Sunil Joshi
Human Resources
Hr Executive
Admin Executive
+7 Others

Thread Started by #anu840

Hi every one
Hi I am a HR Specialist recently joined to Pharmaceutical Company in Bangalore. Now I have to handle statutory things (PF< ESI, Superannuation, Gratuity)
Can any one tell me what is the ceiling limit of PF. if employees basic salary exceeds the limit then what happens????? Opting a PF benefit is compulsory or not????
need a clear information on this plz.............awaiting
31st January 2007 From India, Bangalore
Hi Anu,
The PF ceiling limit is Rs. 6500/- i.e. if the (Basic+DA) of an employee exceeds Rs. 6500/-, it is not mandatory for him to avail the PF facility.
if the (Basic+DA) of an employee is less than Rs. 6500/- and it rises due to salary hike, increments, promotion etc in between the year, he has the option whether to continue his PF or stop it.
Hope the above would satisfy you.
Santosh Iyer

31st January 2007 From India, Pune
Dear Anu,
Let me give u a brief summary abt the Employees P.F Act,1952:
Any worker who has secured employment in any establishment or who has secured employement through any contractor in connection with work in an establishment is eligible for PF.
Yes,its compulsory for an employer to bring every employer under the Act.
Under the PF Act, both the employee andemployer has to contribute 12% of the salary towards the PF.Here salary means basic pay+D.A,where the basic pay is subject to a maximum limit of rs.6500/-However,if the basic wages can be till rs.10000.
Apart from the PF,the employees are also entitled to receiving other benefits such as insurance and pension.For insurance,the employer has to contribute 0.5% and for the pension scheme,the emplyer has to contribute 8.33% and the Central Govt.would contribut 1.16%.
31st January 2007 From Kuwait
Dear Anupama,

EPF Act applies to an organisation where the employee strength, including the contract employees is 20 or above.

As others have mentioned the PF is deducted on the basic + DA (here in after referred as PF Wages). The contribution is 12% by employee (deducted from his/ her salary) and 12% by employer.

Out of the employer contribution 8.33% or Rs. 541/- p.m. which ever is less goes to the pension fund and the rest (3.67%) goes to the employee's provident fund.

Apart from this there are charges and contribution to employee’s deposite link insurance (EDLI) scheme, the total of charges and contribution amounts to 1.61% and are paid by the employer.

The stated limit as per the latest amendment is Rs. 6500/- p.m. (PF Wages). I would like to clarify one thing that even if the PF Wages increased beyond this limit, no employee ceases to be the member of PF. In fact one cannot even withdraw the PF if s/he is moving to a company to which the PF act applies.

An employee is exempt of PF only and only if the organisation is not covered under the PF act or the first PF Wage of the employee is more than Rs. 6500/-.

If once an employee is covered under the act s/he cannot be pushed out of the PF just because her/ his PF Wages has gone beyond the limit as stated by the act.

However, the act does not force the employee and employer to contribute PF over the PF Wages. For e.g. if an employee was drawing 6500/- as PF Wages the total contribution would be Rs. 1665/- (25.61% of the PF Wages i.e. 12% employee contribution, 12% employer contribution and 1.61% towards EDLI and charges).

Now suppose the PF Wages exceeds 6500/- and is 7500/- the organisation may limit the contribution to 1665/- (25.61% of 6500/-) and not 1921/- (25.61% of 7500/-).

Even if the employer wants to contribute to the increased PF Wages, which is 7500/- in this case the contribution to the pension fund will be limited to 541/-.

I hope the underlying cases shall clarify this to you.

(A)Basic 6000/- 6500/- 7500/-

(B)PF Cont (24% of basic 940/- 1019/- 1259/-

Less pension cont)

(C)Pension Cont (8.33% or 541/- 500/- 541/- 541/-

Whichever is less)

(D)Charges 97/- 105/- 121/-

Total PF Cont (A x 25.61%) 1537/- 1665/- 1921/-

or B+C+D

Please feel free to have any further questions on this.

Best wishes,

Sunil Joshi
1st February 2007 From United States, Bedford
Thank you to all for giving information.
Another query is of CTC.
Is PF a part of CTC?
If so then how many times PF will be deducted from employees salary. Is employer's contribution & employees contribution is deducted from employees salary only or only employees' contribution is deducted?
Pls refer this salary breakup of an employee
Basic - 7000
PF Contribution: 12% of basic
Gross: 17500
CTC: 220000.
Pls tell me for 220000 CTC how do you make fitment (Salary breakup) to an employee.
How much would be his take home salary?
Is gratuity is compulsory & is a part of CTC.
1st February 2007 From India, Bangalore
Hi Anu,
If we consider his CTC Per annum Rs. 2,20,000/-, his monthly CTC would be 18,333/-. Now this Rs. 18,333/- would include the PF contribution done by the employer.
Regarding fitment of the breakup, I am not aware about your other allowances / components of the salary. It generally varies from company to company.
Regarding Gratuity adjustment in CTC, not every company considers gratuity as part of CTC.
As the term CTC itself suggests that it is "COST TO COMPANY" hence the PF contribution made by the employer will also be considered in CTC.
Hope this will satisfy you.
Santosh Iyer

1st February 2007 From India, Pune
Dear Anupama,

As per my under standing of PF Act 1952:-

Quarry :- Ceiling

Answer :- As per PF Act 1952, ceiling limit is Rs. 6500/M i.e. (Basic+DA) of an employee.

If the employee’s emoluments exceed Rs. 6,500/- per month, he has the option to join the Scheme(s) with the consent of employer.

Kindly see the details:-

Employee Status:-

If Employee is already member of PF Scheme.

Emoluments :-

1. Up to 6500/M (Basic +DA) -Mandatory @ 12% of Basic +DA.

2. 6501/- & above (Basic +DA)

A.Mandatory @12% up to 6500/M.

B.Above 6500/M it’s up the organization & its policy.

If Employee is not member of PF Scheme or New Entrant.

Emoluments :-

1. Up to 6500/M (Basic +DA) -Mandatory @ 12% of Basic +DA.

2. 6501/- & above (Basic +DA) - It’s not Mandatory, but general in the interest of employees organizations cover their employees under the scheme.

If you want to exempt your employee from the scheme.

Kindly refer: - CHAPTER IV - MEMBERSHIP OF THE FUND (27. Exemption of an employee) of PF Act 1952 for further clarification. Soft copy of PF Act 1952 enclosed for your reference.

I think, it will clear your quarry, if you get more clarification on this, please share it with me also.

With Regards

Rakesh Kumar Sharma

1st February 2007

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Dear Mr Alex,
Sir in this reply of yours above, you have written in "Contribution" that 'the basic wages can be till rs.10000'. Is Rs. 10,000/- a ceiling limit? Are there any different rules applying when basic wages are more than Rs. 10,000/-?
An employer whose employee started below Rs 6500/- and went to say Rs.50,000 in basic wages, would still be required to make a EPF contribution till Rs. 6500/- (ie Rs 780)? Or will it be more?
I would be grateful to anyone who can clear this doubt.
Sir, I tried your mobile number but it is switched off. If it is convinent please reply or call me at 09893235550.
Shamit Verma

30th April 2009 From India, Raipur
Can be deduct the PF above 12% from employer contribution, suppose an employee have total ctc is rs. 20,000 his basic Salary +DA is 7500/- can be deduct the PF from Employer Side is above than 780/-
Manish Dixit - HR
3rd June 2009
dear all,
i m bit confuse about PF cealing, is it possible to deduct 25.61% on 6500/- for those who are having higher Basic+ DA.
if a person drawing 14,000 basic+ DA, is it posible to deduct employer/employee contribution at 6500/-. is there any legal barrier in doing this practice.
23rd April 2010 From India, Vadodara
our company is 20 yrs old we are deducting pf (basic + da) 12 % even above Rs6500/ limit, there is no objection from dept or employees. Now we are in difficult times, can we now start deducting and contributing up to the Rs6500/ limit, will the pf dept object.
thanks rags
24th April 2010 From India, Madras
Hi, i have a query, i just wants to know the process of approval to submit PF on 6500 only, normally its happens that we contribute 12% pf from employer and employee, suppose employees wants PF get deducted only on 6500, Rs.780 only and his basic is more than 6500 so is there any additional form or approval is required from PF office.
Ajay Singh
3rd May 2013 From India, Hyderabad
Dear All,
if any employee had worked 2 years and left job. who was expired suddenly . Is expired person is intitle for family pension ? At the time of death who was not working anywhere. Please explain.
6th June 2013 From India, Delhi
Dear Mr. Ajay,

First of all you have to understand about wage sealing

wage sealing is the salary (Basic+DA) which P F department has fixed, which is presently 6500.00

Now read following case:-

1 If P F salary (Basic+DA) of Employee is equal or less than 6500 in this case PF @12% PF Salary will be deducted from the salary and 13.61% (12% + 1.61%) of PF Salary will be paid by the employer.

2 If P F Salary (Basic+DA) is more than 6500 at the time of joining in this case all depend on employer. he is not bound to deduct PF or he may deduct on his full salary or on 6500.00 ( Wage Sealing)

(Pl. Note:- Is a employee is already member of PF from his old establishment and he did not withdrawn his PF only in this case the new establishment has to give him the benefits of PF whether is P F Salary is more than 6500)

3 If P F Salary was less than 6500 at the time of joining and due to increment or promotion now salary is more than 6500.00 in this case PF will be deducted on minimum of 6500 (Wage Sealing).

If there is any query feel free to discuss

R.K.S. Mehra
26th March 2014 From India, New Delhi
Respected Experts
I would like to know the legal provision wherein as regards to the membership of any employee under provident fund a t if the drawing salary/wages up to Rs.6500.00. Then his/her salary in resed to the ceiling limit. What is terms under the act he should be a member as a continuous membership. Apart from please let me know legal provision please.
11th June 2014 From India, Pune
Hi All,
I have doubt in PF... Is the PF (employer contribution) can be deducted from CTC of employee.
If so can we mention the column as PF(Employee and Employer contribution) in payslip or salary break up... Explain me detail
Please help me...
14th July 2014 From India
Ctc includes all expenses incured by the company. Thats why we call cost to company.
Pf contribution by compnay is exp. To them which is 13.36% of basic + Da. So uffcouse it has to deduct fr ctc amt.
And you can show this deduction in salary break up. As a pf employers contribution.
18th November 2016
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