In our organisation most of the employee salaries are above 20,000/- per month gross. Since now PF have issued a circular saying tha PF contrbutions have to be deducted on gross, is it valid that we deduct only to the minimum of Rs.6500/- gross i.e only Rs. 780/- per month instead of deduction on the gross 20,000/-????
From India, Thana
Hi PF is calculated on the Basic wages & not on the gross pay. Once again there is ceiling for 6500/- So you shall restrict for the same.
From India, Bangalore
Hi Mr. Thakur. I am sorry. Even there should be Ceiling limit. Do you have any Circular or PDF on the same? Can you please share the same?
From India, Bangalore
I saw the news in today's TOI.
Save more in provident fund, but take home less as salary - The Times of India

From India, Lucknow
Hi, Actually when we have an Inspection from the PF Department, they intimate that other than HRA all the allowance should deduct the PF amount...
From India, Chennai
Thugh all other allowances except HRA can be treated as part of basic wages, the wage limit for computing contribution will not go up and it will be the same namely Rs.6500/p.m and thus the contribution can be restricted to Rs.6500/-p.m
HR & Labour Law advisor

From India, Mumbai
Dear Friends,
Let me clear the confusion, Today, we got the news from Time of India news Paper and where wage ceiling is 6500/- because there is no clear massage that employer also has to deposit 12% of the Gross in respect of the employees. Employee PF contribution be will deducted on gross ( all Allowances other than HRA) but employer part will be on 6500/- i.e. 780/- . employer contribution will be voluntary above Rs. 780/- so it depend on the employer choice for his part. but employee choice has closed after this news.
In other case of Expat contribution will be 12% of the gross for employer & employee as well.

From India, Delhi
Dear all can i know, after recent circular, what is the minimum wages on which pf to be duducted, on rs 6500/- or on entire amount, i,e 15000 or more
From India, Bangalore
Dear All,

As the circular is initiated from PF office dated 30.11.2012 which in the context of Section 7-A (Determination of money due from employer).

One of the point mentioned in the circular i.e. number 12 is showing "SPLITTING OF WAGES" which is defined as:-

Previously under Section 2(b) (ii) of the Act as "commission" and "any other similar allowance" are there which is encouraging the subterfuge of splitting of wages to exclude the PF liabilities.Thus now the definitions of "basic wages" is clearly been mentioned with the circular as all the allowance which are being paid to the employee on regular basis shall be the part of "Basic Wages".

Hence, as per my understanding the circular have no impact on Maximum ceiling limit for the calculation of PF i.e. 12% of basic(Max Limit 6500) as given under para 26A of PF scheme.

Thus, only the consideration of Basic Wages shall be have clubbed of all allowances which are being paid on monthly basis but if not exceeding the ceiling limit i.e. 6500.

Please write if you have any ambiguity pertaining to my understanding jotted above.


Pushkar Bisht

From India, Delhi
Dear All, Pl find attached circular from EPFO on 30 November,2012.See sr.No.12 for split of wages. Regards,
From India, Mumbai

Attached Files
File Type: pdf EPFO circular_30.11.12.pdf (304.0 KB, 1367 views)

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