 and the @ 12% on it will come Rs 780/-. and same will be collecting from employee. For immediate reference the following statement may clarify you doubt.

Clarification about Contribution
After revision in wage ceiling from Rs.5000 to Rs.6500 w.e.f. 1.6.2001 per month, the government will continue to contribute 1.16% upto the actual wage of maximum Rs.6500 per month towards Employees’ Pension Scheme. The employer’s share in the Pension Scheme will be Rs.541 w.e.f. 1.6.2001.
Under Employees’ Deposit-Linked Insurance Scheme the contribution @ 0.50% is required to be paid upto a maximum limit of Rs.6500.
The employer also will pay administrative charges @ 0.01% on maximum limit of Rs.6500 whereas an exempted establishment will pay inspection charges @ 0.005% on the total wages paid.
Notes:
The above clarification is given by taking wages upto a maximum of Rs.6500 towards wage (basic+DA).
Since an excluded employee i.e. drawing wages more than Rs.6500 can also become member of the Fund and the Schemes on joint request and if, for instance, such an employee is getting Rs.10,000 per month, his share towards provident fund contribution will be Rs.1200 e.g. 12% and employer’s share towards provident fund contributioin will be Rs.659 and Rs.541 towards Employees’ Pension Fund.

Regards,

PBS KUMAR
Posted 25th July 2007 From India, Kakinada
Do we have rule that Notice period should be deducted @ of basic only or it can vary from company to company

As we are redoing the company policies can we work out Notice period on gross looking at a high rate of attrition in BPO’s

Is it possible or we have stander/fix law to have notice period deducted @ of basic only
Posted 25th July 2007 From India, Mumbai
Dear Akash,

As an employer its mandatory to provided pf no.

As for your second point, if a person leaves after 6month of completion in his organisation, he/she can claim for all the amount deposited into its account and can withdraw the same.

For third point, following liability falls for
employee - 1.75%
employer - 4.75%

of the gross salary on maximum limit of Rs. 10,000/-.

Hope I have made my self clear.

Regards,

Sashmita
Posted 25th July 2007 From India, Delhi
Dear Akash,
Sashmita has explained the things very nicely..

Regarding PF withdrawal which she missed to detail, is

The PF is contributed 12% of basic from both the sides employee as well as employer.. Out of this 24% of contribution the distribution takes place like this-
15.67% goes to PF Fund, whereas
8.33% goes to Pension Fund..
For Pension, one can be eligible only after continue service of 5 years..
If one leaves before, then he will not be liable to get the pension..
But he is eligible to withdraw his PF fund afetr separation from the organisation through a simple process of filling PF withdrawal FORM 10C and FORM 19.
And he can apply for withdrawal of the same, only after 60 days of separation from the organisation..

Hope it will help you to solve your query regarding the PF withdrawal.

Regards,

Amit Seth.
Posted 25th July 2007 From India, Ahmadabad
The PF act is now seems to be out dated . :( I understand that the Singapore Provident fund act is the best in the world. It will be helpful any one gives the information regarding the PF act of singapore? :?: :!:
Posted 26th July 2007 From India, Chennai
You cannot force the employer to contribute the PF on salary (basic+DA+retaining allowance if any) more than 6500.

However you can contribute on the entire basic.

But in case the company has added their PF contribution in your CTC and that is on the entire basic, then they must contribute. This is what most of the employers are opting today.

Regards,

BS
Posted 26th July 2007 From United States, Santa Clara
Depending upon the company policy. As per shop and establishment act, during termination 30 days' wages specified. Rgds... Darshana
Posted 26th July 2007 From India, Mumbai
Hi Amit, Thanks for updating the details, and what if a person wants to withdraw after 4 months of service?? Regards, Sashmita :?: :?: :?:
Posted 26th July 2007 From India, Delhi
Dear Parth,

The PF wages ceiling upto Rs. 6500/- and employer can contributed upto ceiling limit. Normally, it can deduct on above basic Rs. 6500/- but employer & employee need to fill up consent form submitted to PF office.
If you want to deduct more, you can go for Voluntary Provident Fund. It means your total contribution is Rs. 780 + Rs. 780/- = 1560/-. but Employer will contribute Rs. 780/- only. Your contribution can help you for Tax rebate and savings in PF account.

Decide accordingly.

regs,
Bhushan Dahanukar
Posted 26th July 2007 From India, Mumbai
As per PF act, company is bound to deduct/deposit PF contribution upto basic salary of Rs.6500/- that comes 780 from each side i.e. from employer & employee. Beyond basic salary of Rs.6500/- it becomes obligatory to the employer whether to deduct PF contribution or leave the PF deduction or continue on the base of Rs.6500/- However, you can contribute more PF deduction as VPF Voluntary PF Deduction that will accumulate in your EPF account. I hope things must have been cleared to you now.

Regards,
Posted 26th July 2007 From India, Mumbai
Dear Amit,
Can you please explain one point from your post to Aakash answers about PF i.e.
15.67% goes to PF Fund, whereas
8.33% goes to Pension Fund..

When an individual leaves after 2years of service what happens to 8.33% pension fund. If he withdraws his PF immediately after leaving job?

Thanks
R Sandhu
Posted 26th July 2007 From India, Delhi
swaks 
Thanx Sashmita and Amit
Now i am clear with the points
there is one more thing i want to confirm that the amount of ESI is Deducted and depositied to any govt. Deptt. or is ti paid directly to the employee
Posted 27th July 2007 From India, New Delhi
hi Nirzari Shah
i think there is no possiblity of not deducting in case salary is = 3000 or less. that would be true if basic salary is greater than 6500/-. PF is mandatory when basic salary is less than 6500/- p.m.

bhavik h chheda
Posted 27th July 2007




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