2014 Budget PF Limit Enhancement: Implications For Employer And Employee?

The union budget 2014 has increased the PF limit from 6500 to 15000. What will be the implications for employer and employee in the following scenarios?
1. currently the basic pay is 6500, PF contribution / deduction on Rs. 6500 - the contribution will remain the same?
2. currently the basic is 6500 and spl allowance is 1000. will the PF contribution / deduction will increase to 12% of 7500?
3. currently the basic pay is 40% of CTC, so some employees\' basic is, say 40000. currently PF only on 6500. Would it now increase to 12% of 15000?
That means less amount in the hands of employees? (as the company works on CTC basis.)
And when the company is not fixed the salary on CTC, it would mean increase in employment cost of the employer to that extent.
Request experts to please confirm. Thanks in advance.

Hi,
As per your questions...
1. if limit exceeds 6500 to 15000 means, before whose basic+Da is more than 6500 they have the option to choose for the registration, now whose basic+Da is more than 15000 they will fall under optional.
2. if basic+Da is less than 6500 then they are mandatory for PF registration at present scenario, if basic+Da is less than 15000 then they are mandatory for the PF contribution.

Hi Aditya,
You have very well explained the coverage under EPF. But you have not explained how the pf will be deducted. Now most of organisation deduct the pf upto Rs. 6500. I mean to say even if your basic 25000, PF is deducted only on 6500 and A/c 10 (Pension fund) is limited only for Rs. 541. Now as the limit has been increased what will be the pension fund amount. May it be more or same?
Regards
Dinesh Kumar

Hi,
Dinesh
for 6500 EPS A/c limit is 6500*8.33% = 541 then for 15000 its 15000*8.33% = 1249

It means if your salary is Rs. 14000 then PF will be deducted on the whole basic i.e. 14000*12% or It will be limited to Rs. 6500. I mean to say that as in bonus act coverage limit is Rs. 10,000 but bonus is computed on Rs. 3500. then in EPF coverage limit will be Rs. 15000 but the contribution will be limited to Rs. 6500. Will employer be liable to Pay over Rs. 6500,
Thanks & Regards
Dinesh Kumar

Hi,
Employer will limit on 6500/- only but employees can contribute above the ceiling, ceiling increasing benefit is maximum employes will cover under this act, and they can avail the benefit.
before we will discuss regarding this better to wait till notification will pass...............

The PF is deducted on Basic + DA and not on CTC or other components of salary.
Now mandatory PF Contribution increased to 15000/-. Even the Basic + DA is more than the limit of Rs.15000/-, Employer has to be deduct PF Contribution for Rs.15000/-.
Employees take how will be reduced to that extent and the employer has to shed more PF contribution.
For Employees it is beneficial because more amount is saved PF Account.
Regards
Moorthi

Dear All HR Fraternity,
We should wait for EPFO Notification regarding recent EPF wage limit increase (Rs.15,000/-) to address the query/doubt suitably.
Regards,
Anil Sharma

The increase in PF ceiling is addl. burden to Employer. Employee is benefited.
Pon

As advised by Anil Sharma, please wait for publication/ gazettification of EP ceiling. In the mean time, people are expressing relevant/irrelevant issues, thereby confusing cite viewers. Let us wait or if somebody has notification, pl. publish it for the benefit of all.