Understanding PF Contributions and Exemptions: What Happens When Your Salary Exceeds ₹6500?

Dear All,

I need to know what is the statutory percentage contribution of the employee and employer towards the PF if the basic salary is more than ₹6500. Can the employee claim exemption for both the employer's and employees' contributions under 80C?

Also, please let me know if the PF deducted is ₹780 from both the employer and employee despite the basic salary being more than ₹6500. Is this applicable?

Thank you.

Thanks, Abbas, for the reply. Please let me know if the employee can ask the organization to increase his contribution to the PF. Also, let me know how he can do the same. Is there a possibility that the company can deny this request?

I would like to have clarification on the following:

1) Is it valid when a person writes the mother's name instead of the father's name in the PF forms?

2) Is ESI/PF applicable to employees, like...

Dear Abbas, the above-highlighted part is incorrect. Employees can receive an exemption under 80(C) for their contribution to PF up to a limit of 1 Lac p.a.

Regards,
R.Ponraj

Dear Mr. Ponraj,

I don't know why you are highlighting a portion of my posting and straining to establish there is something wrong. Try to understand the original query.

Aditya Kulkarni has posted that even though the salary is more than Rs. 6500, Rs. 780 is only contributed to PF. Out of these contributions (of both employee and employer), is the employee's eligibility to get exemption Rs. 780 or Rs. 780 + Rs. 780 = Rs. 1560? I feel that here the employee will get exemption for only his contribution and answered accordingly. But do you think that as Rs. 18720 (1560 x 12) which is within the limit of Rs. 1,00,000, the entire amount will be exempted from IT under 80(C)?

i.e. for IT exemption under 80(C), two things will be considered:

1. Actual deposit made by the employee, which in this case is Rs. 780 per month or Rs. 9,360 per annum.

2. Rs. 1,00,000.

Out of the above two, whichever is less will be considered for IT exemption and accordingly I responded. If you have a different opinion, be specific.

With regards,

Abbas.P.S

Abbas and Ponraj are correct. As I understood the query from Aditya, it is:

1. PF paid by the employee (NOT by the Employer) is exempted from IT under Sec 80C. (As of now, the exemption limit is Rs 1 Lac).
2. The employer is to contribute a matching amount of 12% of the Basic Pay.
3. An employee can contribute much higher, beyond the minimum 12% of the Basic Pay.
4. The exemption for IT for the employee's contribution is a maximum of Rs 1 Lac.
5. The employer must ensure that the employee's Basic Pay up to Rs 6500 is registered for the PF Scheme (EPF or Trust).

Raju

Mr. Abbas is correct. The one lakh is applicable for all savings like LIC, Group Saving Linked Insurance, interest paid for HL, principal towards HL, etc. In addition, up to 20,000 for long-term infrastructure bonds, then 25,000 for aged dependents, plus mediclaim up to 15,000, and charitable donations up to 20,000. Regards, Vaidya.

Abbas has said the right thing. The contribution from the employee will be a maximum of 12% of Basic + DA with a ceiling limit of 6500/- per month, which calculates to Rs. 780/- per month towards EPF. An equal amount will be contributed by the employer to the employee's PF Account. However, the employee can claim only his PF contribution in Income Tax under section 80 (C). The employee can further contribute towards EPF as Voluntary PF, which is also exempted under section 80 (C). As Keshav said, section 80 (C) covers various areas subject to a maximum exemption of 1 lac. Hope the above-mentioned details will clear out the confusions.

Prasanth