Understanding PF Deductions and Contributions in Employee Salaries

Dear All,

I have a query about PF. I received an offer letter from an employer with a salary breakdown that includes PF contributions from the company and PF deductions from my salary amounting to only Rs. 780. The basic salary mentioned is Rs. 18,821.

Kindly advise.

Regards,
KD

Dear Kalpesh,

If your basic salary is Rs. 18821/- per month, then I think your employer deducts the PF contribution at Rs. 6500/- from your salary. This is because the PF wages ceiling limit is Rs. 6500/-, and you should clarify your doubts with the HR Department when you received your offer letter.

Regards,
Amit Kumar

Dear Friend,

I agree with Mr. Amit. According to the company policy, they deduct your PF on the ceiling amount of Rs. 6500/- at 12%. This you should check with your management when they issue your appointment letter.

G.K. Manjunath Sr. Manager-HR

The PF contribution constitutes 12% of the basic salary by the Employer. Your contribution (deduction from salary) would match this or you can enhance it to 20% of the basic salary. Do note that in the event you leave the company and encash this amount, the entire proceeds become taxable.

Dear Sir,

Though the basic salary is Rs. 18,821/-, you are entitled to a P.F. deduction on the P.F. ceiling amount of Rs. 6,500/-, i.e. 6,500 x 12% = Rs. 780 only as per the P.F. Act.

D. Gurumurthy
HR/IR Consultant

It is correct. It's better to negotiate with them to have a 12% deduction from the basic. They can change, but it depends on your negotiation. You need to be firm on your demands.

Dear KD,

It is very true that the PF wage ceiling is Rs. 6,500/- and the PF contribution is Rs. 780/- for either end. However, there is one more option by which you can make voluntary contributions from your earnings for each and every month. In that case, you can only receive your contribution with interest as you have allowed the management to deduct from your salary, but the management will only give Rs. 780/- to you from their end.

If you want to earn more interest, then make voluntary contributions to your PF account.

Regards, Jagdeep K Vashishtha HR Assistant ITD PCL

Dear Friend,

Commonly, company policy deducts your PF based on the ceiling amount of Rs. 6500/- at 12%. You should verify this with your management when they issue your appointment letter. For your information, as per the EPF Act, you are considered an exempted employee if you have newly joined and are earning more than Rs. 6500/- per month at the beginning of your employment. PF is not mandatory for such cases.

R.S PAGAD ADVOCATE

Mr. R.S. Pagad,

It is not the policy of the company what is mandatory as per the provisions of the PF Act.

"The maximum pensionable salary shall be limited to 19[Rupees six thousand and five hundred / Rs. 6500/-] per month. Provided that if, at the option of the employer and employee, contribution paid on salary exceeding 21[Rupees six thousand and five hundred / Rs. 6500/-] per month from the date of commencement of this Scheme or from the date salary exceeds 22[Rupees six thousand and five hundred / Rs. 6500/-], whichever is later, and 8.33 percent share of the employers thereof is remitted into the Pension Fund, pensionable salary shall be based on such higher salary. Inserted ibid w.e.f 16.3.96. 19 & 21 & 22. Subs. By GSR 774 (E) dated the 8.10.2001 (w.e.f. 1.6.2001)"

Regards,
Jagdeep K. Vashishtha

Dear Friend,

Normally, PF is deducted on Basic; everyone knows the same. For example: In Company X, A is an employee with a Basic Salary of Rs 15,000/- and PF deduction of Rs 1800/-. A has completed the service and resigned. In Company Y, the same employee A joined with a Basic Salary of Rs 25,000/- and PF deduction of Rs 780/-. This is not wrong. Company X follows one method, and Company Y follows another method.

Normally, the PF Act states that if the company has more than 20 employees, PF deduction is required. However, the ceiling limit is fixed at Rs 6,500/-.

Regards,
Suresh

Hi All,

You all are right. Now, don't confuse KD. KD, you are getting the right amount, and the company is deducting the correct amount. Don't worry.

Every one can give the reply to this thread because everyone is aware and familiar with the PF. But try to give such threaded answers to those who have a specific need as it can be challenging.

Thanks for all your cooperation, everyone.

Nanasaheb
Corporate HR - Pune

Dear Nanasaheb,

What you are telling is correct. We are also trying to raise awareness about PF; we are not trying to confuse the person. Regardless of the method you follow, the final result is to deduct PF. If it is 780/-, your take-home pay is more. That KD needs to know.

Suresh
Payroll Manager

Dear,

Some companies have their policies that your basic salary will be anything greater than Rs. 6500. They usually deduct Rs. 780, so don't worry about it. The issue regarding your basic salary and your thoughts on the 12% deduction need to be addressed. Please communicate with your HR department.

Thanks,
Tejas Chikshe
Asst. Manager - HR & Admin

Hi Sir,

I need some information:
1. Who should sign the transfer application form (ex-employer or present employer) and what forms should be submitted?
2. Is there a separate format or tool for maintaining leave registers?

Kindly help me, sir.

Jyothi,

Current employers need to sign the transfer application. Excel is the best tool to maintain the leave register.

Suresh VVN
Jobseeker

Dear Jyothi,

Form-13 (Revised) is used to transfer your funds, and the present employer needs to sign on the same form after filling in the details as prescribed.

Yes, Excel is the best tool to keep a record of leave and absence.

Jagdeep K. Vashishtha
ITD PCL

Dear All,

We have filled up all the returns of PF and submitted them to the PF office. However, we have not received any receipt for the same. Upon visiting the PF office, they informed us that your consultant has not submitted any details of your employees. We only require the contribution card for the employees. What should we do?

Thank you.

Dear Dharmesh Savaliya,

You need to coordinate with the consultant or the concerned person in the PF Department to inquire why you have not received a receipt from the department. There may be some observations regarding the documents you have submitted.

Regards,
Jagdeep K Vashishtha

Dear KD,

It is as per the law that the basic salary for administration charges shall be Rs. 6500 per month. However, by mutual consent of the employer and employee, it can be increased. In your case, it may be your full basic salary. The second option is that you can write an application to your employer to deduct a higher amount from your salary, whichever you can afford, known as Voluntary Contribution, exceeding 12%. In such a case, the employer is not obligated to deposit double the share that you are supposed to deduct. The employer will only deposit up to the ceiling of the basic salary.

Regards,
Jagdeep K Vashishtha