ysnmurty Started The Discussion:
hi to all,
please advise, Is Provident Fund Deduction is applicable for basic salary more than Rs.10000/- p.m.
if so, please inform whom are exempted for P.F. deduction or whatever it is.
please send u r replies to or you can contact me on mobile 98481 38928.
Wge limit under EPF act to cover an employee is Rs.6500/ per month.Any employee drawing wages more than above will be termed as excluded employee provided he is not already a member of PF.if he is already a member of PF then his PF deduction will be on 6500only.
chief editorBUSINESS MANAGER
According to the Act, The celling for the PF deduction is Rs.6500.00pm. If the Basic is more than Rs.6500.00 then it depends upon the policies of the company. If the company thinks fit than the company can pay employer share.
If the employee does not want to become a member of PF & Pension Fund., in that case employer must take unwillingness from the employee in writing
The wages ceiling of Rs.6500/ is statutory. Employees above the ceiling are not to be covered. But most of the Employers cover their Employees under the Principle of Equity.
I know some of the Employers, are not covering the persons who are in the category of above( the Basi+ DA) is Rs.6500/ and also if the Pay enhanced due to Pay Revision or Incremental effect, the employer recover only upto to the extent of Rs.6500/- only for their employees who are already as PF Subscribers on Rolls.
Hope this clarification clear your doubts upon the same.
With Warm regards,
Narayana Murty BV
Hyderabad Cell No: 9394712629
Tel: :D 040-23431552
If you look at the PF act, it is clear that deduction of PF above monthly salary of Rs.6500/- ( Basic+DA) is exempted only if he is a newly recruited employee. More clearly, if a person's salary (Basic+DA)was increased from 6000 to 6700 the employee will not be exempted, but he has to pay @12% of 6500, the wage ceiling.
The act also explains that with mutual consent from both parties higher contributions can be paid.
In your question you mentioned only Rs.10000/ pm as salary.
1. if you mean the salary as basic+da for a newly joined employee it is exempted
2. if the basic+da is less than 6500 it is applicable
3. if that is an employee on the roll for past years and if the salary has been increased to 10000 it is again applicable up to the ceiling rate of 6500/-
There has been a revision in ESIC limits. The limit has been increased to Rs. 10000/- p.m. I understand this happened w.e.f. Oct 2006.
Also, I understand that the employer contribution toward PF need not exceed Rs. 780/- p.m. The employee's contribution will be 12% of basic, but the employee has the option of not paying PF which is more than 780/- p.m.
There is one more option available as per the PF Act, it is possible for both the employer and employee to pay higher contribution on mutual agreed conditions.
There is no such limit like maximum of Rs.780/- but as an employer you can give more contribution for the benefit of your employee.
Why PF dept will pay interest on higher contribution. In Act, it is clearly mention that when basic & d.a. is above Rs.6500 at the time of joining then he may not become the member for PF. But employers contribution is limited to 12% on Basic & D.A. but employee can increase his share upto 20% but only after prior permission from PF Commissioner.
Without permission, pf dept will not pay interest on extra amount deducted as pf contribution i.e. over & above 12%
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