Understanding EPF Contributions: Does Short Attendance Affect the 6500 Ceiling?

The ceiling of 6500/- is there. The Basic wages are more than 6500/-. The employer's contribution is restricted to 6500/- if wages are for the full month. What will happen if wages are for a shorter period due to a shortage in attendance? Will the 6500/- ceiling be raised?

Dear Rajan,

The loss of pay (LOP) in the salary will be proportional to the number of days attended. If the LOP impacts the employee's net contribution to the Provident Fund (PF), then the employer's contribution will also be proportional to the employee's salary.

Regards,
Suresh Ramalingam

Sir,

For more clarity, I submit the following:

Basic Wages: 10,000/- (Basic Pay)
If Pay for the full month:
- Basic Wages: 10,000/- (Ceiling 6500/- uncovered 3500/-)
- Employee PF 12%: Rs. 780/-
- Employer PF 13.61%: Rs. 885.00 (ceiling of Rs. 6500/-)
Status_1

If Pay for 15 days:
- Basic Wages: 3250/- (half of ceiling 6500/- uncovered 1750/-)
- Employee PF: Rs. 390/-
- Employer PF 13.61%: Rs. 442/-
Status_2

- Basic Wages: 5000/- (half of 10000, ceiling is 6500/-)
- Employee PF: Rs. 600/-
- Employer PF 13.61%: Rs. 681/-

Which one is correct if we talk of proportionate reduction in pay. I have logically divided the Basic Wages into two parts. In the case of LOP, the reduction in Basic Wages will be applied to both parts - up to the ceiling of 6500/- and the other part that is beyond 6500/-, i.e., 3500/-. Please suggest.

Rajan Kumar

Dear Mr. Rajan Kumar,

I think you are confused, or I can't understand what you are saying. Why are you bothered about LOP?? If your company's policy is that the employer or employee will contribute to PF on more than 6500 basic salary (ceiling limit).

And you are calculating the wrong 13.61% share. It should also be limited to 6500 and keep in mind the pension account limit. If any employee has a 10,000 (basic + DA) salary, you have to deduct on 6500 as follows:
Employee: 780
Employer: 780 excluding 1.61%, which will be calculated separately.

I hope this will resolve your doubt. If not yet, please post or email me at nextechssn@yahoo.com.

Regards,
Prashant Patil

But in case of absence for some days, both Basic + D.A and EPF salary will be proportionately reduced. If Basic + D.A is Rs. 20,000/- and EPF is considered on the max. cap i.e. Rs. 15,000/- for full month's attendance, and payable days are reduced to 15 days due to absence, then Basic + D.A will be Rs. 10,000/-. In that case, on which amount does EPF need to deduct, on Rs. 10,000/- or on Rs. 7,500/- (proportionate on the max. cap of Rs. 15,000/-)?