Can I Deduct PF on a Basic Salary Above the Government Ceiling? Seeking Advice on Payslip Details

Dear Seniors, kindly suggest to me on the below-mentioned issue. I'm deducting PF on a basic salary of 6500 as per the government ceiling. If the basic salary is higher than 6500, can I mention the same basic and deduct PF for 6500 only, i.e., 780, irrespective of the actual basic amount? For example, if the basic salary is 10000 but PF is deducted for 6500, i.e., 780. In this case, can I mention in the payslip the basic amount as 10000 and PF as 780? If not, how should I split the salary? Please advise.

In the payslip, you need to mention the actual basic amount. Additionally, you can show 780 as a deduction towards PF. Where is the issue?

Regards,
Rajeev Dixit

Hi, you can show the PF deduction as ₹780 irrespective of your actual basic salary. Additionally, you can also show the actual basic salary with the PF deduction of ₹780.

Thanks, Rajeev & Ashok. I have another query: should I mention any note in the payslip or CTC breakup sheet that I'm deducting PF based on the government ceiling of 6500? Employees have been asking what they should mention about the PF deduction percentage if they move to other companies.

No, it's not required to mention that way. You can convey this orally when asked.

Regards,
Rajeev Dixit

Dear Ashok, Is there any problem if I mention in the note below CTC as well as on the payslip that PF is calculated on a basic of 6500?

Regards,
Ramya

Dear Ashok & Rajeev,

Thank you for your reply. The employees are not satisfied with oral communication; they want the information in written format. They believe that showing the payslip in written form will make it more credible to other companies. Are there any legal issues related to mentioning or not mentioning this information?

Regards

Dear Ashok & Rajeev,

Thanks for the reply. However, the employees are not satisfied with oral communication; they want it in written format. They are assuming that by showing this payslip, no other company will believe them. Are there any legal issues with mentioning or not mentioning this?

Nothing to worry about. You can mention in the payslip or CTC sheet or anywhere else stating: "PF - employee's subscription and employer's contribution is restricted to a maximum of Rs. 6500/- as per EPF Act." Alternatively, you can post it on the notice board, circulate it, or include a clause in the appointment letter. Any of these options will suffice.

Regards,
Kumar.S.

PF deduction is restricted only to the employer's contribution of Rs. 650/- (i.e., Rs. 780/-). Why do you want to restrict the employees' deduction? You can deduct PF on the total value of Basic & DA.

Regards,
Mubarack
Senior Manager - HR

I agree with what Kumar says. As per the EPF Act, the maximum salary ceiling for the deduction of PF is ₹6,500. Additionally, there is a clause that allows the member to contribute on their entire basic salary if they choose to do so, and the employer may restrict the contribution to the ceiling of ₹6,500.

I agree with what Kumar says. As per the EPF Act, the maximum salary ceiling for the deduction of PF is ₹6,500. Again, there is a clause: if the member wants to contribute his entire basic salary, he can do so, and the employer may restrict his contribution to the ceiling of ₹6,500.

Of course, an employee, at his or her own discretion, can contribute to his or her PF even if the salary crosses over and above ₹6,500, but the employer cannot be compelled to follow suit, as they normally restrict their contribution only up to ₹6,500. There are employers who contribute without this restriction as a gesture. However, most of the 'Exempted Employers' who have set up PF Trust apply this restriction up to ₹6,500 due to the imbalance in the interest earned and the disbursement commitment to PF members.

Regards,
kumar.s.

You can add one column in the payslip mentioning PF Basic as Rs. 6,500/- just below the actual basic, which will solve your problem.

Regards,
Nilesh Soni
[Phone Number Removed For Privacy Reasons]

Dear Sir, if the basic is higher than 6500, you can mention the actual basic (i.e., 10000) and for PF contribution, you can show Rs. 780. In the payslip, you can also mention Rs. 10000 as basic. If the employee wants any clarification, you can explain that the employer need not contribute more than 6500 (upper ceiling limit). Nowadays, I heard that for PF contribution, except HRA, they will include all the allowances.

Dear Sir,

If the basic is higher than 6500, you can mention the actual basic (i.e., 10000) and for PF contribution, you can show Rs.780/-. In the payslip, you can also mention Rs.10000/- as basic. If the employee wants any clarification, you can explain that the employer need not contribute more than 6500 (upper ceiling limit).

Nowadays, I heard that for PF contribution, except HRA, they will include all the allowances.

R. Dhamodhara Kannan

After PF deduction of Rs. 780, any additional contribution should be calculated for a member with a basic salary of more than Rs. 6,500. The remaining amount will go into the Pension account.

Regards,
Santosh M.

Clarification on Pension Contribution

Your statement is totally wrong. Please note that pension contribution is a company's part, and there are no deductions from the salary for pension contribution. It is a fixed 8.33% of basic + DA, with a maximum of Rs 541/-. So, please update your knowledge and do not post wrong information.

Regards,
Nilesh Soni
[Phone Number Removed For Privacy Reasons]

It is not that big a problem for which you have sought clarification. You can simply show your gross pay in one column and in another column, you can mention as 'PF wages', which can be restricted to the prescribed limit of Rs. 6500/- on which you can deduct the PF contribution.

Regards,
BS Kalsi
Contributing Member

Dear Nilesh,

Thank you for your valuable information. I made an error in mentioning "pension" instead of the Employer's PF contribution. I understand that the pension percentage is fixed at 8.33%, and any amount exceeding that, such as Rs. 541/-, is added to the employer's PF contribution.

For example, if the basic amount is Rs. 8000/-, the Employee's PF contribution would be Rs. 960/-, and the employer's PF contribution would be Rs. 419 plus the pension amount of Rs. 541/- (419 + 541 = 960).

I trust this clarification clears up any confusion.

Regards,
Santosh M.