PF deduction is only on Basic with the upper cap not exceeding more than Rs 6500. Any employee drawing wages exceeding this amount will be considered an excluded employee, provided that they are not already a member of PF. If they are already a member of PF, then their PF deduction will be based on Rs 6500 only.
The PF deduction shall be made on Basic + DA as a contribution with an equal contribution by the Employer. The maximum ceiling limit on both Basic + DA is Rs. 6500/-.
Kindly go through Section 29(1) of the EPF Act 1952 (Chapter V).
29. Contributions
(1) The contributions payable by the employer under the Scheme shall be at the rate of ten percent of the basic wages, dearness allowance (including the cash value of any food concession), and retaining allowance (if any) payable to each employee to whom the Scheme applies. Provided that the above rate of contribution shall be twelve percent in respect of any establishment or class of establishments which the Central Government may specify in the Official Gazette from time to time under the first proviso to subsection (1) of Section 6 of the Act.
In our organization, everyone's basic salary plus DA is more than Rs 6500. The PF deducted from the employee's side, as well as contributed by the employer, is Rs 780 throughout the company.
Is this correct, or should the employer contribution be 12% of Basic + DA?
If any sum is paid as DA, that is considered for PF deduction.
Regards,
Varghese Mathew
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