Can Employers Reduce Provident Fund Contributions to the Rs 6,500 Limit? Here's What EPFO Clarified

Provident Fund Contribution Limit Clarification

India Inc can now limit its Provident Fund contributions against the statutory salary ceiling limit of Rs 6,500 per month, even if earlier such PF contribution was being computed against full basic wages or salary. The Employee Provident Fund Office (EPFO) has, on May 27, 2014, issued a circular to this effect.

Under Provident Fund (PF) regulations, PF is computed at 12% (for both the employer and employee contributions) against 'basic wages'. The minimum statutory limit against which such PF is to be computed is Rs 6,500 per month. The employer and employees have an option to make PF contributions on salary payments in excess of Rs 6,500 per month.

In those cases where contributions were made in excess of the statutory limit, the issue was whether an option is available to revert to lower levels of contributions (i.e., a contribution computed against the statutory limit of Rs 6,500). The EPFO has now clarified on this issue.

Thanks,
GAUTAM KAR

Question Regarding PF Contributions for Contract Labor

Thank you for the update. I have a question regarding PF contributions for contract labor persons. If a person is employed for only 10-15 days for a specific job and then relieved, the wages payable are based on the number of days of attendance. If his salary is above 6,500 but, based on his attendance, his payable salary is less than 6,500, according to current laws, should the employer deduct PF on the actual payable salary or for the full month based on his agreed salary?

Kindly advise.

Regards,
Abhay

I have a question. I have withdrawn my PF amount recently. However, when I checked my EPF balance in my PF account, it is still showing some amount. But this amount was not credited to my bank account.

Please help me understand why the EPF balance is still showing, as I have already withdrawn my PF.

Thank you.

Hi All,

I have a question for the seniors regarding a specific scenario. If an employer is already contributing above the statutory wage ceiling, is it permissible for the employer to reduce it to only the wage ceiling?

Regards,

Yes, the employer can reduce the Employer Contribution to the ceiling level and restrict it to Rs. 6,500/-. However, today a new bill has been passed to increase the wage ceiling for PF Contribution from Rs. 6,500/- to Rs. 15,000/-. Please check that as well.