How to Calculate Employee Pension Fund Deductions for Salaries Above ₹6500? Seeking Guidance

I have 3 employees with a basic salary exceeding ₹6500, specifically ₹16000, ₹14000, and ₹8000 respectively. I deduct the employer's share from their basic salary. My question is, on what amount should I deduct the employee pension fund, which has a maximum limit of ₹541?

For instance, if employee A has a basic salary of ₹16000 and attended work for 28 days in April, the employer's share deduction would be on ₹16000/30*28 = ₹14933. However, for the employee pension fund, the deduction should be on what amount, 8.33% of the maximum limit ₹6500 or ₹6500/30*28 = ₹6067.

Additionally, could you please guide me on how to assign an employee for the wage month April-2012 and provide a new PF number?

Respected seniors, please reply soon with clarification.

Thank you and regards,
Rahul Rana
[Phone Number Removed For Privacy Reasons]

Thank you for your reply. My concern is, if an employee has attendance for 28 days in the month of April, on which amount should we deduct EPS and why?

1. On the maximum limit, i.e., ₹6500 (₹541)
OR
2. On ₹6500/30*28 = ₹6067 (₹505)

Please advise.

EPF and EPS Deduction Clarification

If any employee earns more than 6,500 as basic salary, we would deduct the EPF and EPS on 6,500. As per your example, the employee earns 14,933 for 28 days, which is more than 6,500 rupees. So, the PF amount is 780, and the employer contribution is 541 and 239 respectively.

Employee Pension Fund Deduction Clarification

Mr. Dheeraj,

As per my knowledge, if any employee has a basic salary exceeding the maximum limit, which is ₹6500, the employee deduction on the basic part will be applied regardless of the amount. However, there is a condition that both the employee and the employer must agree on this. In terms of EPS, the maximum limit of ₹6500 remains the same in any scenario.

My question is, if an employee has attendance for 28 days in April, on which amount do we have to deduct EPS and why?

1. On the maximum limit, i.e., ₹6500 (541)
OR
2. On ₹6500/30*28 = ₹6067 (505)

Regards

Employee Pension Fund Calculation

Because the employee earns a basic salary of more than ₹6,500, the PF and EPS amounts are not calculated based on the present days in the month.

For more details, you can reach me at [Phone Number Removed For Privacy Reasons].

Regards.

Wage Calculation for Employee Pension Fund

The actual wage to be considered is Rs. 6500/-, in which case the contribution should be calculated based on the working days, similar to salary calculations. Therefore, the deduction should be on 6500 X 28/30 = 6067, i.e., Rs. 505/-.

Regards,
Swapna

Thank you, Swapna, for your valuable information. However, as you saw earlier, Mr. Dheeraj mentioned that there are no specific criteria for the current days in a month; there is a fixed amount of Rs. 541. I am confused about this. Can you provide any explanation for this? I am eagerly waiting for your reply.

Clarification on EPS Wages Calculation

How could you say that? If the EPF salary is more than 6500, then EPS wages will be 6500 (541).

If the EPF wages are less than 6500, then EPS wages will be the actual EPF wages, and the EPS will be (EPS wages * 8.33%).

Regards

I am also saying that Mr. Swapna is right, but only when the employee's basic rate is 6500 or less. When the basic and DA of the employee are 10000 and they worked for 29 days, the employee earns 9667. This amount is bigger than 6500, so the organization shows the contribution of the employee's PF as 780.

So, don't be confused, Mr. Rana.

Thank you, Mr. Dheeraj. In the above content, your explanation is nice. You explain everything clearly. But what about the EPS amount? If you looked at my thread from the beginning, my question was only about the EPS CEILING.

If the basic salary is more than 6500, why are you deducting and contributing to EPF? Even if the basic is less than 6500, at that time, you cannot deduct.

With regards,
V. Subbarao
[Email Removed For Privacy Reasons]