Navigating PF Ceiling Changes: How Should We Handle Deductions for Existing Employees?

Dear All,

I am working as an administrative officer with a management college. Kindly help me with the following problems:

1. As the PF ceiling has been enhanced to ₹15,000, is it mandatory to deduct the PF amount on ₹15,000 for the already existing employees?

2. As the existing employees are covered under the ₹6,500 ceiling, should the deduction of the existing employees be increased to ₹15,000?

3. Kindly mention the records that need to be maintained according to the PF Act.

4. Kindly provide details on how to deduct the PF amount in the case of Grade Pay, as it is applicable to UPTU teachers.

Thanks,

Regards

PF Contribution Changes for Non-Government Establishments

The recent changes in the PF apply only to establishments that are not government departments, such as government or government-aided schools.

If the salary is more than ₹6,500, and in the past, you have been paying PF on a maximum salary of ₹6,500, then you can make it the salary subject to a maximum of ₹15,000. This means if the salary is ₹12,000 and you have been paying PF on ₹6,500, then pay it on ₹12,000 effective from 1st September. If the salary is more than ₹15,000, say, ₹25,000, you can restrict the contribution to 12% of ₹15,000. You are not liable to contribute to the total salary, i.e., ₹25,000.

Any employee for whom no contribution was made earlier because their salary at the time of joining your institution was more than ₹6,500 would now come under the PF cover, provided their salary is not more than ₹15,000. If their salary is still more than ₹15,000, they will continue to be excluded.

All existing records shall be continued under the new system. In case more employees come under the coverage of the PF Act, a declaration in Form 2 from them shall be collected. When Form 5 is filed online, please mention them as new joiners to the scheme.

Grade Pay is to be treated as basic salary for the purpose of PF deduction.

Please note that the above has nothing to do with provident funds other than those constituted under the Employees Provident Fund and Miscellaneous Provisions Act.

Regards,
Madhu.T.K