Understanding PF Deductions: Is There Really a Maximum Limit of 12% on INR 6,500?

Hi Team,

I have read once that there is a maximum limit for the PF deduction. Is that correct? It says the maximum limit for PF deduction is 12% of INR 6,500. Please clarify this for me.

Advance Thank you

Hi Viyannar,

The maximum limit for PF deduction is 12% of 6500, which is correct. Additionally, there is an exemption by submitting Form No. 11.

Dear Mr. Viyannar,

Yes, there is a limit on PF contributions as mentioned below:

Employee Share: 12% of his Basic Salary
Employer Share: 12%

Hi Murali,

Thank you for the information. If there is a limit in place, why are companies deducting more than that amount? In fact, it is a loss for them as well because they also need to pay an equal amount to the employee's PF Account.

Hi,

Though the maximum is 12% of 6500, it depends on the management decision. Management can decide to contribute and deduct the complete 12% on Basic.

Regards,
Akhila

Rs. 6500 is the maximum limit for EPS and EDLI. As far as the EPF Act is concerned, the deduction of 12% can be done on basic salary + DA/VDA + food concessions + any other allowances, which are undefined, e.g., special allowance and other allowances.

Thanks and regards,

Sumit Kumar Saxena,
9899669071, 0120-4131277

PF deduction is made at 12% of the basic pay, DA, cash value of food concession, and retaining allowance, if any, subject to a maximum of Rs. 6500 per month as per the Act.

However, voluntary higher contributions are also acceptable by EPFO at the joint request of the member and the employer.

Regards.

Dear friend,

Subject to submission of the no-objection (Joiner declaration of Er. and Ee.) form under 26(6), it can be deducted on the above-specified limit (6,500 INR per month) too.

Dear friend,

I am sorry to say that a deduction of more than Rs. 6,500 per month does not depend on the management's decision itself. If an employee does not accept and Form-11 is not submitted, it is not feasible to deduct.

Sathish

Though the maximum is 12% of 6500, it depends on the management's decision. Management can decide to contribute and deduct the complete 12% on Basic.

Regards,
Akhila

Hi all,

We have a policy that if the BPay is less than or equal to 6500, the Company will contribute its 12% plus administration charges. Consider an employee who is drawing Rs. 6000 per month and currently, the company is contributing 13.61% to PF. In the subsequent month, his basic pay is revised to Rs. 7000.

In this case, should I deduct the entire 25.61% (12% Employer contribution + 12% Employee contribution + 1.61% EDLI + Administration charges) from his CTC, or should I remove it from the PF list?

Please clarify.

RR

As far as PF is concerned, one can contribute 12% of the salary accountable for PF, which includes Basic, D.P & D.A. Besides this, one can contribute an amount as Voluntary Provident Fund (VPF). For VPF, the employer's contribution will not be available, but all other benefits will be available as on PF subject to a maximum of 50% of the take-home salary.

Arun Kumar Walia

EPF contribution from the employee is restricted to 12% on basic + DA for an employee whose salary + DA is Rs. 6500/- per month. The employer contribution is also 12%. If the employee wishes to contribute more than 12%, it is permitted, but there will not be an equivalent contribution for that increase from the employer as it is a voluntary contribution. According to the EPF scheme, no employer can deduct more than the permitted limit of 12%.

Regards,

Dr. K. K. Anirudhan
Email: kkanirudhan@gmail.com

Hi there,

There are three types of PF:
1. CPF is given by the employer, which is 12% of basic pay + special pay + DA deposited in the employee's PF account.
2. EPF (Employee Provident Fund) is deducted from the employee's salary and equals 12% of basic pay + DA.
3. VPF is an additional PF deduction that can be done if the employee requests it. There is no limit to VPF, but it cannot exceed (Basic pay + special pay + DA).
EPF + VPF is deducted from the employee's salary. There is a minimum limit for EPF, but there is no maximum limit for VPF, subject to the salary.

By Vikas Pandey

Ok friends,

Can I remove someone from the PF list once they cross the 6500 (Basic + DA) mark? Meaning, I will neither deduct the company contribution nor the employee contribution and instead add that to their net pay starting from the current month onwards. I will then submit their name in Form 10.

RR

[QUOTE=sathish.hr1975;1031812]
Dear friend,

I am sorry to say that a deduction of more than Rs.6,500 per month does not depend on the management decision itself. If an employee does not accept and Form-11 is not submitted, it is not feasible to deduct.

Sathish

Thank you, Satish. I agree with you.

Deduction of PF on salary Rs. 6500/- per month doesn't depend upon management decision but it's a compulsion that salary up to Rs. 6500/- (Basic + DA), the PF deduction has to be done.

Sumit

[QUOTE=GiriKL;1032645]

Employer's Contribution Allocation

From the employer's contribution, 12% is allocated. Out of this, 8.33% will be contributed to the pension fund, and 3.67% will be contributed to the Provident Fund (PF).

Regards, Reyas

Hema & Reyas are correct. Statutorily, the maximum limit is fixed up to Rs 6,500 per month, but the employee or employer may choose to contribute more as well. However, in the Pension Account, 8.33% of 6,500, i.e., a maximum of Rs 541, can be deposited from the employer's contribution.

Regards,
N N Tiwari

I would like to correct here that the maximum amount which an individual can deposit is subject to Rs 541, i.e., 8.33% of 6500/-, not Rs 641/-.

Please clarify my doubt.

In any circumstances, is there a provision to contribute more than Rs. 541 to the Pension Fund in a month? Suppose a person's basic salary was Rs. 3025, and they were contributing Rs. 252 towards the Pension Fund. They receive an increment of Rs. 1250 in month A, with arrear payment for the previous 4 months. So, their salary in month A is Rs. 9275, and their revised salary is Rs. 4275.

My doubt is, what will be the contribution towards the Pension Fund in month A? Will it be limited to Rs. 541 only? Since the actual contribution for the previous 4 months had to be Rs. 356, how should the difference amount of Rs. 104 (104*4) be adjusted?

Regards,
Sini

Understanding the Statutory Ceiling for PF Calculation

There is a statutory ceiling set by the PF Department that mandates the maximum limit for PF calculation to be Rs 6,500. This means that an employer is required to deposit PF contributions up to 12% of Rs 6,500. Beyond this amount, the employer has the discretion to contribute further.

For example, if an employee's basic salary is Rs 5,000, the PF contribution would be Rs 5,000 * 12%, which is compulsory. In this case, the employer cannot exempt the employee from this contribution regardless of the employee's preference.

However, if an employee's basic salary is Rs 8,000, the employer can limit the contribution to 12% of Rs 6,500. If the employee wishes, they can seek exemption from the PF contribution.

Moreover, if an employer opts to pay based on the actual basic salary, there is no limit to the contribution.

Shyamal, you mentioned you read about a maximum limit for PF deduction. It is indeed correct that the maximum limit for PF deduction is 12% of Rs 6,500. I hope this clarifies your query.

Thank you in advance.