New Employee EPF Wages Increased After a Year: Should EPS Contributions Continue?

Urgent Query
If, during the joining of a new employee, EPF wages are less than 15,000, EPS is deducted. After one year of increment, if EPF wages increase, should EPS continue or not?

Hi, either PF can be paid on the actual basic + DA over and above 15k, or PF can be limited up to 15k.

Since he is already a member of the Pension Fund, you should continue to contribute to his Pension Fund. As his salary has exceeded Rs. 15,000, your contribution to the Pension Fund shall be restricted to Rs. 1,250, i.e., 8.33% of Rs. 15,000.

Hello sir, I need one more urgent clarification, please. Does it mean all EPS contributions will go to the EPF in ECR?

Gross Wages: 30000
Basic + DA: 16000
EPF Wages: 16000
EPS Wages: 0
EDLI Wages - will it be zero?
EPF Contribution Remitted: 1800? or 3600?
EPS Contribution Remitted: 0
EPF-EPS Difference Remitted: 0

If you joined after 1st September 2014, then it should be like this.

PF Salary Considerations

PF Salary can be Rs 16,000 or Rs 15,000. This depends on the employer's decision whether to contribute on the actual basic and DA or to restrict it to 12% on Rs 15,000. Even if the employee decides to contribute on Rs 16,000, the employer can restrict their contribution to 12% on Rs 15,000. However, many employers do contribute on a higher salary as well.

Contribution Details

Assuming that the Basic and DA together amount to Rs 16,000, then:

- Contribution of the employee to EPF on actual Rs 1,920.
- Contribution of the employer to EPF on actual Rs 1,920.
- Amount put together will be Rs 3,840.
- No contribution to EPS.
- Contribution of the employer to EDLI Rs 75 (this is 0.5% of Rs 15,000, even if the PF qualifying salary is more than Rs 15,000).

Employer Contribution Restriction

If the employer restricts their contribution to Rs 15,000, then their contribution to the Provident Fund will be Rs 1,800. The total amount together with the employee's share will be Rs 3,720.

Both Contributions on Rs 15,000

If both of you contribute on Rs 15,000, then obviously, the total credit to PF will be Rs 3,600.

Thank you so much, Madhu T K. Your quick response resolves my query.