Provident Fund [Thread 495426]

Hi,
I have some question related to provident fund.
Q1 )we are planning to enroll our company with EPFO during next month. So can we deduct the provident fund from this month onwards for all employees.
Q2)Is it possible to deduct the provident fund contribution in two ways for employees. (a) 12% of Rs6500 i.e Rs780 for the employees whose basic pay is above Rs 6500. and ( b) if someone's basic salary is less than 6500 then 12 % on the lower basic pay can it be calculated on that.
pls let me know.
thanks
Naveen.

Q-1 You cannot deduct before getting your establishment registered under EPF.After reg: you can deduct the Ee's contribution of previous month's with permission of PF authorities.
Q-2 Yes you can.

Dear Varghese ji,
Your answer to Q1 is absolutely right without any doubt. However, your answer to Q2, I have a question. If basic less than 6500 is below MW rate, then what?

If basic is below the MW then I do not think that the EPF Act gives any power to PF authorities to take action against the employer.They have issued a circular saying that basic should not be less than the MW fixed by state Govts.I doubt the legality of that ie can a circular of an executive over ride a legislation?.If wages paid is less than MW then state labour dept is to take action.Again in the case of an establishment carrying on employment for which MW is not fixed,
how EPF authorities will decide MW?.
Varghese Mathew
09961266966

First of all you have to take coverage from the PF Authorities before deducting the PF contribution.
The PF deduction will be 12% on the salary subject to ceiling salary
of Rs.6500.

Both Keshav Kprgaonkar and Verghese Mathew are right with their respective contentions. An employer cannot pay less than minimum wages while P.F Authorities cannot dictate the employer as to how much shall be the quantum of wages payable to the employees more so in view of the circular that was kept in abeyance in view of Surya Roshini's case.Hope this clarifies the position.
B.Saikumar
In-House HR & IR Advisor

Dear Naveen,

Answer for your questions.

1. If you have not registered under EPF and your strength is above 20 employees, then you have to start deduction of money from the date of employee's joining. While you apply for registeration you accumulate all the deducted amount @12% from employees and you have add the employer contribution along with EDLI and other charges @13.61%. You have purchase the DD for this amount in favour of EPF commissioner and you have to submit this along with your registeration form, also attach a list of employees along with PF contribution details.



or

Once you get the registeration code, you have show the previous deducted amount as Surplus or Arrears amount and has to contributed, but PF deduction is a compulsion if your organisation's strength is more than 20.

2. PF deduction has to be made on Basic and DA.

Its upto the management, that you can pay PF on full basic amount though it more than 6500.Rs or you can fix the celieng as 6500/-.

But ensure that, the PF wage(Basic+DA) is equal to or more than minimum wages, further if your minimum wages is more than 6500/- then you fix the PF wage celieng for 6500/-Rs.

Please go through the concerned state's PF rule for further clarifications.

Please correct me, if i'm wrong in any of the above statements.

With Best Regards

Shreyas

Ph: +91 9164110020

Mr. Varghese Mathew,
M so sorry, got confused....but no state has its own Rules as per as EPF Act is concern.
Regards
Shreyas

Dear Naveen,
i would like share my view with you on your query.first of all you have to need minimum 20 employee for enroll with EPFO and if you have 20 employee than you are liable to deduct to epf amount @ 12% because if you apply late than too you will be liable for day first when employees number touch to 20.

Dear friends,

Here is the latest circular from the CPFC reg. restricting the salary for PF contribution @ 12% to Rs.6,500/-.

"Companies CAP Provident Fund (PF) contribution to Rs. 6500"

The Provident Fund Office has allowed companies to cap their per-month Provident contribution to employees at Rs. 6,500. At present, companies contribute an amount equal to at least 12 per cent of an employee’s basic salary towards his/her PF. Now When an employer is deducting and depositing Employees’ Provident Fund contributions upon more than the prescribed salary, he can reduce it to Rs. 6,500 per month and in that event, section 12 of the Employees’ Provident Funds & Mis­cellaneous Provisions Act providing bar for not to reduce wages will not be attracted.

Full Text of the Circular is as follows:-

EMPLOYEES PROVIDENT FUND ORGANISATION

MINISTRY OF LABOUR AND EMPLOYMENT, GOVERNMENT OF INDIA, DELHI

Ref. No. LC(637)2009/Vol.I/203- Dated: 27.05.2014

Subject: Filing of Review Petition against judgement of Hon’ble Supreme Court of India in SIP No. 1205/2009 in the matter of Marathwada Gramin Bank Employees Union Vs. Management of Marathwada Gramin Bank – regarding.

Reference: This office letter No. LC-2(637)2009/MH/12780 dated 08.10.2013

Please refer to the above Cited letter wherein views on the issue of filing Review Petition/implementation of the order dated 09.09.2011 of the Hon’ble Supreme Court of India in SLP No. 1205/2009 in the matter of Marathwada Gramin Bank Karamchari Sangathan & Ors. Vs. Management of Marathwada Gramin Bank, were called for.

2. The views expressed by the Zonal Addl. Central Provident Fund Commissioners as to whether review petition need to be filed or not has been examined at Head Office. Having analysing the pros and cons of the issue, Competent Authority felt that there is no point in going for review against the said judgement of Hon’ble Supreme Court of India.

3. All the Regional Provident Fund Commissioners-In-charge of Regional /Sub-Regional Offices are, therefore, directed not to force employers to contribute over and above the statutory wage ceiling in respect of their employees. However, option is available for the employees to contribute beyond the statutory wage ceiling if they so desire subject to the conditions enumerated under para 26(6) of the Employees’ Provident Funds Scheme, 1952.

Yours faithfully,

(P.K.UDGATA)

Addl. Central Provident Fund Commissioner (Compliance)..

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Companies CAP Provident Fund (PF) contribution to Rs. 6500

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