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Thread Started by #Nagendra

My dear friends,
i have one doubt. i am thinking employer side. one employee joined our org & and he crossed basic more than Rs.6500/- from stating now we are maintaining pf or not. if we are not maintaining pf, any problem.......
ple suggest me

hyd executive - hr
19th December 2006 From India, Hyderabad
Dear Mr. Nagendra,
Warm Greetings!
U have to meet the penality, if u doesnt deduct PF.
If u want to overcome the penality, according to Workmens compensation act, u can take madiclaim policy.
Warm regards,
john Jebaraj N
19th December 2006 From India, Madras
Hi If basic crosses 6500 deducting PF is not mandatory. It is optional for the employer. Employer can pay upto Rs. 780/-.or 12% if they prefer to. Regards, AM
19th December 2006 From India
Dear Nagendra, AM and friends,
As per a recent directive, the minimum basic salary slab for deduction of PF has been increased to Rs.10,000/- from the earlier Rs.6,500/-. As such, anybody who has a basic equal to or less than Rs.10,000/- has to be given the facility of PF coverage. Else, there will be penal charges as rightly pointed out by John.
In case you do not want to give coverage to your employees under the EPF trust, then either you must provide them with a better coverage than given by the EPF or your employee strength must not cross 20!!
Hope this clarifies your query.
Samba Siva.
19th December 2006 From India, Hyderabad
Dear Mr. Nagendra, and friends,

I am very new to this site. Basically we are PF and ESI consultants for past 10 years, and some of our clients faced same situation as yours.

In this regard we had several meetings with regiona PF commissioners as well as with Central PF Commissioner, (CPFC) and they interpreted the law and we were advised as follows:

There are few things to be kept in mind in this situation:

1. If the employee is currently a member of PF, he cannot be detained with the PF benefits ie. he cannot be treated as excluded employee even if the basic salary crosses 6500/-

(on of my friends in this discussion (yajeetheh) has mentioned that the slab has been increased to 10000/-, but I would like to clerify that it is not for PF, but the limit has been increased for ESIC, for PF it is still 6500/-, but in addition I would like to tell that the resolution has already been presented in the parliament, but not yet notified by the house and hence currently the limit is still 6500/-, hopefully in coming parliament session, it may be increased to 10000/-)

2. Now, if he is already a member of the PF then there is an option with you that you can contribute maximum Rs. 780 p.m. (12% of 6500), but in this case this rule should be followed for other employees as well.

3. if presently any other employee of yours is getting more than 6500 and you are contributing equal amount (eg: his basic is 10000 and you are making PF contribution 1200 in his case) then you have to make equal contribution for this employee as well. you cannot treat different employees differently.

4. Now, there is one other option with you, suppose any other employee is getting basic 10000 and you are making contribution 1200 for him, then you can pass a board resolution, and make contribution Rs. 780 p.m. for each employee (passing resolution is applicable in case of limited company).

5. Ooops.. one more thing I forgot to mention, if you are not covered under PF Act, then there is no need to make any contribution towards EPF as he will be considered excluded employee.

Hope I am able to clarify your doubts.


19th December 2006 From India, Delhi
Hi Kapil,
Thanks for the correction on PF slab being Rs.6,500/- and not Rs.10,000/- as earlier suggested by me. I stand corrected.
I feel even if the employee is a contributor to PF inspite of his drawing a basic over Rs.6,500/-, it is not mandatory on the part of the new company to continue his contributions to the PF account.
Warm Regards,
Samba Siva.
19th December 2006 From India, Hyderabad
Hi, Mr. Kapil is absolutely right. This is as per the law nothing more than this. Abhishek
19th December 2006 From India, Delhi
Mr. Nagendra
It is mandatory to deduct PF even if he has crossed the limit of Rs. 6500/-, but in case the employee doesn't want to deduct his PF, he has give it in writing, which has to be submitted to the PF office.
Santosh Iyer
19th December 2006 From India, Pune
I have joined workplace on 1st december and my salary is 8,000. I am in a dilema as to whether ask for PF or not because some case is going on against the co. in PF court.Plse advice.
20th December 2006 From India, Pune
Dear Siva,
Can u plz send me or tell me the link from where we can download or see the notification that PF slab has been increased to 10,000/-
There is lot of confusion in this regard.
20th December 2006 From India, New Delhi
Hi friends,
I want to know one thing
An establishment covered under EPF & MP Act.
Establishment deducting PF and paying Employer share on the full basic.
One new employees joins the est. He is not ready to become member of Employees Provident Fund. He has signed Form 11 under the ACT and even verified from the old employers that he had never been member of act.
If the establishment doesn't deduct the epf, will it be right (Box establishment deducting epf for all the employees whether the basic is 5000/-, 10,000/- or 50,000/- )
20th December 2006 From India, Delhi
Thank You Mr.Kapil.Can you clarify my doubt as to is there any claws by which an educational institution which employs more than 20 employees,though a few are in the probation period can be exempted from the purview of PF Act
20th December 2006
Mr. Kapil's reply is on the line. Even if a employee joins a new employer and earlier he was covered under PF he will remain under the scheme even his basic will remain above the prescribed limit for PF.
20th December 2006 From India, Delhi
Hi Kapil
I have recently joined a new call center company which has just started in Oct'06.
The company is only registered under firms formation. It has to go under STPI registration.
My question is
I want to know when and at what stage is it necessary to have PF for the employees.
What stage it will become mandatory for us to have that. we are having approx 15- 20 employees at the moment. ANd by Jan'07 there may be addition of at least 10-25 more employees
Also is there any direct no or an email where i can reach you.
21st December 2006
HI Nagendra,
I think you are talking about ESI and not PF. There is no limit for PF dedcution.
Any organisation is exempt from filing PF returns if all its employee's BASIC salary is upwards of Rs. 8500 pm (don't know if this has been revised).
There has been a recent amendment to the ESIC Act where all employees earning upto Rs. 10000 pm will come under the purview of this Act.
I'm attaching a notification which migh be of some help.
21st December 2006 From India, Pune

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Dear Mr.Nagendra and all Colleagues !

With ref to the question l remember last time, One reply we have given from this Forum to Mr.YSNMurty, of Vishakapatnam, AP.

Generally, the Provident fund is a statutory, compulsory saving for the benefit of the Members under the scheme refers to Social Security.

In case the Member is crossed Rs.6500/ ceiling also he shall have to be the Member under the PF Act. But most of the Employers now a days deducting the PF under the Principle of Equity ie they deduct on the total Basic+ DA whatever they used to draw, on each month @ 12% though the wages are over and above 6500/ ceiling.

for ex: A recovery on Rs.6500/ wages( both employer 12+ employee 12 share,) Rs.541/ shall have to bifurcated to Family Pension a/c( 8.33%) and the balance amout be credited to Provident fund A/c.(12%+3.67%).

Wages above Rs.6500/ also the Pension is only Rs.541/ fixed, but the remaining entire amount will be remitted to the Member's PF A/c.

A fresh employee whose wages are above 6500/ is not required to become a Pf Member, if he is not already holding the PF membership. Otherwise, if both the Employer and employee are willing, he can become a PF subscriber/member by exercising option.

I hope this clarifies your doubt on the issue.

with regards,

Narayana Murty


Cell No: 9394712629

Office No: 040-23431552
22nd December 2006 From India, Visakhapatnam
hi my dera friends thanking very much to one and alla & also to citehe. bze sharing of views and doubts and giveing suggestion. once again thankful to all from Nagendra
22nd December 2006 From India, Hyderabad
Dear Mr. Nagendra,
Considering your organization has covered under EPF Act 1952. then
1. The employee need not to be covered under said act if his pf salary crossess Rs. 6500/-,
2. BUT if he is already a member of EPF and having active PF account no. (may be with earlier organizaton), and submits proofs inthis regard, THE EMPLOYEE SHOULD BE COVERED UNDER EPF ACT THOUGH HIS SALARY MORE THAN SAID CEILING
best wishes
jaya krishna
23rd December 2006
Hi All,
I would like to say that there are two different conditions for employee’s eligibility for PF contribution.
1. Old Employee - If an employee is working at 6400/- p.m. but due to increment the salary increased up to 7200/- p.m., even then we have to comply with the provisions of P.F. at least up to the upper limit for contribution i.e. 6500/-p.m.
2. New Employee – If any employee joins your organisation and his basic salary is more than 6500/- p.m. and he/she doesn’t wish to be a member of PF Scheme, then you have to get a form filled by the Employee i.e. Form –11. A copy of the same is to be submitted with PF Commissioner.
If your company comes under the preview of PF Act then you have to comply with the above laws to avoid any penal action.
Hope it will clear your doubts regarding employee’s eligibility in respect to PF.
Rajeev Chaudhary
23rd December 2006 From India, Chandigarh
Dear friends,

I am attaching the details from Guide to EPF Member that " who is eligible to become a PF member "

1. All employees includes employees employed thru contractors, daily rated piece rated, temporary, casual etc.

2. Excluded employees - a. Apprentice

b. Employee drawing the wages (Basic + DA Only) beyond Rs.6500/- as on the date of joining the Establishment. If the wages of an employee is increased beyond Rs.6500 during the course of employment and after becoming a member of EPF, such employees are not to be treated as excluded employees. In such case his contribution shall be restricted to his wages upto Rs.6500/-.

c. Employees whose EPF was once fully settled after 55 yrs of age or on permanent settlement abroad.

3. An individual PF member can seek exemption from the membership of EPF Scheme, so as to join the company's PF. The member may apply to the Commissioner thru the employer.

So, as per the above guidelines, the membership is not optional. It is statutory.

23rd December 2006 From India, Chennai
Dear friends

Few Points which covers all aspects under PF Act.

Employees covered under the scheme - As per section 2(f), employee means any person who is employed for wages in any kind of work, manual or otherwise, in or in connection with the work of an establishment, and who gets his wages directly or indirectly from the employer. It includes any person - (i) employed by or through a contractor in or in connection with the work of the establishment (ii) engaged as an apprentice, not being an apprentice engaged under the Apprentices Act, 1961 or under the standing orders of the establishment.

Thus, (a) Persons employed through contractor in connection with work of establishment are covered (b) Apprentices employed under Apprentices Act or under standing orders of establishment are excluded, i.e. they are not employees. [The model standing orders merely state that an apprentice is a learner who is paid an allowance during the period of his training].

Non-Eligible employees under PF - * Employee whose pay is more than Rs. 6,500 per month are not eligible. (It may be noted that limit of pay was Rs 5,000 upto 31.5.2001 and Rs. 3,500 upto 30th Sept., 94) * Apprentices as per certified standing orders or under Apprentices Act * Casual employees. However, employees employed through contractors have also to be covered under PF.

Employee to become member of Fund immediately on joining Every employee employed in or in connection with work of a factory or establishment to which the Act applies is entitled and required to become member of Provident Fund, unless he is an excluded employee. [para 26(1) of EPF Scheme]. An employee who is drawing pay above prescribed limit (presently Rs 6,500) can become member with permission of Assistant PF Commissioner, if he and his employer agree. [para 26(6) of EPF Scheme].

Contribution by employer and employee - As per section 2(c) contribution means a contribution payable in respect of a member under a Scheme or the contribution payable in respect of an employee to whom the Insurance Scheme applies.

As per section 6, contribution shall be paid by employer @ 10% of basic wages plus dearness allowance plus retaining allowance. This amount is defined as pay as per explanation to para 2(f)(ii) of EPF Scheme.

Equal contribution is payable by employee also. This contribution can be increased to 12% by Central Government and in fact, has been increased to 12% in most of the cases.

A person who is already a member continues to be a member even if his pay exceeds Rs 6,500. However, the contribution is limited to Rs 6,500 only. [para 26A(2) of EPF Scheme].

RPFC is liable under Consumer Protection Act - The Regional Provident Fund Commissioner is providing service under the Act and hence he is liable under Consumer Protection Act. - RPFC v. Shiv Kumar Joshi (1996) 4 CTJ 805 = 1996 LLR 641 (NCDRC 5 member bench) - confirmed in RPFC v. Shiv Kumar Joshi 1999 AIR SCW 4456 = 1999(7) SCALE 453 = 2000 LLR 217 = AIR 2000 SC 331 = 99 Comp Cas 347 = (2000) CLA-BL Supp 26 = 24 SCL 46 (SC).

Employees Provident Fund Scheme - This is the main scheme under the Act. Both employer and employee have to pay contribution to Provident Fund. The employer has to deduct contribution of employee from the salary of employee and has to pay both employees contribution as well as employers contribution by a challan in prescribed form. The amount has to be paid in approved bank.

Employee can pay higher contribution - Employee has to contribute 12/10% of his 'pay' as contribution. The employee can voluntarily pay higher contribution above the statutory rate. However, employer does not have to match the voluntary contribution, over and above the statutory rate. [para 26(2) of EPF Scheme].

Contribution payable under PF Scheme - The Principal Employer is liable to pay contribution of his own employees as well as employees employed through contractor. Principal Employer can recover from contractor the amount paid by him on behalf of contractor. The contribution is 12% of pay i.e. basic wages, plus dearness allowance, cash value of food concession and retaining allowance. Contribution of both employer and employee is same i.e. 12% each. [para 29 of EPF Scheme].

Employer has to pay his contribution to EPF. He cannot deduct his contribution from wages of the employee. [Para 31 of EPF Scheme]. However, he has to deduct employees share from his salary and pay the same in EPF scheme. This deduction can be only from the wages pertaining to period for which contribution is paid. However, if there is accidental omission, the amount can be recovered later. Amount deducted from salary of employees is held in trust by the employer or contractor. [Para 32 of EPF Scheme].

Out of employers contribution of 12/10%, the Employers contribution of 8.33% will be diverted to Employees Pension Scheme. The balance will be retained in the EPF scheme. Thus, on retirement, the employee will get his full share plus the balance of Employers share retained to his credit in EPF account. [This diversion is only w.e.f. 16th November, 95. Earlier Employers contribution to their credit will continue to remain to their credit].

Lower contribution in certain cases - The employer's and employees contribution is 12% each. This is applicable to many of industries and establishments. However, this contribution is not applicable to - * any establishment employing less than 20 persons * any establishment registered with Board for Industrial and Financial Reconstruction (BIFR) as a sick company - the lower rate of contribution continues till its net worth is positive * any other establishment which has accumulated loss equal to or more than its assets and has also suffered cash loss in last two years. * Jute industry * Beedi industry * Brick industry * Coir industry other than the spinning sector * Guar gum factories. In these cases, the contribution is 10%.

Interest on account PF Commissioner shall maintain account of each member of EPF scheme. [Para 59 of Scheme]. Interest is credited to the account of employee. The Interest is calculated on monthly running balance basis. Amount standing to credit at end of the month is considered for calculation of interest for the following month. The interest rate is declared every year by Central Government in consultation with Central Board of Trustees of Provident Fund. [Para 60 of EPF Scheme].

Employees Pension Scheme - This scheme has been introduced w.e.f. 16th November, 95. The Scheme is applicable to all subscribers of Employers Provident Fund. It is also compulsory to persons who were subscribers as on 16.11.95.

Contribution - The employers contribution of 8.33% will be diverted to the fund of Pension Scheme. Employee does not have to make any contribution. Employers contribution is 12%/ 10%. In such cases, 8.33% is diverted to Pension scheme and balance 1.67%/3.67% as the case may be, will be in credit of employees name in Provident Fund account. The 8.33% is on maximum salary of Rs. 6,500. If some employers are paying contribution on salary in excess of Rs. 6,500, the excess contribution will be credited to Provident Fund account and not to Pension scheme.

No separate administration charges or inspection charges are payable, as these are already paid along with Provident Fund contribution.

Benefits under the scheme - Members will get pension on superannuation or retirement from service and upon disablement during employment. Family pension will be available to widow/widower for life or till he/she remarries. In addition, children will be entitled to pension, upto 25 years of their age. In case of orphans, pension at enhanced rate is available upon death of widow/widower or ceasing payment of widow pension. Benefit of pension to children or orphan is only restricted for two children/orphans.

If the person is unmarried or has no family, pension is available to nominee for a specified period.

Commutation of Pension - The member can commute 33.33% of the pension, so as to receive hundred times the monthly pension so commuted as commuted value of pension. Balance will be paid on monthly basis.

Employees Deposit Linked Insurance Scheme - The purpose of the scheme is to provide life insurance benefits to employees who are already covered under PF/FPF. The employer has pay contribution equal to 0.50% of the total wages of employees In addition, administrative charges of 0.1% of total wages. [Notification No. AO 503(E) dated 28-7-1976 issued u/s 6C(2) of PF Act].

The employee does not contribute any amount to the scheme. The salary limit for coverage of employees is same as that of Provident Fund.

Exemption from the scheme can be obtained from RPFC if LIC Group Gratuity scheme is adopted by employer. If exemption is granted, only inspection charges @ 0.005% are payable to PF authorities.

Benefit to nominee of employee - If an employee dies during employment, his nominee or family member gets an amount equal to average balance in the Provident Fund Account of the deceased employee during last 12 months. If such balance is more than Rs. 35,000, the insurance amount payable is Rs. 35,000 plus 25% of the amount in excess of Rs. 35,000, subject to overall limit of Rs. 60,000. If the employees are covered under another life insurance scheme whose benefits are better than this scheme, an exemption from this scheme can be obtained. [Increased to 35,000 and 60,000 w.e.f. 13.6.2000]


Arun K Mishra[/quote]
23rd December 2006 From India, Bahadurgarh
Dear All,
Warm Reagards & best wishes for the Chrstmas & New year. The topic was wheather to deduct or not the Pf if basic is above 6500/-. What the pf Act says that, if the Employee is getting the salary or wages which is above 6500/-, the employer contribution towards the pf will be 6500/- Per Month.
For Example:
Mr.X has a package of Rs.100,000/- Out of which the basic is 60,000 & the D.A is 10,000/-.
In the above case if we will take the 12% of Basic + D.A it will 12% of 70,000. That comes to 8400/-. But the employer is liable to pay only 6500/-. So even if the salary goes up the employer's liability is limited upto Rs.6500 Per Month.
Please revert back if i am wrong or if you have any suggestions.
B.R.Misra M.B.A, M.H.R.M, ADCHN

24th December 2006
Dear Nagendra,
Ones the employee is covered in PF Act, he is covered till he continues in the employment. If employee basic salary crosses the set limit of Rs.6500, in that situation employer has to deduct to the maximum limit of Rs.6500 which is Rs.780 (employer share), he is legally bound to do that. If the employer stops deducting and contributing in the PF fund he is violating the law. This is what i think.
By now you must have collected all the relavent information on this topic so what you say on this. Please mail me the details on .
thanks and regards,
Bibhutosh Bhadauria
1/206 White Horse Road,
Balwyn 3103, Melbourne
Victoria, Australia
24th December 2006 From Australia, Balwyn
Dear Mr. Samba Siva,
In your post you said that PF coverage limit is raised to Rs.10, 000. This issue was pending for years. Have the notification have come on this issue and it has been implemented or still in progress.
I will be grateful if you send me detailed information on this. My Email is
thanks and regards,
Bibhutosh Bhadauria
1/206 Whitehorse Road,
Balwyn 3103 Victoria,
Melbourne, Australia
24th December 2006 From Australia, Balwyn
Dear Nagendra,
An employer can not stop deducting PF of covered Employee irrespective of any hike in his / her salary. Of course, Employer can restrict the contribution to 12% of Rs 6500 and need not contribute 12% of hiked salary, but continued coverage is mandatory.

20th February 2013 From India, Kota
heloooooooooooooo sir i am kamal please clarify me Is the employer bound to pay his share of PF if the basic salary of an emplloyee exceeds 6500/- p.m.? What else, if it exceeds 6500/-p.m?
16th April 2013 From India, New Delhi
Dear Friends,
Please clarify my doubt with regard to EPF Employer contribution is treated as a Expenses which stands in the Profit and Loss account Expenses side. Is it correct method for finalize the accounts? Any bodies can prove regarding my doubt with EPFO notification if available any in the EPF act.
Please do the needful and feel free to contact my e-mail
Thanks & Regards,
20th January 2014 From India, Chennai
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