Understanding PF Admin Charges: Should They Be Based on Actual or Ceiling Salary?

Query Regarding PF Admin Charges:
Case – Employee basic is ₹10,000 per month. The company is depositing PF on the PF ceiling of ₹6,500 for both employer and employee shares. However, the employee wants to add a voluntary PF contribution of 12% on his actual basic, i.e., ₹10,000 per month. So now, the question is whether admin charges will be applicable on the PF Basic ceiling of ₹6,500 or the actual basic of ₹10,000. The PF Inspector is enforcing that admin charges will be applicable on the actual basic, i.e., ₹10,000, not on ₹6,500. Please provide clarity about this query; written evidence would be appreciated.

Regards,
Mahender Singh

Admin charge is paid from the employer's contribution, so I think what you are doing is right.

Dear PF Inspector is absolutely right; it will be applicable on 10,000/- (actual basic).

Please provide any circular, Act, Section, or notification issued by the PF authority to get more clarity on the query.

Regards

Admin charges shall be paid on total wages, and EDLI & EDLI Admin charges shall be restricted to Rs. 6,500/-.

Regards,
AVGN Vara Prasad

Admin charges are payable on the actual basic salary, whereas EDLI and Admin on EDLI are paid on a Rs. 6500/- basic salary per month.

Regards,
Indira

If the employee and employer both are contributing ₹10,000/-, then the admin charges are on ₹10,000/-.

If the employee and employer are contributing ₹6,500 and the remaining amount is deducted from the employee's salary as a voluntary contribution, then the admin charges are on ₹6,500/-.

Regards,
Sanjeev Sharma
PF & ESI Consultant

Sanjeev Sharma is correct. If the employer is contributing an equal amount as the employer's share on voluntary contributions by the employee, then you have to pay administrative charges on Rs. 10,000. If you are not contributing an equal amount as the employer's share on voluntary contributions by the employee, administrative charges are applicable on Rs. 6,500. As your query is not clear on this particular point, you can decide for yourself.

Regards,
Prahalatha

I have gone through your query and noticed that the employee's basic salary is Rs. 10,000, but the deduction for EPF is based on Rs. 6,500, amounting to Rs. 780. The employee wishes to contribute voluntarily based on Rs. 10,000, which is not possible. Since the deduction for EPF is on Rs. 6,500, I suggest informing the employee to contribute VPF amounting to Rs. 780. Therefore, the total Employee Contribution should be Rs. 1,560.

The Employer Contribution should be 3.67%, which equals Rs. 239, and the Employer Contribution should be 8.33%, which amounts to Rs. 541. Note that VPF contribution impacts only the employee's share, not the employer's share. Additionally, contributions can only be made on EPF salary, and voluntary contributions should only reflect in the PF account under the employee's share, not separately. In the EPF annual return (Form 3A), you need to indicate the percentage of voluntary contribution at the top, but under Employee Share, you must mention Rs. 1,580.

Regarding the EPF Challan

- A/C1 = (12% + VPF of EPF salary + 3.67% employer share)
- A/C2 = 1.1% of EPF salary
- A/C10 = 8.33% of EPS Salary
- A/C21 = 0.5% of EPS/EDLI Salary
- A/C22 = 0.01% of EPS/EDLI Salary

I hope this clarifies all your doubts. If you have any further queries, feel free to ask.

Thanks & Regards,

Sumit Kumar Saxena
[Phone Number Removed For Privacy Reasons]

For more clarity, the employer is deducting PF on ₹6,500 instead of the actual basic salary, but employees want PF to be deducted on the actual basic salary at the same percentage, i.e., 12%. The difference will be considered as VPF contribution. In short, the employer deducts PF on ₹6,500 at 12%, and the employee's PF is deducted at 12% on the actual basic salary, which is more than ₹6,500. Now, the query is whether admin charges will be paid on ₹6,500 or the actual basic salary.

Regards,
Mahender Singh