Dear Seniors,
Pls. clarify one doubt about the PF. As per PF Act celing is 6500/- (basic + da) if my salary is more than 6500/- I am not cover under PF Act, at that time i have to pay PF on 6500/- (Rs. 541/-) or not?
My salary is 10,000/- (basic+da)
in this time i am covering under PF or not?
Srinivas B

From India, Hyderabad
Industrial Relations And Labour Laws
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YEs, celing is Salary+d.a.Rs.6500/- and 12% deduction on 6500/-. If company has taken approved from EP commissior for deduction above 6500/- and ur salary is above Rs.10000/- then ur deduction 1200 @12% .
Where comp.'s conrtibution is:> /8.33% for 541 &for 3.67%Rs.659/-=1200/-.:)

From India, Ahmadabad

Dear Srinivas, Although well defined by Mr. Bhardwaj, But employer may contribute at ceiling basic salary only i.e of 6500/- . Regards, Amit.
From India, Ahmadabad

If the employees' contribution is not restricted to Rs 6500, then employer should not restrict his contribution to Rs 6500. In the example, an employee is drawing Rs 10000 and he is contributing 12% on Rs 10000, then employer should also contribute 12% of Rs 10000 and he cannot restrict his contribution limited to 12% of Rs 6500. Certainly, his contribution of 8.33% to Pension Fund shall be 8.33% of Rs 6500, ie, Rs 541, but his contribution to Provident Fund should be Rs 659, ie, 1200 minus 541. Virtually, he will contribute the same amount (+ whatever administrative charges and EDLI as applicable) as is contributed by employee.

However, for voluntary contributions by employee, the employer has no obligation to contribute at the same higher rate of contribution. Voluntary contribution is a rate higher than the statutory contribution (of 12%) which an employee decides to contribute. If an employee decides to contribute 25% to EPF, then his salary will be deducted by 25% but the employer's contribution will be limited to 12% only. This is different from the matter discussed being in the post.



From India, Kannur

Althrough, Madhu is correct but let me add some thing that if the employee drawing Rs. 10000 (Basic+DA) & he never been the member of EPF, in that conndition there is no need to deduct pf even on ceilling Rs.6500/-(Subject to decelaration in form 11 by employee)
best regards

From India, Delhi


Without joining issues with all others, I would like you to see the following possible scenarios and the answers alongside.
  • Mr. A-an exixting employee of an organization and drawing salary (Basic+DA) less than Rs. 6500/- He is bound to be covered anyway.
  • Mr. A, in the above example, over a period of time, due to salary increases crosses the ceiling (of Rs. 6500/- p.m. Basic+DA), then in such case the company has the discretion
      • to continue his membership (as once a member-always a member is the rule of the PF) and arrest his contribution at ceiling level, OR
      • to continue to contribute to PF on his ACTUAL Basic_DA, irrespective of the ceiling, BUT this will have to be rule for ALL covered employees. He will not cease to be member of the PF simply because his salary has crossed the ceiling.
  • Then there is Mr. B, who joins the company at a salary (Basic+DA) greater than the ceiling level (presently Rs. 6500/- p.m.). In this case the company has the choice to treat him as an excluded employee and thus NOT cover him under the PF. This is perfectly provided for in the Act and the Scheme. One has to follow a simple procedure. The company may however offer him membership of PF but restrict contribution at the ceiling level. Again such a rule should be for all joinees with similar facts.
While all this may be so, the company has to carefully decide regarding the policy to apply offer PF membership when a new joinee is enjoying salary greater than the ceiling level.

I trust I have covered all contingencies. If there are more querries I will try and answer these also.

Nov 30, 2008

From India, Pune

Eventually ,it is the ceiling limit which matters to the employee, employer and the PF Authorities.
As aptly said by samvedan and madhu, it is the discretion of the management to decide the contribution to be made.
Practically, no management would agree to contribute 12% on the amount , ie, above the ceiling limit.

From India, Bangalore
Dear All,
I have some confusion regarding pf deductions for example -
Case no.1 (if company consider employees salary in ctc)
for ex. basic salary Rs.10,000/- following will be contribution
a/c 1 12%+3.67 1200+659=1859/-
a/c 10 8.33% 541
Case no. 2 (if company consider employees salary not in ctc)
for ex. basic salary Rs.10,000/- following will be contribution
a/c 1 12%+3.67 1200+239=1459/-
a/c 10 8.33% 541
note:- amount 239 has been taken from the ceiling of Rs. 6500/- as a basic + da for employer.
is my calculation are true or wrong, please comment ?
sanjeev verma

From India, Chandigarh
If you have joined the company newly and your salary is fixed at Rs.10,050 then the break up to be exempted from ESI and PF is as follows.
Basic: 7000
HRA : 1000
MA : 1250
Travel: 800
Total: 10, 050 per month.
Here the company need not pay you PF or ESI.
If you are already an employee of the company and your salary was recently revised such that your basic exceeds above Rs.6500,if you had been a member of PF you have to continue to do so until you leave the company. You cannot be exempted.
Other wise if your employer is not willing to contribute you can pay your contribution. The only advantage is you could get exempted from tax + some returns from the deposited money at a later stage. Employer can withdraw his contribution if your basic salary at the time of joining exceeds Rs.6500.
Ramamurthy R

From India, Madras
Mr. Sriniwas,
It Has Two Segments I.e., This Is Bounded On The Company To Pay Pf In The Case When The Employee Basic Is Less Than Rs. 6500/- But If The Basic Is More Than Rs. 6500/- Then This Is On The Discretion Of The Management To Go For Pf Deduction Or Not. If The Company Was Contributing Pf For An Employee Whose Basic Was Less Than Rs. 6500/- And After Some Time If His Basic Got Increased To More Than Rs. 6500/- Then Also Until That Employee Will Leave The Company, Pf Contribution Will Be Deducted From Employee Salary.
Pf Contribution Will Be Directly 12% Of Your (basic + Da) And The Same Amount Will Be Contributed By Your Company.
Hope I Cleared Your Doubts.
Vishal Nagpal

From India, Delhi

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