Confused About EDLI Contribution Limits in E-Return Tool? Need Help with Software Settings

I use the e-return tool (version 4) provided by EPFO to calculate PF contributions. There are a few employees whose basic pay exceeds Rs. 6,500, but we pay PF on the entire basic amount. For example, for an employee with a basic pay of Rs. 10,000.00, we pay PF on the full Rs. 10,000.00.

EDLI Contribution Calculation Issue

If I understand correctly, even for such employees, when calculating EDLI contribution (A/C # 21), the employer is required to contribute a maximum of Rs. 6,500.00 and not on Rs. 10,000.00. However, the e-return software automatically calculates the EDLI contribution based on the entire basic amount and not the maximum of Rs. 6,500.00.

Could someone please suggest if I am making any mistake in the software, or if there is a specific rule that needs to be configured in the software to address this issue?

Thanks very much.

Clarification on EPF & MP Act Implementation

Contrary to some of the views expressed in this forum, the basic rules on the EPF & MP Act are very clear and implemented by the EPFO authorities.

These are:

1. Basic + DA up to Rs 6,500: 12% of this will be deducted from the employee towards the EPF, 12% for the Basic + DA from the employer towards the Pension Scheme, and 1.61% from the employer towards EDLI and Admin Charges.

2. Basic + DA over Rs 6,500: 12% of the Basic + DA from the employee towards the EPF. 12% of the Basic + DA from the employers, of which Rs 542 (8.33% of 6,500, which is the maximum) will be deposited towards the Pension Scheme and the rest towards the EPF. The EDLI + Admin Charges are as before.

Therefore, if the Basic is Rs 10,000, then the EPF Software will:

(a) 12% of Rs 10,000 = Rs 1,200 from the employee towards the EPF.

(b) 12% of Rs 10,000 = Rs 1,200 from the employer, of which Rs 542 will be towards the Pension Scheme and the rest (Rs 658) will be deposited to the EPF.

(c) 1.61% (Rs 161) will be towards the EDLI and Admin charges.

In a press briefing some time back, the EPFO Commissioner also reiterated the above and added that some industries—notably in Tamil Nadu, Maharashtra, etc.—are defaulting in this due to ignorance! It is seen that almost every week there is an advertisement in the newspapers from the EPFO organization about the recovery of dues from an employer! And the recovery sum totals to above Rs 1 Crore!

Regards,
Rajusiachen.

Understanding EDLI and Admin Charges on PF Contributions

Legally, Admin and EDLI should be paid on the total Basic plus DA on which an organization pays PF contribution. If you are restricting it to Rs 6,500, then the EDLI and Admin will be on Rs 6,500. If you are paying on the entire Basic plus DA, then charges will be levied on the entire amount. The payment you are making is in order.

Regards,
T Sivasankaran

The problem you mentioned regarding the e-return tool was indeed present, but only until last month. Starting from this month, the e-return tool automatically calculates the EDLI contribution at a maximum of Rs. 6,500.00, even for employees with a basic salary higher than Rs. 6,500.00. I generated challans for some of my clients yesterday, and I can confirm this.

Thank you.