Understanding PF Deductions: Is ₹780 the Maximum for Salaries Above ₹6500?

I have gone through several discussions and found that:

1. PF is deducted at 12% of the Basic Salary + DA. For example, if the basic salary is 6500 for any employee, his PF deduction would be ₹780. Right?

2. However, if the basic salary is more than 6500, let's say, ₹22,750, then what would be his/her PF deduction? For example: 22,750 x 12% = ₹2,730.

Now, what I want to know is whether my second calculation is correct or not. Is ₹780 fixed for those who are drawing more than a basic salary of ₹6500? Is there any rule that ₹780 is the maximum amount that can be deducted as PF deduction?

As per my knowledge, there are some PF conditions:

1. EE-0 ER-0
2. EE-Ceiling ER-Ceiling
3. EE-Actual ER-Ceiling
4. EE-Actual ER-Actual

Most companies will follow the 2nd option, where regardless of the Basic amount, only ₹780 should be deducted from the employee, and the Employer Contribution will be based on the ceiling. If the Basic is less than ₹6500, both EE and ER contributions will be calculated on the actual amount. For example, if the Basic is ₹3500, then both EE and ER will contribute ₹3500 * 12%.

If the Basic is more than ₹6500, then only ₹780 will be deducted from both EE and ER.

In the 3rd condition, if the EE pays based on their actual amount, for instance, if the Basic is ₹20000, then EE will contribute ₹20000 * 12%, while ER will contribute based on the ceiling, for example, ₹6500 * 12%.

However, most companies tend to follow the 2nd option.

I hope this clarifies your concept.

As per my knowledge, there are some PF conditions:

1. EE-0 ER-0
2. EE-Ceiling ER-Ceiling
3. EE-Actual ER-Ceiling
4. EE-Actual ER-Actual

Most companies will follow the 2nd option, where whatever the Basic is, they should deduct only ₹780, and the Employer Contribution will be on the ceiling. If the Basic is less than ₹6500, then it will be calculated on the actual amount. For example, if the Basic is ₹3500, then ₹3500 * 12% from both EE and ER. If it is more than ₹6500, then only ₹780 from EE and ER.

In the 3rd condition, if EE is paying on his actual, like Basic is ₹20000, then it will be ₹20000 * 12%, but ER will contribute on the Ceiling, for example, ₹6500 * 12%.

However, almost all companies will follow the 2nd option.

Hope your concept is clear.

There is no law that prohibits you from deducting more than Rs 780 per month towards EPF from an employee's salary.

Regards,
Varghese Mathew
[Phone Number Removed For Privacy Reasons]

Thank you all for your valuable inputs. So, it is optional for the employee as to how much he/she wants to get his/her salary deducted as PF, but most of us follow that second option. 

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There is no such law that states PF will not be deducted more than ₹780/-.