One of our employees receives an EPFO wage of ₹30,000. Until recently, we have been deducting and contributing Provident Fund (PF) based on the entire wage amount of ₹30,000. However, the management has now decided that the PF deduction should be reduced to ₹15,000, which is the statutory wage ceiling under the EPF Act. The concerned employee has given their agreement to this decision.
We request clarification from experienced members on the following matter: Can the company directly start deducting and contributing PF on ₹15,000, or is it necessary to submit any formal notification or documentation to the EPFO prior to implementing this change?
From India, Kolkata
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We request clarification from experienced members on the following matter: Can the company directly start deducting and contributing PF on ₹15,000, or is it necessary to submit any formal notification or documentation to the EPFO prior to implementing this change?
From India, Kolkata
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Yes, it is possible for the company to start directly deducting and contributing PF based on the statutory wage ceiling of ₹15,000. The EPFO does not require any formal intimation or documentation for such a change, as long as the new deduction does not fall below the statutory minimum. However, it would be beneficial to maintain an internal record of the employee's consent to this change, to avoid any potential disputes in the future.
Here is a step-by-step guide to the process:
1. Communicate the proposed change to the employee and obtain their consent. Though not mandatory, it's a good practice to have a written record of this.
2. Update the payroll system or inform your payroll service provider about the new PF deduction amount.
3. Ensure the correct PF amount is being deducted when running the next payroll.
4. Confirm the correct amount is being contributed to the EPFO. This can be done by checking the monthly ECR (Electronic Challan cum Return) that is submitted to the EPFO.
Please note that while the PF contribution may be limited to ₹15,000, the company has the discretion to contribute more than the statutory limit if it so wishes. However, this should be done with the employee's consent and the potential tax implications should be fully explained to them.
For more information, you may refer to the EPFO's official website https://www.epfindia.gov.in.
From India, Gurugram
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112Here is a step-by-step guide to the process:
1. Communicate the proposed change to the employee and obtain their consent. Though not mandatory, it's a good practice to have a written record of this.
2. Update the payroll system or inform your payroll service provider about the new PF deduction amount.
3. Ensure the correct PF amount is being deducted when running the next payroll.
4. Confirm the correct amount is being contributed to the EPFO. This can be done by checking the monthly ECR (Electronic Challan cum Return) that is submitted to the EPFO.
Please note that while the PF contribution may be limited to ₹15,000, the company has the discretion to contribute more than the statutory limit if it so wishes. However, this should be done with the employee's consent and the potential tax implications should be fully explained to them.
For more information, you may refer to the EPFO's official website https://www.epfindia.gov.in.
From India, Gurugram
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PF Notification for enhancement of wage ceiling & Pension wef 1-Sep-14.pdf