Employer's Role in Provident Fund Contributions: What Are the Legal Requirements?

Employer Liability on Provident Fund (PF)

What is the liability of the employer regarding Provident Fund (PF)? Can the employer contribute its share of PF at ₹6,500/- or on an actual basis? Do we have any rules in PF law regarding this? Please reply, it's urgent.

Regards,
Vishal Setia

Calculate PF as 12% of Basic & DA. In case 12% of Basic & DA is more than Rs 780 (i.e., 12% of Rs 6,500), you can choose to restrict PF to Rs 780 per month.

Regards,
Madhan

As per PF rules, both the employer and employee should each contribute 12% of the basic salary towards the PF share. The salary could be restricted to Rs. 6,500. However, this should be made applicable to all employees.

Dear Vishal,

First of all, you must be aware of the fact that the component for the deduction of EPF accumulation is done on Basic salary + dearness allowance + food conc. (if any). Secondly, the basic salary should not be less than the minimum wages defined by the state from time to time. Thirdly, membership for EPF/EPS accumulation is mandatory for the salary range up to Rs. 6500/- (which includes basic + DA + food conc.).

Furthermore, once you become a member of EPF/EPS, you cannot be excluded during your continuity in service until your basic salary exceeds Rs. 6500/-. Rs. 6500/- is the ceiling for EPS & EDLI, not for EPF. If the employer wishes to pay the contribution on the actual basic, then it is well and good, but they must pay up to Rs. 6500/-. Additionally, all the administrative charges must be paid by the employer.

Thanks & Regards,

Sumit Kumar Saxena

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