How Should PF Contributions Be Handled When an Employee's Salary Exceeds 6500?

Respected all,

Please express yourself generously about the following: I have an employee in my company with a basic salary of 6000/-. Now, his basic salary has been revised to 6600/-.

Keeping the above in view, please describe his PF contribution as PF has an exemption limit of 6500/-. What will be the employer's liability in this particular case, considering the company's policy to deduct PF only up to 6500?

Regards,
Vikas Kumar

Dear Vikas,

If an employee's salary has increased from 6000 to more than 6500, then the contribution of PF can be 12% on his actual salary, maybe it is 6600 as you stated. For example, 6600 * 12% = 792, but the employer's contribution may be restricted to 12% on the ceiling, i.e., 6500, which means 780/-. The contribution towards EPS is based on 6500/-, i.e., 541/- from the contribution part of the employer, and the remaining part goes to PF again as the employer's share, which is calculated to be Rs. 239/-

Regards,
Kiran Kale

Dear friend,

The Act is silent on the issue of whether the PF contribution will continue on the basic pay higher than 6500/- or not. However, it is very clear that you have to cover the employees under the PF Act having a salary up to 6500/-

Regards,
Rajeev

Dear Mr. Vikas,

It is solely at the discretion of management regarding the above issue. If the management is okay with the increased basic salary and is paying the PF amount on the revised basic, then the EPS share will be calculated on 6500/-, i.e., 541/-, and the remaining amount will be credited to the EPF account. We are following the same criteria in our company.

Regards,

Nilesh Dev.

Dear Mr. Vikas,

The contribution to the pension fund (8.33%) is restricted to 541/- (i.e. 8.33% of 6500/-) under the act, and the difference between the pension fund contribution and PF contribution will be added to the PF contribution.

It is the choice of the employer whether to pay their contribution on the full salary (Basic + DA) or restrict it to Rs 6500/-. This choice entirely depends upon the employer's wishes.

However, if an employee has contributed to their PF during their employment, the employer must do the same. In this case, the employee would be covered under the act, even if their contribution is restricted to Rs. 6500/-. Please refer to Form-11 of the EPF and MP Act 1952 for further information.

Thanks & Regards,
Ajay Shukla
Labour Law Consultant, Kanpur
ajaywshukla@rediffmail.com

Respected all,

Please express your opinions generously on the following:

I have an employee in my company with a basic salary of 6000/-. Now, his basic salary has been revised to 6600/-. Considering the above, please describe his PF contribution as the PF exemption limit is 6500/-. What will be the employer's liability in this case, given that the company's policy is to deduct PF only up to 6500.

Regards,
Vikas Kumar

Dear Vikas,

There is no limit for EPF, but for EPF, there is a limit of Rs. 6500/-. This means that above this salary, the limit would be only Rs. 541/-. The excess amount goes to the PF account.

Regards,
Nayan

Dear Nayan,

There is a ceiling limit on the salary of Rs. 6500/. However, this is for statutory purposes/requirements. Contribution in excess of the ceiling limit is at the employer's discretion. Many employers are contributing based on the actual salary beyond the ceiling limit. In such cases, pension contributions will be restricted to the ceiling of Rs. 6500 (contribution Rs. 541), and the remaining amount will go to the individual PF account.

Abbas. P. S

Dear Vikas,

Your PF contribution after INR 6,500 continues up to Rs. 6,500 for EPF & FPF. It is mandatory because you are already a member before crossing the limit. However, if your employer gives permission to contribute more than the prescribed limit, then FPF will contribute up to INR 6,500, and the rest of the amount will go to your EPF account.

S.K. BOHRA
LABOUR LAW ADVISOR

I have a query regarding the EPF law. According to the law, the ceiling limit is Rs. 6500.

- A/c-1 - 12% + 3.67%
- A/c-2 - 1.10%
- A/c-10 - 8.33%
- A/c-21 - 0.5%
- A/c-22 - 0.01%

The total contribution is 25.61%, which amounts to Rs. 1665.

Now, if the basic salary is Rs. 10,000, and we deduct contributions up to Rs. 6500, what will be the contribution for the remaining Rs. 3500? Please provide information on this via email at [Email Removed For Privacy Reasons].

Thank you.