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Thread Started by #Amit Kr. Chaturvedi

Respected Seniors/Friends,

The Government has approved the increase of PF wage to Rs.15000/- per month. Enclosed herewith the most awaited Notification regarding the same published today itself:

The following may be the impact after the amendment:

1. The employees whose monthly Basic wages is Rs.15000/- and above and the company who is currently paying PF limited to Rs.6500/- for such employees may have to increase the contribution limit at least on Rs.15000/-. ( As per the section 6 of the PF Act , Equal Contribution to be provided by the employer) .

2. The employees who have already opted out from PF coverage ( whose basic is above Rs.6500) should be covered under the scheme incase their Basic Wages is up Rs.15000/- per month).



3. The companies who are currently extending PF benefit only on Rs.6500/- irrespective of their wages , may have to increase the PF wages to Rs.15000/- and need to pay the employer contribution of 13.61% on Rs.15000/-

4. The pension amount maximum limit also may increase from Rs.541/- to Rs.1000/-.

5. The employees who current basis wages is less than Rs.15000/- may have to pay the contribution on the actual basic payable.
28th August 2014 From India, Jabalpur

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Dear sir,
Please, understand me this concept same like 6500/- limit for epf deduction and 15,000/- above salary person can get exemption for pf deduction, after filled up form 11(revised).
Nilesh Bhatt
28th August 2014 From India, Vadodara
Hi Nilesh, The concept and calculation shall remains same but the ceiling will be increased form Rs. 6500 to Rs.15000 w.e.f 1st September 2014.
28th August 2014 From India, Jabalpur
Chaturvedi Sir,
I have little confusion on sr. no. 4 where you have mentioned the pension amount maximum limit also may increase from Rs.541/- to Rs.1000/-. I think calculation process remain same pension fund must be calculated on actual basic but not more than on 15000/- basic wage i.e. maximum 1250/-.
e.g.
1. Basic Wage 7800
Employee share 936/-
Employer share EPF 286/-
EPS 650/-
2. Basic Wage 15000
Employee share 1800/-
Employer share EPF 550/-
EPS 1250/-
3. Basic Wage 18000
Employee Share 2160/-
Employer Share EPF 9
And I think notification talking about pension amount not about the pension fund share. Am I right if not then please explain it with example I will be grateful to you.
30th August 2014 From India, Mumbai
Chaturvedi Sir,
I have little confusion on sr. no. 4 where you have mentioned the pension amount maximum limit also may increase from Rs.541/- to Rs.1000/-. I think calculation process remain same pension fund must be calculated on actual basic but not more than on 15000/- basic wage i.e. maximum 1250/-.
e.g.
1. Basic Wage 7800
Employee share 936/-
Employer share EPF 286/-
EPS 650/-
2. Basic Wage 15000
Employee share 1800/-
Employer share EPF 550/-
EPS 1250/-
3. Basic Wage 18000
Employee Share 2160/-
Employer Share EPF 910/-
Employer Share EPS 1250/-
Third case depends upon the policy of the company or on employer's wish whether he want to pay PF on more than 15000/- or not.
And I think notification talking about pension amount not about the pension fund share. Please clear my doubt and correct me if I am wrong.
Thanks & Regards,
Shailza
30th August 2014 From India, Mumbai
Hi Shailza,
Your understanding regarding Pension is absolutely correct. Yes, and notification talking about pension amount not about the EPS that is 1250 on 15000/-.
It was a typo and I appreciate your observation over the same.
30th August 2014 From India, Jabalpur
Dear sir,
My organisation currently follows a practice of flat 12% PF deduction from employees.My organisation is also compliant to minimum wage guidelines. Would appreciate your guidance to understand the impact and changes that I need to introduce in my organisation following this notification.
Best wishes and Regards
30th August 2014 From India, Kolkata
Dear Friends,
The notification has created a challenge for HR professionals. While one side, the employee has to increase his contribution, the other side management also need to increase its contribution. The take home salary will go down and will increase the HR cost of the companies. While the objective of the notification is appreciable, the huge rise from 6500/- to 15000/- has put many companies in difficult situation at this challenging economic scenario.
I would like to request senior members/professionals how companies can address this challenge such a way that both employee and employer take minimum impact.
Regards
Bhavan
30th August 2014 From India, Bangalore
Dear Bhavan
just go thru the msg of Shailza, u will get clear.
from the recent pf pension fund notification, everything will be the same deduction on account of PF. only thing is contribution to Provident fund share is increasing.
ultimately govt need more money from this pf pension fund.
employer/employee is not giving more, employee is sharing the pf saving fund to pension fund.
Hope I understood in correct way.
Regds...Mathan
31st August 2014 From India, Madras
Hi Indrani, Plz assume 15000, instead of 6500 per month wrt PF.
31st August 2014 From India, Jabalpur
How is an organisation impacted if the organisation (operates in multiple states) is doing the following:
1. Is applying a flat 12% towards PF contribution as employee's share and....
2. Is also compliant to state prescribed min wage limits
Please guide dear senoirs.
Best wishes
31st August 2014 From India, Kolkata
Chaturvedi Sir,
Thank you for your valuable information.
I have a doubt. Our company deducting a flat Rs. 780/- from all employees those who are earning more than Rs. 10,000/-. Is this ceiling need to me increased? If so what will be the ceiling? Accordingly is the employer also have to increase their ceiling? Kindly clarify?
Thanks,
Ramachandran
1st September 2014 From India, Chennai
Hi Mr. Amit,
Thanks for sharing such an important information.
That notification has brought one more impact/addition in the EDLI benefit, which is now become Maximum upto 3.6 Lac earlier it was 1.56 Lac.
1st September 2014 From India, Delhi
Sir, I am getting a salary of Rs.20000/- while my basic salary is Rs. 9000/-. What would be my EPF and EPS calcualtions after 1.9.2014
1st September 2014 From India, Calicut
Ramachandran Jee, The ceiling will be increased from 6500 (Basic+DA) to 15000 per month w.e.f 1st September 14.
1st September 2014 From India, Jabalpur
Dear Mukund, If your basic+da is 9K than deduction would be 1080/month w.e.f 1st September as EPF and 750/month as EPS.
1st September 2014 From India, Jabalpur
Yes Bisht Jee, Its all about how we welcome n accept this change.
1st September 2014 From India, Jabalpur
Dear Indranil, Its applicable to whole in India Except J&K. Employer’s liability is only upto 15000/-.
1st September 2014 From India, Jabalpur
Dear Chaturvedi Sir, Pls tell about EDLI benefits? is there any changes?
2nd September 2014 From India, Trichy
Dear Bisht Sir, As per your comment, EDLI benefits changes is sure or not? (from 1.56 lac to 3.6 lac).
2nd September 2014 From India, Trichy
Dear Chaturvedi Sir,
I have some doubt for pf calculation.
1. Which one is correct calculation for PF (Calculate from Basic or Calculate from Basic + DA),
2. Which method is legal procedure to calculate PF, and
3. Is there any changes in EDLI Benefits?
I need your helpful reply.
2nd September 2014 From India, Trichy
Dear Sirs, Could anyone clarify whether there is any particular percentage - the basic salary should be from Gross salary? Bcoz, it impacts on EPF reduction, minimum wages (Basic + DA), etc...
2nd September 2014 From India, Chennai
Dear Fellow community members...

One interesting feature is not at all addressed by any one in this forum. That is on getting pension 50% on the last drawn wages.In this notification it is touched as below: please confirm my understanding is on the right side of the EPS body. This is on the contribution made by the companies on the actual basic being drawn without limiting to the CAP of 15k. The notification gives 6 months time to confirm by both employer and employee.

Suppose one's basic is Rs.20000/-.

Employee Share: 20000X12% =2400

Employer share: 20000X (8.33%+3.67%)=1666+734

If Rs.1666/- is contributed to EPS then such employee can draw 50% of the last drawn average basic as his pension. But one wise amendment made by the EPS body is ,

Last drawn Basic wage = average of last 60 months basic prior to retirement.

It was earlier last 12 months basic prior to retirement. Now it is hiked to 60 months.

Under the above one can expect the pension of as good as Govt. employees. Say one retires at 2030. The average basic salary between 2026 to 2030 is 40k, then he can expect the pension of Rs.20k per month.

Let us publicize this benefit to all ! Seeks views from all learned members !!!

Rajan
3rd September 2014 From India, Alandur
Dear Experts,
Is the PF calculation correct?
Example-1 (Base Rs. 15000/-)
CTC Salary – Rs. 25000/-
Basic (60% of CTC) – Rs. 15000/-
Medical (Max.)- Rs. 1250/-
HRA (40% of Basic) – Rs. 6000/-
Conveyance (Max.)- Rs. 800/-
Sp. Allowance – Rs. 1950/-
Deduction:-
PF:- (Emp. Cont.)= Rs. 15000*12%= Rs. 1800
PF:- (Empr. Cont.)= Rs. 15000*13.61%= Rs.2041.50 -
Example- 2
CTC Salary – Rs. 25002/-
Basic (60% of CTC) – Rs. 15001.2/-
Medical (Max.)- Rs. 1250/-
HRA (40% of Basic) – Rs. 6000.48/-
Conveyance (Max.)- Rs. 800/-
Sp. Allowance – Rs. 1950.32/-
Deduction:-(as basic is above 15000, exempted)
PF:- (Emp. Cont.)= Rs. 0*12%= Rs. 0
PF:- (Empr. Cont.)= Rs. 0*13.61%= Rs.0
Example- 3:
CTC Salary – Rs. 10000/-
Basic (60% of CTC) – Rs. 6000/-
Medical (12 % of Basic.)- Rs.720/-
HRA (40% of Basic) – Rs. 2400/-
Conveyance (Max.)- Rs. 240/-
Sp. Allowance – Rs. 640/-
Deduction:-
PF:- (Emp. Cont.)= Rs. 6000*12%= Rs. 720
PF:- (Empr. Cont.)= Rs. 0*13.61%= Rs.816.6
5th September 2014 From India, Mumbai
Hi Tatkare Jee, Its all about Basic+DA only if you are not having DA component please consider Basic only for deduction.
5th September 2014 From India, Jabalpur
Hi Dhiliban,
If you are having separate DA component in your CTC/Gross fixation format than add this amount with basic for calculation of PF wages. If you do not have separate DA component than go with basic only.
The EDLI benefit has also increased to 3.6 Lakhs.
5th September 2014 From India, Jabalpur
Dear All
Pls take a note of below point in Pension amendment.
Para 4 says\" The existing members as on 1/9/14 who at the option of employer and employee had been contributing on salary exceeding 6500/- may on fresh option continue to contribute on salary exceeding 15000/-.
Provided that aforesaid members have to contribute @1.16% on salary exceeding 15000/- as an additional contribution payable by employees for each month\".
To what i understand about pension is that it doesnot have an option to contribute on salary above statutory limit. Earlier it was 6500/- so pension contribution of employees who were contributing above the statutory limit was 541/- which was contributed by employer. Now in this scheme it talks about the contribution over and above wage ceiling as well as additional contribution by those who are contributing over and above the wage ceiling.
This creates confusion about what will be the present structure of PF and Pension calculation.?
5th September 2014 From India, Ahmedabad
Dear members,
It will take sometime for confusion to stop and to understand the full crux of notification. In addition to the above, also be reminded about the following clause in the notification.
" Effective September, 1, 2014, all new EPF members shall not become a member of EPS, if their pay is more than INR 15,000/ month at the time of joining. In other words, no allocation towards pension fund will be made for such new members and the entire employee and employer contribution will go to the provident fund account. For existing subscribers drawing more than 15000/-, a 'fresh option' has to be exercised for willingness to contribute".
At the maximum employer may restrict to 15000/- for EPS/EPS as usual. Many small size companies are unwilling to meet the extra contribution and so also the employees on high deduction. Let's wait and see the course of action.
Regards
Chandru
5th September 2014 From India, Madras
Can anyone explain me the below clause of the new notification by PF enhancing limit from 6500 to 15000 wage ceiling?
"On salary exceeding six thousand and five hundred rupees per month, may on a fresh option to be exercised jointly by the employer and employee continue to contribute on salary exceeding fifteen thousand rupees per month:
Provided that the aforesaid members have to contribute at the rate of 1.16 per cent on salary exceeding fifteen thousand rupees as art additional contribution from and out of the contributions payable by the employees for each month under the provisions of the Act or the rules made thereunder
Looking forward for an early response.
Thanks,
Sajid
8th September 2014 From India, Delhi
Dear Jagriti Bhagat, CTC means cost to the company. so the management may deduct both the share from the employee. But the bigh question is, is it ethical?
12th September 2014 From India, Mumbai
Dear Mr.Tatkare,
The management can deduct the employer share as well as employee share from CTC because all costs that incur because of recruiting an individual constitutes an CTC. I hope you know very well that all Salary Components are included in CTC.
Its like, Basic Salary + Dearness Allowance + House Rent Allowance + Conveyance Allowance + Leave Travel Allowance + Medical Allowance + Other & Special Allowance + All employer part of contributions to deductions = Cost to the Company
Cost to the Company - All employer part of contributions to deductions = Gross Salary
Gross Salary - All employee part of contributions to deductions = Net Salary
IN this deductions are mostly EPF, ESI, PT, Loan, TDS, etc.
So, It is obviously not the question of ethics... It is upon the perception of the individual.
12th September 2014 From India, Chennai
hi,

Except belwo effect nothing will be changed, it remains same. Ther eis no reduction in Net salary.

EDLI will be calculated 0.5% on Pension wage, currently Rs 6500, if it is increased to Rs 15000, need to calculate 0.5% on Rs 15000 and even it is applicable for admin charges of EDLI 0.01% on Rs 15000.(It costs to the employer only)

Due to this, impact will be there on employer EDLI contributions.

1.difference amount would be added to EPF amount of 3.67% same as before.

If Basic is Rs 20000/- (Greater than Rs 15000)

EPF Contribution from Employee : Rs 2400 (12% on Basic 20000)

EPS Contribution from Employer : Rs 1250 (8.33% on maximum limit Rs 15000*)

EPF Contribution from Employer : Rs 1150 (3.67% on 20000 + diff amount of 416)

2.If the Basic salary is less than Rs 15000, then Pension Contribution would be 8.33% on Basic and Pf Contribution from the employer would be 3.67% on Basic, there will not be any difference amount to add the value to EPF (3.67%)

If Basic is 10000/- (Less than Rs 15000)

EPF Contribution from Employee : Rs 1200 (12% on Basic 10000)

EPS Contribution from Employer : Rs 833 (8.33% on Basic 10000)

EPF Contribution from Employer : Rs 367 (3.67% on basic 10000)
12th September 2014 From India, Visakhapatnam
#Anonymous
Need Urgent Reply :
Hi All,
Please let me know what is maximum Companies are doing for PF ( from 6500 - 1500 Basic ) as per Gross base or CTC Base.
If existing employee( working more then 1 yr ) have 12000/- as Basic, what is the companies doing from this month( Sep 14).
Are they paying employer Share or showing total salary as CTC and deducting 2 parts from Employee.
17th September 2014 From India, Hyderabad
Dear Expert,
From past two weeks I am facing lot of pressure both from Management and Employee. Management says whatever deductions of PF is to be deducted from CTC itself which is true. But employee will get very less amount in hand as both employee and employer share will be deducted from employee salary itself.
How are you all handling this situation?
19th September 2014 From India, Mumbai
Hi,
Can anyone tell me what are the salary heads need to be considered for calculation of PF according to these notification.
We have Basic, HRA, Conveyance, Medical Allowance, Special Allowance and currently we are calculating pf on Basic+Special Allowance.
Please clarify my query.
Regards,
Gajendra
22nd September 2014 From India, Bangalore
if employees' total salary is Rs.10000/- and basic+ DA is Rs. 7500/-, then pf will be calculated on Rs. 10000/- or on Rs. 7500/-?
23rd September 2014 From India, Bangalore
Hello!
Under the PF Act, following components of salary do not attract PF deduction;
i) House Rent Allowance
ii)Overtime Allowance
iii) Bonus
iv)Commission or any other similar allowance
As per judgments delivered by Gujarat, Madhya Pradesh & Madras High Courts, it has been held that all allowances ( i.e. Conveyance, Medical, Education, Attire, Special & other allowances etc. etc.), which are paid universally, necessarily & ordinarily to all employees, they will be treated as part & parcel of basic wages & that will attract the PF contribution. However, the appeals have been filed in the Supreme Court by M/s. Surya Roshini Ltd. & others, which are likely to be heared & decided in near future.
Also the Basic should be calculated @ not less than 55% of gross.
I hope this helps!!!!!
23rd September 2014 From India, Mumbai
Sir,
Kindly help me clarify these doubts.
Whether an employee who joins PF on or after 1st september can become member of the pension scheme, or would the whole 12% EMPLOYER CONTRIBUTION go to PF?
If there is any change in rules(for employees joining on or after Sept 2014) then is it applicable for both categories, one with salary under Rs. 15000/- and the other exceeding Rs. 15000/-?
24th September 2014 From India, Ernakulam
Hi All,
I heard it. Is it correct?
Due to this incresing of pension wage limit from Rs 6500 to Rs 15000, is there any effect for International Workers contributions?
Like entire contribution wil be deposited in to PF account instead of 8.33% in pension account? if so, is it applicable for all inter national workers who are working before and after 1st sep 2014?
26th September 2014 From India, Visakhapatnam
Dear Sir,
one of my client has registered themselves under PF Act w.e.f Sep 2014 now we are going to generate the ECR for the month of Sep and Oct 14, but issue is they have 21 employees for Whom ECR is to be made and out of which Basic of 20 employees is above Rs15000. Most of the employee does not want to get the PF deducted from thier Salaries, now what is required to be done in this case as we have not submitted any form to EPF office regarding exemption of employees.
11th December 2014 From India, Bhopal
Hi,
I want to confirm how much basic salary we can keep as per govt. law?
As per new rule of PF (revision in wage ceiling) i have implemented 12% on every employee basic. But some are having less than 6500. Is that correct or i need to change basic wages?
Waiting for your responses and suggestions.
Thanks & Regards
Aashima
11th December 2014 From India, Delhi
Dear Sir,
I have one question is that i am working directly as contract employee in jharkhand government. my salary is 12000 per month and i have no such pension account by the jharkhand government can i am applicable for the employee pension amendment 2014
3rd January 2015 From India, Ranchi
That is alright about Rs. 6500 & Rs.15000.. Plz provide me the break up percentage of the employer contribution monthly in PF. Also the employee contribution in percentage....
31st May 2015 From India, Mumbai
Hi Sir,
I have a query, my basic salary is 10000/- and my I am applicable to be deducted for PF. my firm is deducting my share as well as employer's share from my salary itself. Is right way??? as I know, I am applicable to pay only employees share but employer's share has to be paid by the company.
Pls suggest me.
8th July 2015 From India,
Dear Chatuevedi does the rule still prevails Anticipating your valuable feedback
18th January 2016 From India, Gurgaon
sir upto sep 2014 my contribution in pf was 1768 and employer contribution in pf was 1227 and in pension fund 541. but after this notification from october 2014 employer contribution was just reversed. from oct 2014 employer contribution to pf is 541 and towards pension fund is 1227. i cant get it pls help me out. regards.
12th March 2016 From India, Bisrakh
Dear KK2121,

Your id on cite HR is KK2121, I see it is as combination of pairs "K-K" "21-21".

Like your ID, your Basic pay is also forming a pair of "Employee-Employer" contribution.

Lets see

Here I assume your Basic Pay is Rs.14,730/-

PF Computation Till Sep-2014

A. Employee's Contribution to EPF: Rs.14,730 * 12% = Rs. 1,768/-

B. Employer's Contribution to EPS: Rs.14,730 * 8.33% = Rs.1,227 wiz. limited upto Rs.541/- (Rs. 6,500 * 8.33%)

C. Employer's Contribution to EPF= A-B

i.e. Rs. 1,768 - 541 = Rs. 1,227/-

PF Computation After Oct-2014

A. Employee's Contribution to EPF: Rs.14,730 * 12% = Rs. 1,768/-

B. Employer's Contribution to EPS: Rs.14,730 * 8.33% = Rs.1,227 wiz. less than higher limit Rs.1,250/- (Rs.15,000 * 8.33%)

C. Employer's Contribution to EPF = A-B

i.e. Rs. 1,768 - Rs.1,227 = Rs. 541/-

Thus in your case the amount of Employer's Contribution towards EPF and EPS are just reversed.

I hope the computation has clarified your doubts.

Besides the functional points, in mathematical terms, I will term Basic (approx. Rs. 14,730) as "Reversing Basic", which is forming a pair of reversing amount of contribution.
12th March 2016 From India, Mumbai
#Anonymous
Dear Members,
Please help for understanding EPS calculation logic
Just want to understand can calculate eps as per blow scenario 2 & 3 (as a pro-rata base) or can pay on month days not include absent like blow scenario -1?
Scenario -1
Actual Salary for July-2016
PF wages PF EPS Wages EPS Employer share
25000 3000 15000 1250 1750
Problem statement.
Scenario -2
Paid 25 days for July-2016 (absent 6 days)
PF wages PF EPS Wages EPS Employer share
20161 2419 12097 1008 1411
Problem statement.
Scenario - 3
Paid 31 days for Salary Aug-2016 also Paid 6 days for July-2016 as arrears
PF wgs PF wgs Arr PF + Arr EPS Wgs EPS Wgs Arr EPS ES
25000 4839 3581 15000 2903 1491 2090
Regards
Shanu
26th August 2016 From India, New Delhi
#Anonymous
Hi,
Please see the attached notification. As per it, an international worker joining establishment on or after 01.09.2014 should not be made member of EPS. Entire 12% employer contribution should go to EPF.
8th June 2018 From India, Bengaluru

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