Confused About PF Contributions for Expats? Seeking Clarity on Salary Basis

Dear Friends,

My company is paying PF at a rate of 12% on the basic salary for all employees. With the recent PF regulations applicable to expatriates as well, we are now required to make contributions for them too. I am confused about whether we should only pay PF on 6500/- for expats working in our company or if we are obligated to deposit on 12% of their basic salary.

Kindly advise.

Regards,
Shilpi

EPF contribution for international workers is 12% on the full amount of salary without reference to Rs 6,500. For details, please visit the website of the Employees' Provident Fund Organisation.

Regards,
Madhu.T.K

Dear Mr. Madhu,

Thank you for your reply. Actually, my confusion arose from that specific point. I was under the impression that their contribution would be based on the full salary, but upon reading the FAQs on the EPF site, I came across a statement that contradicted my understanding. Therefore, I am curious to know how other companies are handling their international workers. Could you please provide some guidance on this matter?

FAQ read on EPF site:

15) Is there a cap on the salary up to which the employer's share of contribution has to be diverted to EPS?

Yes, the cap on the salary up to which the employer's share of contribution has to be diverted to EPS remains at Rs. 6500. (Para 3 of EPS)

Kindly advise.

Thank you.

Yes, there is certainly a cap on salary for PENSION FUND (EPS and NOT EPF) contribution. It shall be understood like this: Total salary will qualify for Provident Fund, and therefore, 12% of the salary shall be deducted from the salary of international worker, and the contribution by the employer shall be made as follows:

8.33% of Rs 6500 to Pension Fund. The difference between the amount deposited in the Pension Fund and the amount deducted from the employee (12%) shall be deposited in the Provident Fund along with the employee's share of 12%.

Is it clear?

Madhu.T.K

It means that, for example, if the basic salary is 50,000/- per month, 12% of this amount is 6000/-. Out of this, 8.33% of 6500/-, i.e., 541, will be deposited in the Pension Fund, and the rest, 5458, in PF (employer contribution), along with the 6000/- contribution from the employee's side.

Am I right?

Regards,

Shilpi

Dear All,

This is in reference to the PF contribution on expat salary. Please note, the contribution has to be deducted from the total salary (salary: as per the definition of the EPF Act).

Regarding the Rs6500/- exemption, please note that they do not fall under the purview of the said definition (exemption provided under the schedule). Hence, it is to be deducted from the full salary (salary: as per the definition of the EPF Act).

Thank you.