New Company PF Deductions: Should We Submit Before Allotment Number Arrives?

Hi,

We are a new company and have just completed hiring 20 people. PF formalities have started, but we will be getting the PF allotment number by April. PF deductions have already begun. Can anyone please let me know if, after the allotment, the deductions from January until now would have to be submitted, or if the deductions should start after receiving the PF allotment number?

Please advise.

Hi,

PF deduction should be done from the month when 20 or more employees are on the rolls.

Regards,
Prabhu

We are a new company that has reached 20 employees in January. We applied for PF in early February and still have not received the registration number. Our queries are as follows:

• Do we need to deduct the employee's part from January onwards in the January salary itself? If we assume the answer is yes, there is a further query, i.e., Do we pay the January amount along with the application? What happens to the amount post-January until we receive the registration, i.e., until around April? Won't we become defaulters for having deducted the amount and not paid to the government coffers (as we don't have the registration number yet)? As far as income tax is concerned, that would be a default (u/s 43B). What do the PF Rules say?

• Is it okay for the employer to pay from its own funds and deduct from the employee for the intermediate period (say 3 months) once the registration is received? Would there be any compliance default if we structure it this way? Or should we deduct from the employee for all three months once the registration number is received?

PF deduction should be done from the month when 20 or more employees are on rolls. This is Jeevanandam, HR at Saint-Gobain Glass India Ltd.

My cell number is 9994589446. Any doubts on PF or ESI, feel free to call me, no problem.

Dear,

PF is applicable to all 20 employees right from their induction if their basic salary is less than Rs. 6500.

Thank you.

You can pay P.F. later as well, but usually EPF deposits charge you penalty charges at the end of the year. I suppose at the time of registration process, you might have paid a certain amount. You can submit the challan after getting registration, but the thing is that you have to be ready to pay the penalty.

Mr. Sudiptarc,

Please note that you can deduct PF from the salary/wages of employees when the employee count exceeds 20. Additionally, you should deposit both the employees' and employer's contributions, along with administrative and other charges (totaling 25.61%) each month, starting from January until you receive the PF code Number. When depositing the specified amount through PF challans and submitting the monthly returns in Form 12-A, 5, and 10, as well as Form No.2, remember to indicate on all documents that you have "Applied to PF Authority for PF code Number" to avoid any penalties or late fees. By doing so, your company will not be labeled as a defaulter.

You may include the PF code number on all documents once your company is assigned the PF code number in April by the PF authority.

Regards,
NKJ

Dear Arunoommen,

Kindly confirm whether the PF contribution from the employee's part is not restricted. Can employees contribute 100% of their salary?

From what I understand about PF contributions, employees can contribute between 12% and 20% of their Basic and DA.

I have thoroughly reviewed your research and agree with most points about PF. Could you kindly clarify this doubt?

Thanks and Regards,
Deepak Sabharwal

Dear All,

This is in context to Md. Ashfaq Ahmed's statement that PF is applicable for employees having Basic less than Rs. 6500/-.

It's very clear that 12% is deducted on allowances other than exempted ones like Conveyance Rs 800/m, Child allowance Rs 200/m for two children, Medical allowance Rs 15,000/ per annum, and LTA.

The PF contribution is 12% of Basic salary from both the employee and 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 will explain the various accounts of the PF challan:

Employee Employer
A/c No 1: PF contribution Account 12 3.67
A/c No 2: PF Admin account 1.10
A/c No 10: EPS account 8.33
A/c No 21: EDLIS account 0.50
A/c No 22: EDLIS admin account 0.01
12 13.61

PF admin charge = Employer has to pay 1.1% of the basic
EDLIS: Employer has to pay 0.5% of the basic
EDLIS admin charge: Employer has to pay 0.01% of the basic
Total additional percentage employer has to pay: 1.61% of the basic
So, the employer has to pay 13.61% of Basic, and the employee has to pay only 12% of the basic. Employees' complete 12% goes to the PF account while the employer contributions' 8.33% goes to the Pension fund and 3.67% goes to the PF fund.

Regards,

Rajiv Ranjan

One of my employees has a basic salary of 20000/-, and he wishes to deduct his contribution at a minimum of 6500/-. That is 780. The organization's contribution is definitely limited to 6500, but is it possible to deduct the employee's contribution at 6500, even though he has a higher basic salary.

Hi All,

I need some clarification:

PF amount of 24% is deducted every month from my salary. When asked, they say it's a part of the CTC. On my payslip, only 12% of employee contribution is shown, and the remaining 12% contribution will reflect in my PF account. Can you please tell me if this is the right way?

Thanks in Advance.

Regards,
Rao

Dear Sir,

I want to know about the entire provident fund return filing, i.e., from the allotment of PF numbers, Form 5, 10, 3A, 6A, challan filling, etc., up to the submission of returns. Can you please provide me with a copy with formulas in Excel?

Thank you in advance.

Regards

Hi Rajeev,

When it comes to EPF or Employee PF, we have two side contributions:

1. **Employee's Side:** This is deducted from your salary, i.e., from your monthly gross. The minimum contribution as per the PF Act is 12%, and you can voluntarily scale it up to a maximum of 20%.

2. **Employer's Side:** This is not deducted from your salary. This is included in your CTC to show the transaction. (I shall explain how it should be reflected). As per the PF Act, the employer is supposed to contribute 12% of your Basic + DA to your PF & Pension Account. Out of this 12%, 8.33% goes to the Pension Account, and only 3.67% goes to the PF Account.

In addition to the 12% contribution made by the Employer, they are also liable to pay:

- Administrative Charges - Handling for PF/Pension account
- Employee Insurance Charge
- Employee Insurance Handling Charge

However, if the company provides a better insurance scheme, they can opt-out of the insurance scheme in the PF act.

Now, to see how the PFs should be reflected in your CTC:

- Basic
- DA
- HRA
- Conveyance
- Medical Allowance
- Other Allowances (if any)

=========================

GROSS

==========================

- Gratuity (Calculated as 15/26 * 1 * Last drawn salary i.e., basic + DA, and this amount is contributed to the gratuity account that the company has with some LIC or related firm)
- PF (This is the employer's contribution)
- ESIC (if applicable - again, employer's contribution)
- Annual Bonus
- LTA (if provided by your company)

=============================

CTC (i.e., cost to company)

Now from your monthly gross:

- Gross (basic + DA + HRA + conveyance + medical allowance + other allowances)

(less) PF (This is the employee's contribution)

(less) Professional Tax

(less) TDS

===================

MONTHLY IN-HAND

===================

So if you see that PF contribution can be deducted only once from your gross.

The PF that was mentioned in your CTC is very much correct as that amount is also deposited in your PF account.

I hope if this was the doubt, it was cleared.

Please read further on the following link for a discussion on a similar query: https://www.citehr.com/455974-no-emp...#ixzz2POPwicji

Regards