Industrial Relations And Labour Laws
Sr. Manager Hr/admin
Human Resource-professional
+2 Others

Dear all

There is a confusion on payment of PF administration charges. I very well know that it is to be paid @ 1.1%. But on what wages. In our organisation we deduct PF @ 12% on Basic and DA (say for example it is more than 6500/-), but the management contribution is on Rs.6500/- only.

Our contention is that we are bound to pay administration charges on Rs.6500/- only for which we have rules specified in PF Act. But the PF officials

denied and are asking administrative charges on full wages on which PF is deducted. We tried to get the rule under which it is done. They have not given any rules but however insists that it should be paid on full wages.

Can some of you tell me whether our contention is right or PF authorities contention is correct. I will be much grateful if you can mention the rule specified in the PF act if the contention of PF authorities are correct and also

mention any court decisions for reference.

Please help me out as this has become a burning issue and my client is suffering.

Expecting to hear from you soon


Auditor Raman

From India, Madras
Dear Mr. Raman
Even I am in the same confusion. Even am looking for the document evidence but I din't get anything on that. I enquired with some PF officers but few are telling on 6500/- and few are telling as 12% on the entire Basic

From India, Bangalore
Dear Raman & Jeevarathnam, Please refer the attached excel sheet. You will find the detail work with an example. For any further clarification feel free to write or discuss.
From India, Mumbai

Attached Files
File Type: zip EXAMPLE PF (7.9 KB, 249 views)

Dear Mr. Prasenjit Thanks for your reply. That is fine. If employee is contributing on 10000/- and ER is restricted to 6500/- then what will be the calculation
From India, Bangalore
Dear Jeevarathnam,
First, there should not be any difference in the contribution amount.
The employer has to match the employees contribution unless the employee has opted for voluntary PF deduction.
If the employer wants to contribute only Rs 780 against PF then it should deduct the same amount from the employee.
The calculation of PF admin charges will remain the same as I mentioned in the excel sheet.

From India, Mumbai
Dear Mr.Jeevarathnan
In employee contribution for 10,000*12% 1200 means you have to pay the administrative charge 1.1% for 10,000.or your employee contribution for 6500*12% 780 means you have to pay 1.1% for 6500.

From India, Madras
Dear friends, Deduction of PF above 6500 for an employee is optional,where as employer is bound to pay and caliculated to the extent of 6500 only.All calculations are limited to a max of 6500 only.
From India, Hyderabad
Administration charges is payable on PF qualifying salary. Therefore, if employees are contributing on their actual salary (say, in the example Rs 10000) you have to contribute it on Rs 10000.
In the return of contribution you have to show the PF qualifying salary. It is on that salary 12% is calculated. If the employees do contribute on higher amounts than Rs 6500, then that should come in that column. In such scenarios some employees may be limiting their contributions to Rs 6500 also. Therefore, salary/ wages means total of PF qualifying salary (the salary on which employees' share of contribution is deducted).
At the same time EDLI and its admin. charges are to be worked out at Rs 6500.

From India, Kannur
Dear Prasenjit Mitra,
There is a mistake in pension fund 8.33% should not exceeds 541/- but your value is Rs.833/- wrong value. The remaining amount of employer share should be added to Account No.1 along with employee share i.e. 12%.
Please all followers correct it other wise the accounts of PF may problem at the time of updation.

From India, Secunderabad
Dear Friends
As I told you, in our case employee is contributing 12% on Rs.10000/-
whereas management contribution is 12% on Rs.6500/- only. As such
we have paid administration charges @1.1% on 6500/-. The PF
authorities are not accepting and asking for 1.1.% on 10000/-. We
wanted to know the specific rule under which it is needed, for which
there is no reply.
If any one knows about the rule or if it has been decided in a case law
kindly provided the same as it has become a burning issue.
Auditor Raman

From India, Madras
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