New Employee's EPF Contribution: Can Employers Limit to 12% of 15,000 When EPS Isn't Applicable?

Team, Suppose a new employee has joined with a salary exceeding the threshold limit of 15,000 under EPFO (not eligible under EPS 1995). As an employer, can we contribute 12% of 15,000 towards EPF only?

Salary of the employee
Salary of the employee = 17,000

EPF contribution by the employee
EPF contribution by the employee = 12% of 17,000 = 2,040

EPF contribution by the employer
EPF contribution by the employer = 12% of 15,000 = 1,800 (EPF wage restricted to 15,000)

EPS contribution by the employer
EPS contribution by the employer = Nil

Regards,
Kiran Raj

Hello Friend, The employer contribution of 12% is divided into two parts:

1. 8.33% in EPS
2. 3.67% in EPF

This 12% employer contribution includes the EPS contribution as well.

If the employee is joining for the first time and was not a member of EPS previously, and the salary is more than 15,000/- per month, then the employee is not a member of EPS. The entire 12% of the employer's contribution will be in the EPF account only.

If the salary is 17,000/-, both the employee and employer contributions may be based on 17,000/-. It may again be restricted up to 15,000/- for both employer and employee.

If the employee is interested in contributing more as voluntary contributions, they can do so.

Under any circumstances, there will be no contribution to EPS if the employee is a fresher.

Regards, S K Bandyopadhyay

If the employee is joining for the first time and was not a member of EPS before, and the salary is more than 15,000/- per month, then the employee is not a member of EPS. The entire 12% of the employer contribution will be in the EPF account only.

PF Department Circular 2014
In 2014, the PF department issued a circular in this regard. Those who are earning more than 15,000/- are not eligible for EPS.

Effect of EPF Notification Effective from September 2014

According to the PF notification, if any employee becomes a member of the provident fund scheme for the first time after 01 September 2014 and their salary at the time of becoming a member is more than Rs 15,000/-, then they will only become an EPF member but not a member of EPS.