Understanding PF Obligations: Do I Need to Register for Just Three Employees?

I have a company with 32 employees. Only three have a salary of less than Rs. 6500/-. Am I liable for PF registration and should I provide PF to the three employees?

Since you have 32 employees, you are covered by EPF. However, only those three employees whose salary is below Rs 6500 will be covered, and therefore, your contribution will be limited to that extent only.

Regards,
Madhu.T.K

What is the minimum number of employees to be covered under PF? Please reply.

Regards,
Vinda.

An establishment with a minimum of 20 employees will be covered by EPF.

Regards,
Madhu.T.K

A person with a salary of Rs. 10,000-20,000 and age above 50 years, will he be entitled to PF deductions? If he is eligible, could you please inform me under which section of the PF Act this falls?

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Eligibility for Provident Fund Membership

The Employees' Provident Fund and Miscellaneous Provisions Act does not restrict any employee from becoming a member of the EPF. Therefore, if the employer is willing to contribute their share of PF, then they can certainly become a member of the Provident Fund. However, since the employee is above 50 years of age, the employer's contribution of 12% shall be deposited exclusively in the Provident Fund alone, without breaking it as 3.67% in PF and 8.33% in the Pension Fund.

Regards,
Madhu.T.K

Thanks.

Sample Salary Breakdown of Employees

Name | Basic+DA | HRA | Medical Reimbursement | Conveyance | LTA | Spl All | Gross Pay (per month)

A | 10000 | 5000 | 1250 | 800 | 833 | 2117 | 20000

B | 15000 | 7500 | 1250 | 800 | 1250 | 4200 | 30000

C | 7500 | 3750 | 1250 | 800 | 625 | 1075 | 15000

D | 12500 | 6250 | 1250 | 800 | 1042 | 3158 | 25000

E | 37500 | 18750 | 1250 | 800 | 3125 | 13575 | 75000

F | 4250 | 2125 | 625 | 400 | 354 | 746 | 8500

G | 30000 | 15000 | 1250 | 800 | 2500 | 10450 | 60000

When I was interacting with a PF Consultant, he mentioned that the Basic + DA may be >6500 or >10,000 to >40,000.

Example

Suppose if the Employee has Basic+DA of 10,000, he says that we can calculate for 6500 as Basic+DA and we can leave the remaining amount of Basic+DA 3500.

But we can show the below Salary breakup for PF records:

Name | Basic+DA | HRA | Medical Reimbursement | Conveyance | LTA | Spl All | Gross Pay (per month)

A | 10000 | 5000 | 1250 | 800 | 833 | 2117 | 20000

My Questions

• Suppose if I'm following my consultant's advice, will it create any problem for me?

• My employee strength is 40, and most of them have a Basic+DA of >10,000-40,000.

• Should we include the employee in PF or NOT?

• The consultant is saying that if the Employee strength is 40, at least 30 Employees should be in ESI AND EPF.

• In case any PF inspectors come for inspection, they will definitely impose a fine for not paying PF contributions.

• At present, out of 40 Employees, we have 5 Employees in ESI and EPF.

Please give me valuable suggestions to sort out my problem.

If any employee's basic salary is less than 6500, then they would be a member of PF. More than 6500 would not be entitled to PF.

Lokesh

Tamim,

Your query was answered in the following link: https://www.citehr.com/278721-clarif...about-epf.html.

Regards,
Madhu.T.K

Understanding Arrears and Interest Liability

What kind of arrears is it? If it is wages payable in 2015-16 paid now, then you need not pay any interest or damages. But if it is arrears of PF collected in 2015-16 and is paid now, then certainly it will attract interest and damages.

In long-term settlements, it often happens that the negotiation will take months to come to a conclusion, leading to payment of arrears of salary. Since the payment of salary and PF deduction therefrom takes place now, you can pay it along with this month's contribution without any interest and damages.

What you have to do is to include this salary along with the salary paid for December and pay the PF contribution along with the normal contribution due for December. If you show it as arrears of salary paid, then the system will take it as a delayed payment only.

We have made separate challans for separate months, and now the system has imposed penal damages and interest against these challans from the arrear month. Now, please guide us on what we can do in this situation. Can we appeal for a waiver for this? We cannot afford to pay this from the salary as these individuals already have Rs. 1800 as EPF deductions, and the total amount of arrears in EPF comes to Rs. 4000 as deductions at 12%. Please provide guidance on this matter.

EPF and MP Act Contribution Limits

The EPF and MP Act has not restricted the contribution to Rs 1800. You can pay PF on any higher amounts. Therefore, there will not be any system error if you add the arrears payable to the salary amount for the month of December and pay the contribution on this total amount.

Handling Separate Challans and System Errors

Now, having made separate challans, the system will take it as an omission of wages and, naturally, will demand interest and damages. Therefore, the only remedy is to write a letter to the EPFO and ask for a personal hearing in which you can submit the facts and get a waiver of interest and damages.