Understanding PF Contribution Limits: Can We Apply the ₹6,500 Cap Differently for Workers and Managers?

Dear seniors/friends, I had a doubt regarding PF contribution in certain conditions.

PF Contribution Limitations

1. If ₹6,500 is limited for employee categories like workers, staff, and managers, can we limit it only for workers?

2. Can we remit one challan in this category: (i) ₹6,500 limitation for workers and (ii) no ₹6,500 limitation for managers?

3. For 6 months, there is no limitation for all workers on the challan. After the 7th month, some workers are asking, "Please limit my PF wages to ₹6,500." Is it possible to remit this in the 7th month?

Thank you.

As per my knowledge, if you want to limit, then you can because PF has not given any compulsion for this.

Uniform Policy for PF Contributions

The PF Act stipulates that all employees drawing wages (basic plus DA) will be covered under the provisions of the statute. You cannot, and as a proactive HR practice, should not differentiate between workers and managers. I strongly recommend a uniform policy. Several progressive organizations allow for PF deductions on actual wages even if it exceeds the present limit of Rs. 6,500/- per month.

You need not limit the employee contribution to Rs. 6500/-; let it go towards saving for their future. You can restrict the employer contribution to Rs. 6500/-, i.e., Rs. 780/-, which can be split into Rs. 541/- as EPS and the balance into Er PF.

Thank you.

There is no compulsion on either side to go beyond Rs. 6500/- without limiting at that. It's also true many employees compel offices to minimize the deduction to the extent possible in order to increase their take-home pay at the cost of 'compulsory savings' in the form of PF for one reason or another; maybe they are justified in some cases. I wish employers shouldn't yield to the pressure whatsoever may be their reasoning.

But for beyond Rs. 6500/-, it is your/their choice. It should be avoided—any frequent lowering or hiking lest you will have confusion in administering them. Of course, in the worst-case scenario, they can avail refundable loans or part withdrawal to the extent possible, which can be facilitated on merit.

Secondly, having different norms for different categories is unwelcome and might lead to friction between the groups, inviting trouble for the HR. Even dual challan is also not required and to be avoided.

EPF & MP Act Application

The EPF & MP Act is strictly applied up to the monthly basic + DA + food concession of Rs. 6,500/-. Beyond that, it is at the discretion of the employer when a person joins with a salary beyond Rs. 6,500/- and does not have prior membership, as duly declared in Form 11. If a person who joined with a salary beyond Rs. 6,500/- per month declares that they were a member of the scheme, you cannot ignore their membership and are bound to enroll them as a member at least up to the current ceiling limit, i.e., Rs. 6,500/-.

The implementation should not be based on designations.

Regards

According to the EPF Act, there is no requirement for PF contribution where Salary = (basic + DA) exceeds 6,500 INR. However, in the case of employees whose salary exceeds 6,500 INR and where both the employee and employer are contributing to the fund:

According to industry practice, it is advisable to maintain consistency in terms of EPF contribution. The best approach I have observed in the industry is to compute PF based on Salary = (basic + DA), without restricting it to 6,500 INR itself.

Thanks,

Uma Sankar

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Since the range has been increased from Rs. 6,500 to Rs. 15,000, can you please confirm if the below calculations are correct?

Employee and Employer Contributions

Basic + DA = Rs. 10,000, cut-off amount as per PF office Rs. 15,000. Employee deduction at 12% on Basic + DA = Rs. 1,200. Employer Contribution is 8.33% of Rs. 10,000, i.e., Rs. 833 to EPS and 3.67% of Rs. 10,000, i.e., Rs. 367 to EPF.

Or is it 8.33% of Rs. 15,000, i.e., Rs. 1,250 to EPS and 3.67% of Rs. 15,000, i.e., Rs. 550 to EPF?

EDLI and Admin Charges

Similarly, whether EDLI (by Employer) EDLI at 0.5%, Admin charges at 1.1%, and EDLI Admin charges at 0.01% to be calculated on Rs. 10,000 (Basic + D.A) or on the cut-off range of Rs. 15,000?

Thank you.

Dear Hari,

Now the Admin Charges are 0.85% and not 1.1%. You can deduct Rs. 10,000/- only and not required for Rs. 15,000/- as the Basic+DA is Rs. 10,000/-.

Thank you.