Is an Employer Obligated to Contribute to PF for Voluntary Members Earning Above Rs. 6501? Seeking Clarification and Examples

Dear seniors,

I have a few queries which are as follows:

Q1. An employee who is drawing a basic salary of Rs. 6501 or above and has become a member of the provident fund by his/her own wish (as we all know it is not mandatory for such employees to become a member of PF). Please tell me, is the employer liable to pay contributions in respect of these kinds of employees? If no, then why? Also, provide examples of some establishments where such policies are being practiced.

Q2. Under the Employees' Provident Fund and Miscellaneous Provisions Act of 1952, we have three funds: Provident Fund, Pension Fund, and Deposit Linked Insurance Fund. Can you tell me how much contribution is deposited in these funds from the employee and employer sides? Please provide me with a detailed breakdown of the employee and employer 12% contributions.

Thank you.

Sonu_xiss

Dear,

If an employee whose basic is above 6500 and wants to become a member of PF, he can. Once he is a member of PF, then the employer has to contribute their contribution to PF.

Employees' complete 12% goes to the PF account, while the employer's 8.33% goes to the Pension fund, and 3.67% goes to the PF fund.

Some additional information in detail:

The PF contribution is 12% of the Basic salary from both the employee and the employer. For the calculation, the maximum limit of Basic is Rs 6500/-. It means even if the employee's basic salary is above Rs 6500/-, the employer is liable to contribute only on Rs 6500/-, that is Rs 780.

However, if an employee so desires, he may voluntarily contribute more than 12%. Apart from it, an employer also has to pay some administration charges. I explain to you the various accounts of the PF challan.

A/c No 1: PF contribution Account

A/c No 2: PF Admin account

A/c No 10: EPS account

A/c No 21: EDLIS account

A/c No 22: EDLIS admin account

PF admin charge = The employer has to pay 1.1% of basic

EDLIS: The employer has to pay 0.5% of basic

EDLIS admin charge: The employer has to pay 0.01% of basic

The total additional percentage the employer has to pay is 1.61% of basic.

So, the employer actually has to pay 13.61% of Basic, and the employee has to pay only 12% of the basic.

Dear Sir,

Thank you for providing me with such valuable information. Kindly tell me one more thing: as you mentioned, for the calculation of PF contribution from the employer's side, Rs 6500 is the maximum limit. So, what is the maximum limit for an employee, or is there no such limit? For example, if an employee has a basic salary of Rs 10,000, will they pay 12% of Rs 10,000 or 12% of Rs 6500?

Thank you.

One clarification,

Out of the employer contribution of 8.33% to EPS (A/c. no. 10), the maximum amount will be Rs. 541 (8.33% of Rs. 6500).

Say, if an employee's basic salary is Rs. 9000, then his EPS account amount will be credited as Rs. 541 (from the employer's share) only, and the balance of this account will be credited to A/c. no. 1 (PF Account).

Best regards,
Mahendra Rana

There is no cap on employees' contribution to the fund. As per your example, he can contribute 12% of Rs. 10,000 to the fund.

Hi,

Can you please let me know the details of PF, how it is beneficial for us, and how we can withdraw the amount we deposited in the PF account?

No, you can't. The government has fixed the minimum basic wage at Rs. 7,352. Please refer to the Minimum Wages Act for more information.

SALARY CALCULATION SHEET

Deducting Fines and Expenses from Salary

If we have to deduct fines, medical expenses, or notice period fines from an employee's salary, where will it reflect? Suppose the salary of XYZ is $10,000, with a basic salary of $7,000, allowances of $3,000, and medical expenses of $900. Here we calculate EPF & ESIC on the above amounts, i.e., Rs. 7,000 & Rs. 10,000, or after deducting fines & charges, on Rs. 9,100 (Rs. 6,270 & Rs. 2,730).

I'm an HR professional in our company. I haven't found any relevant person to assist me.

How do we calculate PF?

Some people say PF will be deducted twice if the salary is high, while others say it's optional whether we want to deduct PF from our salary. Some people mention that PF is to be split with 12% from the company and 12% the employee has to contribute. I am unsure about what is accurate. I have asked several individuals at our company and elsewhere, but the responses have not satisfied me.

How is PF deducted?

What is the process for it? How is PF released? How can we withdraw PF from our account? Are we notified about PF deductions from our salary?

Thank you.

EPF Contributions

EPF is contributed by both the employer and employee to the EPF fund, and it is an obligation under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. Please read this act thoroughly for more details.