Understanding EPF Contributions: Are Employers Obligated for Wages Above Rs. 6,500?

As per the EPF scheme, the wage limit up to which the employer's contribution has to be paid is Rs. 6,500/- per month. If a person's initial appointment is with a monthly wage of Rs. 6,501, is the employer liable to pay the EPF employer contribution? The wage exceeds the maximum limit specified.

In certain organizations, the employer's contribution at 12% of the wages (basic + DA) is remitted. Here, there is no restriction made to the maximum wage limit of Rs. 6,500/-. In this case, is the employer statutorily obliged to pay the administrative charges for the whole wages?

If the wage limit for administrative charges is set at Rs. 6,500/- per employee for those whose wages exceed Rs. 6,500/-, there would definitely be cost savings. Please advise if it is possible to limit the wages at Rs. 6,500/- for the calculation of administrative charges.

SIVADASAN.A

Hi SIVADASAN,

As per the EPF Act, the maximum ceiling for contribution is Rs. 6,500 basic salary. However, one can remain a member or become a member even if they exceed the ceiling. This is done with consideration for both the employee and the employer.

In this scenario, the employer's contribution remains the same at the aforementioned ceiling amount, i.e., Rs. 6,500 basic salary only.

Regards,
Amit Seth

Respected sir,

There is some more clarification required in the reply. As per the EPF Act, the Administrative expenditure is remitted as a percentage of wages, i.e., 1.1%. By considering the following situation, please offer your valuable opinion.

Number of employees engaged in an organization = 750. Wages of employees considered for EPF are ranging from Rs. 10,000 to Rs. 25,000. Employer's contribution is paid irrespective of the statutory wage limit, i.e., contribution is paid to the whole wages (basic + da) with no limit for Rs. 6500 fixed.

In the above situation, whether one can pay the administrative expenditure by considering the total wages as Rs. 6500 * 750 as the statutory wage limit for payment of employer contribution is Rs. 6500 per month only. My opinion is to take the statutory maximum of Rs. 6500 per head as the wage for the calculation of Administrative expenditure. So the administrative expenditure to be paid is Rs. (6500 * 750) * 1.1%.

With regards, Sivadasan Trivandrum.

Respected Sir,

Does the employer need to pay the administrative charges for the employee provident fund for those who exceed the ceiling limit, i.e., 6500/-? Kindly advise me.

Srinivas