Understanding PF Deductions: Can Employees Opt Out if Below the $15,000 Ceiling?

As per the new notification, the ceiling limit is to be $15,000 per month, whether it is based on basic or gross salary. If the amount (basic or gross) that applies is less than the ceiling limit, can the employee choose non-deduction of PF?

Thanks and regards

Employee and Management Contribution Under PF Act

As per the PF Act, the employee has to contribute 12% of the basic salary (on net salary). The same applies to the management, but in the management contribution, 8.33% will move to the pension plan. The formula remains the same; we just need to increase the ceiling limit from 6,500 to 15,000.

For example, let's consider the previous scenario. If an employee's basic salary is 24,000, but at that time, we had taken the limit as 6,500 for the 12%. With the recent amendment, if the employee's basic salary is 24,000, we need to consider the limit as 15,000 for the 12%.

This is for your information.

Regards,
MANOHAR

Hi, I wanted to know what the salary structure will be for a Delhi-based employee if their CTC is 250,000 as per the new PF ceiling limit.

Regards,
Sunita Shah

You have rightly mentioned the recent amendment. However, can the company revise the basic salary without intimation? The employee's basic salary is ₹24,000, but at that time, we had taken the limit as ₹6,500 for the 12%.

Based on the recent amendment, if an employee's basic salary is ₹24,000, the company can revise the basic to ₹6,500 and add the balance to another category. The calculation should then be based on ₹6,500 for 12% instead of ₹15,000 for the 12%.

There is no confusion about the ceiling rate. Only $6,500 is to be replaced with $15,000, that is all.

I have some doubts about the New PF G.O. It is mentioned that on or after 01.09.2014, the entire employer and employee contributions shall remain in the provident fund, and no diversion to EPS shall be made for all new PF members on or after 01.09.2014, having a salary more than ₹15,000 at the time of joining.

So, according to the above statement, is this clause applicable to new PF account members after 1st September 2014, or to any new employee for the organization (i.e., experienced persons who change jobs)?

Please clarify the doubt. Thanks in advance.

Effective September 1, 2014, all new EPF members shall not become a member of EPS if their pay is more than INR 15,000 per month at the time of joining. In other words, no allocation towards the pension fund will be made for such new members, and the entire employee and employer contribution will go to the provident fund account.

Regards,
pkjain

Kindly help me if I have to circulate an email to my internal employees regarding this PF Amendment. Kindly let us know what I have to mention because now everyone's PF amount will be deducted more than before. Hoping for a positive reply.

Regards,
Anjali

Ceiling Limit Change for PF Deduction

The ceiling limit changed from Rs. 6,500 to Rs. 15,000 means that for employees whose salary is less than Rs. 15,000, it is compulsory to deduct PF. If the salary is above Rs. 15,000, then it is optional.

Sir,

Further to the clarifications from point no. 4 on page 5 of the gazette, I understand that if you and your company wish to contribute above the ceiling limit, you need to inform in writing. It also states that if no option is selected, the pension fund will be restricted to the ceiling amount, and the balance will be transferred to the employee's PF fund. In other words, does this mean that contributions exceeding the ceiling are accepted for both PF and the Pension fund?

Please correct me if I am wrong.

Best regards,
Rajiv Mehta

Yes, you have to circulate a mail to internal employees regarding the increase in PF Contribution.

Notification of Increased PF Contribution

The below mail is what I have circulated in our organization:

It is to circulate that the Central Government has increased the wage ceiling from Rs. 6,500/- to Rs. 15,000/- per month for the purpose of calculating the PF Contributions, as per gazette Notification No. GSR 608 (CE) dated 22.08.2014. The amendment has come into force with effect from 01.09.2014. Therefore, employers need to contribute 13.61% and deduct @ 12% up to the wage ceiling of Rs. 15,000/- from the wages payable from 01.09.2014.

The Management, after a detailed examination of the issue, has decided to suitably enhance the salaries of employees whose CTC is Rs. 25,000/- or less and to deduct the enhanced PF Contribution from 01.09.2014 from all employees, to provide some relief to those drawing salaries of Rs. 25,000/- or less.

If you think the above points are convenient for you, you can send this itself.

Regards,
Arunagl
HR Executive
[Email Removed For Privacy Reasons]

Dear Team,

My company is a start-up with an initial number of employees ranging from 5 to 15. Their basic salaries range from $4800 to $25000. Could you kindly guide me on whether PF deduction is mandatory for all employees with a basic salary below $15000? Are there any exemptions for this category? Additionally, how can we exempt those employees with a basic salary above $15000 from PF deductions?

Thank you.

Anyone can tell me what amount should be mentioned in the Gross Salary column of ECR? Is it the actual amount or only Rs. 15,000 in case the salary is greater than Rs. 15,000?