Understanding Provident Fund Regulations and Employee Contributions

Hi,
I have posted this query in other thread but didn’t get any response. I have the following queries about PF.

• Can any employer discontinue providing PF if an employee after getting increment is earning more than 6,500 basic? What is the procedure for discontinuation?
• If an employee earning more than 6,500 wants to get PF but the employer is not interested to provide, can the employee claim for the same?

I request seniors to give their valued inputs.

Once an employee is covered under PF, their membership is to be continued, even if their basic salary is increased to more than Rs. 6,500 on account of annual increments. There is no need to cover any employee under PF whose basic salary is more than Rs. 6,500 per month upon joining.

Option for coverage of all employees:

1) It is a fact that in an organization where one of my friends is working, the basic salary of employees, whose basic salary is more than Rs. 6,500, is limited to Rs. 6,500 in the PF register, and PF contributions are made accordingly.

2) An employee whose basic salary is more than Rs. 6,500 per month can also become a member of the Fund and the Schemes upon a joint request. For instance, if an employee is earning Rs. 9,500 per month, their share towards provident fund contribution at 12% will be Rs. 1,140, the employer's share towards provident fund contribution will be Rs. 599, and Rs. 541 towards the Employees' Pension Fund. Please note that the highest contribution towards the Pension Fund will be Rs. 541 only.

Regards,

Sivadasan

Dear Sonai,

For your first query, what Govind Singh said is correct.

Coming to the second query, if an employee wants PF, you can deduct both contributions from his salary based on CTC. That is, you can decrease his salary to account for what you offer and pay the remaining salary through PF contributions. The Cost of Company formula is based on this. In this CTC, both contributions come from the employee's side. According to this, both the employee and employer are satisfied.

Thank you.

Dear SONAI,

I fully agree with the comments given by Mr. Govind Singh Negi.

Regards,
R.N. Khola

Dear All,

Can anyone tell me which employees are covered for PF coverage? Are trainees or off-roll employees covered for PF coverage? Is the basic salary of the employee at the time of Date of Joining (DOJ) more than Rs. 6500/- covered for PF registration for the company?

We have 27 employees:
01) 05 Trainees
02) 05 Not on Payroll
03) 07 Basic salary @ DOJ is more than Rs. 6500/-
04) 10 Basic Salary is less than Rs. 6500/-

Now my query is, do we have to apply for PF registration or not? Please guide me.

Awaiting a favorable reply from any of you.

Regards,
Sanjay Bhatt
Sr. Ex. Accounts
Hyderabad.

Dear Sanjay,

You have to obtain a PF code regardless of the number of employees with wages exceeding 6500. The total number of employees must be more than 20 to be eligible for a PF code.

Best Regards

Dear, I am giving you the answer to your query. We can enroll employees in PF if you have more than 20 employees in your organization. So, you can include those employees in PF; otherwise, not.

Regards,

Deepak Nigam

HR Executive

Kota

An employee who has received an increment that is more than the salary of 6500. Earlier, he was contributing to the PF range. If he is not contributing anymore, we will have to discontinue his PF service by filling out form number 10 and removing him from the PF service as soon as possible.

Dear Sanjay Bhatt,

As per the Factory Act, you need to register the company if the number of employees exceeds 20. In your case, you have provided the following details:

01) 05 Trainees
02) 05 Not on Payroll
03) 07 Employees with a basic salary at Date of Joining exceeding Rs. 6500/-
04) 10 Employees with a basic salary less than Rs. 6500/-

It is mandatory to have PF deductions for trainees and employees not on the payroll. Considering this, your total employee count stands at 27, requiring PF deductions for all eligible employees.

Thanks and Regards,
NSB

Dear Friends,

Our company has not yet started PF contributions to the employees, as the company's commercial operations have not yet begun. Now, we are planning to introduce PF for the employees. However, some of the employees have exceeded their Basic Salary of Rs. 6,500/-. Is it mandatory to cover them under the PF Act?

Looking forward to your replies.

Murali
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Dear Sanjay Bhatt,

You do not need to apply for PF registration. Employees who are receiving less than Rs. 6500 as basic salary are eligible for PF contribution. For trainees, there is no requirement to pay PF or ESI. Here, for trainees, we are paying stipend, so we are only liable for Professional Tax. If there are 20 or more PF-covered employees, then we must apply for PF registration.

sonai,
pl. not that no employer can discontinue the pf contribution. secondly an employer is liable to contribute Rs.780 i.e 12% of 6500. if the basic goes more than 6500 its not binding on the employer to pay the contribution amount of basic exceeding 6500.
thirdly an employee can withdraw his pf amount after two months of his resignation from the company in form 10 D and 10-C
REGARDS,
Subhash- 9769889009

For reason one, if an employee gets more than 6500, he will remain a member until he works. However, if he resigns and withdraws his amount from PF and then rejoins, he will be excluded from PF. In that case, the employer must fill up Form 11 mentioning that he has withdrawn his dues.

If any employee crossed PF wage 6500/- due to revision/hike or any other reason, the employee has to be continued as a PF member. The deduction of PF on amounts above 6500/- is at the discretion of the management.

K. Srinivasa Murthy

Dear Sajay,

As a senior executive in the Accounts Dept., you have the right to inform the management about the applicability of the EPF Scheme for your organization. The minimum requirement for EPF membership is 20 (in your case, it is 27).

I will now discuss my views on the issues you mentioned:
1) 05 trainees: If your organization falls under the purview of the apprenticeship act, you can exclude these members; otherwise, you cannot.
2) 05 Not on Payroll: It is not legal to appoint employees in an organization without maintaining their attendance or payroll register. Your organization may face penalties if the EPF Inspection team discovers this.
3) 07 Basic salary @ DOJ is more than Rs. 6500/-: You can exclude these employees.
4) 10 Basic Salary is less than Rs. 6500/-: You must include these employees.

Jishnu V. Nair
Tax & EPF Consultant
Kerala

Please provide me with the following details:

1. How to calculate salary?
2. What is the salary percentage?
3. What is the PF percentage?
4. What is the ESIC percentage?

Also, could you explain the process of calculating salary as a percentage of the basic salary, total salary, PF, and ESIC? Your prompt response would be greatly appreciated.

Dear All,

I am very clear that these 20 persons include contract labor, temporary, fixed-tenure contract employees, etc. Can anybody provide me with a judgment regarding the applicability of the P.F. Act once we cross the 20-person threshold, including contract labor?

Trushit