Confused About Provident Fund Deduction? Why Is My PF Less Than Expected?

Dear Esteemed Colleagues, I am seeking clarification regarding the Provident Fund (PF) deduction. I understand that the standard deduction is 12% of the basic salary. However, I'm confused about the deduction of Rs. 780. If the basic salary is Rs. 14,000, the 12% deduction should amount to Rs. 1,680. Despite this, the company is deducting only Rs. 780. Could you kindly clarify this discrepancy?

Thank you.

Provident Fund (PF) Calculation

The minimum basic salary for the calculation of PF is Rs. 6500. Employers shall deduct PF on the minimum amount as per the EPF Act. The maximum deduction of PF depends on the Company Policies.

The calculation is given below:

= 6500 * 12 / 100 = 780.

Regards,
Supriya Sharma

Your logic is right! However, currently, the EPF wages ceiling is Rs. 6,500, and the employers are bound to contribute a maximum of 12% based on the EPF Wages Ceiling, i.e., Rs. 6,500. This amounts to Rs. 780.

If the employer wishes to remit contributions beyond the Wages Ceiling, they can do so at their discretion. However, they are not obligated to do this.

I hope this clarifies your doubt. Cheers.

I want to know one more thing in the same regard: if my basic salary is Rs. 14,000 and the employer is deducting the employee's share of 12% on Rs. 14,000, does the employer deposit his share on Rs. 6,500?

Regards,
Isha

Dear Isha,

For your kind information...

Wage Ceiling for PF Coverage to be Raised to Rs. 15,000 per Month

Also, a monthly pension of Rs. 1,000 per month.

The Finance Ministry has approved a proposal to provide a minimum monthly pension of Rs. 1,000 to workers in the organized sector, a move that would benefit 27 lakh pensioners immediately.

The ministry has also approved a proposal to raise the basic wage ceiling under the Employees Provident Fund Scheme to Rs. 15,000, from the existing Rs. 6,500 per month.

Currently, there are about 44 lakh pensioners. Of these, 27 lakh, including 5 lakh widows, receive less than Rs. 1,000 a month.

The government will provide an additional contribution of Rs. 1,217 crore to ensure the minimum monthly pension of Rs. 1,000 starting in 2014-15. Pensioners are, therefore, expected to benefit from this starting from April 1 this year.

Labour Minister Oscar Fernandes, however, is yet to decide whether the move requires Cabinet approval or not.

The Labour Ministry's proposal to provide a minimum monthly pension of Rs. 1,000 under the EPS-95, managed by the Employees' Provident Fund Organization (EPFO), has been pending for a long time.

Previously, the Labour Ministry had proposed that the government should increase the contribution to EPS-95 from 1.16 percent of the basic wage to 1.79 percent to ensure a minimum pension.

However, this was not favored by the Finance Ministry as it would have led to a permanent increase in its contribution.

In its revised proposal, the Labour Ministry has asked the Finance Ministry to provide around Rs. 1,217 crore in additional funds every year, indicating that this amount may decrease over time as more members subscribe to EPS-95.

Regards,

Dineshkumar M

As per The Employees' Provident Fund & Miscellaneous Act, 1952, the ceiling limit for an employer to pay the PF is ₹6,500 with only 12%. Whereas the employee can contribute at a voluntary higher rate or a higher amount.

For example, if an employee is receiving ₹15,000 as their salary, the employer's contribution should be (minimum) ₹780 (₹6,500 * 12%). On the employee's side, the minimum is also ₹780 (₹6,500 * 12%), but the maximum can be any percentage or any amount they are earning. They can even opt for 24% @ ₹15,000. However, the higher rate should be voluntary.

Regards,
Swarna

Provident Fund (PF) Calculation Clarification

The minimum basic salary for the calculation of PF is Rs. 6,500. Employers shall deduct PF on the minimum amount as per the EPF Act. The maximum deduction of PF depends on the company policies. The calculation is given below:

= 6,500 * 12/100 = 780.

Regards,
Supriya Sharma

Attribution: https://www.citehr.com/482620-about-...#ixzz2s5wTmF1C

As per the PF Act, the minimum basic wages for PF calculation are 6500, and the maximum wages depend on the mutual understanding of the two parties (Employee and Employer). Therefore, the deduction of PF on 6500 would be 780 (6500x12/100), and the deduction on 14000 would be 1680.

Regards,
Mohd Shamshad Ahmad