PF Calculations - Ceiling Limit

Dear Friends
I give below a typical case where in I do not know, how to calculate PF Admn
charges. I would like to know as per PF Act what is the correct calculation.
i.e. whether pf admn charges should be calculated on the ceiling wages of
Rs.6500/- of on the total wages, since the employee is contributing more than the ceiling limit.
Please let me have the clarity, as I am an new to HR Dept.
Case
If B + DA > 6500, then Employee = 12%, Employer = 12%+1.61%
Example : B + DA = 10000 and considering that the employee is not contributing any additional PF greater than 12 % of 6500 for 10 months of the year and in February & March employee had contributed a lump sum of Rs. 3000 in each month then
Employer = Rs 780, Employee = Rs 3780 (( 12% * 6500) + 3000) + 1.61% * 6500 = Rs. 104.65
In this case whether the admin charge 1.61 % on 6500 is correct or not? or 1.61% should be calculated on Rs.10000 ( B+DA)as stated in the first paragraph.
Regards
Sreenandhini

I have already answered your queries including the above vide citeHR/320892 as under. Kindly go through.

Dear Sreenandhini,

Example : The employee’s Basic - 5000 , DA – 4000 , Total of Basic + DA = 9000

The Employee is on Loss of Pay for 5 days in the month and his earned salary is

(9000 / 30) * 25 = 7500. For the purpose of PF calculation, Rs. 7500 will be considered.

The above calculation is fully correct.

Case 2:

If B + DA < 6500, then Employee = 12%, Employer = 12%+1.61%

Example : B + DA = 5000

Employee = Rs 600, Employer = Rs 600 + 1.61% * 5000 = Rs. 80.50

The above calculation is fully correct.

Case 3: (a)

If B + DA > 6500, then Employee = 12%, Employer = 12%+1.61%

Example : B + DA = 10000 and considering that the employee is not contributing any additional PF greater than 12 % of 6500, then

Employee = Rs 780, Employer = Rs 780 + 1.61% * 6500 = Rs. 104.65

The above calculation is fully correct.

Case 3: (b)

If B + DA > 6500, then Employee = 12%, Employer = 12%+1.61%

Example : B + DA = 10000 and considering that the employee is contributing additional PF for total of his salary then

Employee = Rs 780, Employer = Rs 1200 ( 10000* 12%) + 1.61% * 6500 = Rs. 104.65

In this case whether the admin charge 1.61 % on 6500 is correct or not?

Here there happened mistakes.

1. If employee is not ready for higher contribution why employer has to contribute?

2. The split up of 1.61% is as follows : 1.1% is admin charge on PF amount, 0.5% is premium on EDLI and 0.1% is admin charge on EDLI. It is to be mentioned that premium & admin charges on EDLI has to restricted on ceiling salary (Rs. 6500). But admin charges on PF may vary according to the contribution above ceiling salary.

Case 3: (c)

If B + DA > 6500, then Employee = 12%, Employer = 12%+1.61%

Example : B + DA = 10000 and considering that the employee is not contributing any additional PF greater than 12 % of 6500 for 10 months of the year and in February & March employee had contributed a lump sum of Rs. 3000 in each month then

Employee = Rs 780, Employer = Rs 3780 (( 12% * 6500) + 3000) + 1.61% * 6500 = Rs. 104.65

In this case whether the admin charge 1.61 % on 6500 is correct or not?

As stated above split the normal contribution & additional contribution (mistakingly you quoted as employee 780 & employer 3780, but it is vise versa) and charge 1.1% only on 3000.

Abbas.P.S

I understand that you have already explained. Now my doubt is
whether I should calculate 1.1% of PF Admn charges on Rs.6500/-
or Rs.10000/- ( including additional contribution of the employee)
and what the PF Act says about this.
I request you to clarify this point only and give reference of
relavant section of PF Act.
Regards
Sreenandhini.

Kindly refer the concerned portion as under :
"Example : B + DA = 10000 and considering that the employee is not contributing any additional PF greater than 12 % of 6500 for 10 months of the year and in February & March employee had contributed a lump sum of Rs. 3000 in each month then
Employee = Rs 780, Employer = Rs 3780 (( 12% * 6500) + 3000) + 1.61% * 6500 = Rs. 104.65
In this case whether the admin charge 1.61 % on 6500 is correct or not?
As stated above split the normal contribution & additional contribution (mistakingly you quoted as employee 780 & employer 3780, but it is vise versa) and charge 1.1% only on 3000."
It is clear that 1.1% is not for ceiling limit, but for the actual contribution.
For details kindly refer para 38(1) of the Act.
Abbas.P.S