Confused About PF Deductions? How to Handle Salaries Below INR 15,000 During Leave or Short Work Months

I need clarification with respect to PF deduction. If an employee's basic salary is more than INR 15,000, and the contribution is restricted to the ceiling limit of INR 15,000, what should be done in the following scenarios:

1. If the employee is on leave and earned less than INR 15,000 in a month, should the deduction be based on the actual earned Basic and DA or on a prorated basis to INR 15,000?

2. If the employee worked 5 days in a month and earned INR 7,000 as Basic and DA, should the deduction be on the actual earned amount of INR 7,000 or a prorated amount of (INR 15,000 / 30 * 7) = INR 3,500?

Please provide clarification along with a notification copy regarding this matter. Your prompt response is appreciated.

Thank you.

Hi Nirmala,

If an employee is earning above 15000/- and you are restricting to the ceiling limit, and in any month, if an employee received wages less than 15000/- (For example 14000/-), then PF is calculated on the actual earned wages only (12% on 14000/-).

If an employee earned only 7000/- as Basic+DA, then PF is contributed on 7000/-.

Nirmala,

No need to deduct the PF if Basic is less than 15000 due to absence or W.P. YOU HAVE TO KEEP HIS FORM 11 in your records. If one or two months' basic is less than 15000, then it is acceptable by EPFO but not more than that. Also, for further information, you can consult your respective RPFO.

Thanks, Shubham

Once an employee is a member of EPF, there is no point in seeking exemption, even if he/she is employed by a different organization.

Moreover, the question pertains to existing covered employees who are earning above Rs. 15,000/-.

It is settled law that clarifies if an employee's full month's rated salary/wages exceed the coverable limit, meaning they are considered an excluded/exempted employee, and if their attendance and earnings are less than Rs. 15,000, then PF is not applicable, and no contribution is required even if they are paid daily wages. Such employees will always be outside the purview of PF coverage.

Regards,
RDS Yadav
Director, Navtarang HR Services

Nirmala,

The contribution is on wages earned, subject to a maximum of Rs. 15,000/-. If a member has worked for 25 days and wages exceed Rs. 15,000/-, the Provident Fund (PF) will be calculated based on Rs. 15,000/- and not on the daily rate of Rs. 15,000/30*25.

Thanks,