Is PF Deducted from Overtime Pay? Seeking Clarity on Contribution Rules

Can anybody clarify whether PF contribution is to be deducted on overtime? I feel there is no deduction of PF on overtime. Please clear my doubts.

Thanks, friends.
S.S. Kumar

Hi,

PF is a two-sided contribution from both the employer and employee. The EPF contribution for employers is 12%, while employees contribute 3.67% based on the basic salary.

ESIC is calculated on the gross salary.

Hi,

I hope Ms. Sujata gave you a clear picture as PF is applicable only to Basic + DA, and ESIC is deducted on Gross Salary. Definitely, PF is not deductible on OT.

Cheers,
Ajay

Dear All,

Yes, Provident Fund is a contribution by the employee and an equal contribution by the employer, subject to the statute, Basic Earnings, Voluntary Contribution of the employee, and the Employer. The statutory deduction depends on the Basic Earn, which is 12% for the employee and an equal contribution by the employer. Thus, now the contribution deducted, i.e., 24%, is deposited in 12% (Employee Contribution) + 8.33% (Employer Contribution) in the Employee PF account, and the rest amount in the Pension Fund. In any case, if the employee's basis is more than Rs. 6500/-, then the Pension Contribution will be capped at 541 only, and the remaining amount will be deposited in the Employee PF account with their contribution of 12% and 8.33%.

Hope the same is clear.

Regards,

It has been made quite clear that PF is recovered on Basic wages and DA.

However, I have come to know that in some cases, Enforcement Officers (E.O) are forcing employers to deposit PF on overtime (OT) when the employer has paid more than 50 hours of OT in a quarter.

There is still uncertainty about whether to deposit PF on OT or not. Can anybody clarify this?

Regards,
Harminder

Hi All,

We calculate OT as follows: (Basic + HRA + Adhoc Allow) x 2 x No. of OT hrs. If PF is calculated on Basic, then I believe PF must be applicable on OT as well. Requesting seniors to please clarify.

Regards,
Beena

As I said earlier, NO PF is deducted on OT wages. It is only when a worker has worked more than 50 hours of OT in a quarter that the Enforcement Officer insists on depositing PF contributions on OT wages. Can anybody clarify if this is included in the PF act?

Regards, Harminder
🤔😕

Hi,

I have a small query - if the quarterly overtime is more than 50 hours, will the PF on OT be applicable?

Regards,
Monica

[QUOTE=malikjs;599182]
Dear Malik Jee,
As it is well known and, to the best of my knowledge, PF is applicable on normal wages (Basic+DA) only. However, we are now being instructed by PF Authorities to also deposit the contribution on OT wages. This includes both the employees' and employers' share in arrears, along with interest and damages. We are being accused of evasion of wages under Sec 7A.
Can anyone provide assistance in this matter? How is OT considered as part of wage evasion? Can you provide any rules or regulations that state that no PF contribution is applicable on OT?
Thanks and Regards,
Harminder Singh

Dear Prabhakar,

Can you cite any rule? We are directly affected by this clause as we are being asked to deposit PF on OT wages with arrears, employees/employers share, and are framed under Sec 7A for evasion of wages. I will be thankful for an early response.

Regards,
Harminder

PF cannot be deducted on overtime allowances.

For detailed information, visit [White Eagle: Provident fund and Overtime Allowances](http://kuldeeprathore.blogspot.com/2009/11/whether-provident-fund-can-be-deducted.html).

Dear All,

I want to tell you that PF deduction is applicable on overtime amount as well. According to Section 2 of the 1952 Act, if you do not have written permission from the Chief Inspector of Factories, then you will have to pay PF contributions on the entire overtime amount.

Regards,
Shalu