Dear all,
I have read various emails on this group regarding PF contribution where basic exceeds Rs. 6500/-. I have a slightly different query. The company has been paying PF contribution even when the basic exceeded 6500/-, but now wants to restrict it only up to a basic of 6500/-. In other words, we want to deduct PF for employees whose basic exceeds 6500/- but contribute only on 6500 and not the entire basic.
Another query is - can the company completely stop contributing where the basic exceeded 6500? These kinds of requests have been received from employees since they don't want too much deduction to happen on account of PF. What is the procedure involved in restricting PF contribution up to 6500/- and what are the implications? Does the act permit it and if yes, how do we go about doing it?
Regards,
Vandana
From India, Mumbai
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1I have read various emails on this group regarding PF contribution where basic exceeds Rs. 6500/-. I have a slightly different query. The company has been paying PF contribution even when the basic exceeded 6500/-, but now wants to restrict it only up to a basic of 6500/-. In other words, we want to deduct PF for employees whose basic exceeds 6500/- but contribute only on 6500 and not the entire basic.
Another query is - can the company completely stop contributing where the basic exceeded 6500? These kinds of requests have been received from employees since they don't want too much deduction to happen on account of PF. What is the procedure involved in restricting PF contribution up to 6500/- and what are the implications? Does the act permit it and if yes, how do we go about doing it?
Regards,
Vandana
From India, Mumbai
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Hi Vandana,
Regarding PF Contribution - Employer should pay 12% of Basic salary, in which 8.33% will go to the Pension Scheme, and the remaining 3.67% will go to PF. When calculating the Pension Scheme, the employer should pay 8.33% of the basic salary (limited up to Rs. 6500, i.e., Rs. 541), not more than that, with the rest going to PF.
For example, if the employee's Basic salary is Rs. 8000, Rs. 541 (8.33%) will go to the pension scheme, and Rs. 419 will go to PF. However, the employer has to contribute 12% of the basic salary, regardless of the amount.
Regarding Employee Contribution, 12% from the basic salary is unavoidable as per the PF act. Please refer to the ppt. for more details.
Regards,
Karthik
From India, Madras
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Regarding PF Contribution - Employer should pay 12% of Basic salary, in which 8.33% will go to the Pension Scheme, and the remaining 3.67% will go to PF. When calculating the Pension Scheme, the employer should pay 8.33% of the basic salary (limited up to Rs. 6500, i.e., Rs. 541), not more than that, with the rest going to PF.
For example, if the employee's Basic salary is Rs. 8000, Rs. 541 (8.33%) will go to the pension scheme, and Rs. 419 will go to PF. However, the employer has to contribute 12% of the basic salary, regardless of the amount.
Regarding Employee Contribution, 12% from the basic salary is unavoidable as per the PF act. Please refer to the ppt. for more details.
Regards,
Karthik
From India, Madras
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Dear Vandana,
Under the EPF & MP Act, 1952, to become eligible for membership, it is defined that the salary of a person should not exceed Rs. 6,500.00 per month. However, this is applicable when a person is joining the EPF scheme for the first time in their career. If your company has enrolled all employees irrespective of their salary, then this is known as voluntary enrollment towards the EPF scheme.
As you are aware, EPF contributions have also been deducted on the full salary, and the same amount has been contributed by the employer towards EPF. Contributions beyond the statutory limit of Rs. 6,500.00 are known as voluntary contributions, which are allowed under the scheme.
However, voluntary contributions beyond a salary of Rs. 6,500.00 need to be intimated to the concerned Regional Provident Fund Commissioner's office.
If you have already informed the relevant authority regarding this matter, then to restrict the contributions (employee & employer) to a salary of Rs. 6,500.00, which is also allowed, please send a revised intimation in this regard for the withdrawal of voluntary contributions.
It is important to note that discontinuation of deductions is not permissible under the act. Once a member of the scheme, either through normal or voluntary means, they will remain a member of the scheme irrespective of their salary. The contributions can be restricted up to the salary of Rs. 6,500.00 per month (the current applicable limit).
It is essential to understand that contributions can be restricted up to a salary of Rs. 6,500.00, but under no circumstances can they be discontinued while the member is still in service.
Regards,
Anil Anand
From India, New Delhi
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Under the EPF & MP Act, 1952, to become eligible for membership, it is defined that the salary of a person should not exceed Rs. 6,500.00 per month. However, this is applicable when a person is joining the EPF scheme for the first time in their career. If your company has enrolled all employees irrespective of their salary, then this is known as voluntary enrollment towards the EPF scheme.
As you are aware, EPF contributions have also been deducted on the full salary, and the same amount has been contributed by the employer towards EPF. Contributions beyond the statutory limit of Rs. 6,500.00 are known as voluntary contributions, which are allowed under the scheme.
However, voluntary contributions beyond a salary of Rs. 6,500.00 need to be intimated to the concerned Regional Provident Fund Commissioner's office.
If you have already informed the relevant authority regarding this matter, then to restrict the contributions (employee & employer) to a salary of Rs. 6,500.00, which is also allowed, please send a revised intimation in this regard for the withdrawal of voluntary contributions.
It is important to note that discontinuation of deductions is not permissible under the act. Once a member of the scheme, either through normal or voluntary means, they will remain a member of the scheme irrespective of their salary. The contributions can be restricted up to the salary of Rs. 6,500.00 per month (the current applicable limit).
It is essential to understand that contributions can be restricted up to a salary of Rs. 6,500.00, but under no circumstances can they be discontinued while the member is still in service.
Regards,
Anil Anand
From India, New Delhi
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Thank you so much Karthik and Anil. Now I am clear. Surprisingly i had got different views from the people who are working as consultants for some of the companies. Thanks!
From India, Mumbai
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From India, Mumbai
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Dear Kartik,
It's an amazing PPT. I really liked it, and it helped me a lot. I'm a fresher who recently joined an organization in HR. I have to handle PF, gratuity, and insurance, so this PPT was very helpful to me.
Sir, if you don't mind, can I ask a question that I've not understood in the PPT? Please mail me your email ID.
Thank you a lot.
Shilpa
shilpahrm@gmail.com 😊
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It's an amazing PPT. I really liked it, and it helped me a lot. I'm a fresher who recently joined an organization in HR. I have to handle PF, gratuity, and insurance, so this PPT was very helpful to me.
Sir, if you don't mind, can I ask a question that I've not understood in the PPT? Please mail me your email ID.
Thank you a lot.
Shilpa
shilpahrm@gmail.com 😊
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Dear Vandana,
You have raised a good question here. The only problem with PF is you can't roll back once an employee is enrolled in the scheme. It could lead to legal complications. In this case, it is better if you can seek advice from a PF consultant or authority.
Regards,
John
From India, Delhi
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You have raised a good question here. The only problem with PF is you can't roll back once an employee is enrolled in the scheme. It could lead to legal complications. In this case, it is better if you can seek advice from a PF consultant or authority.
Regards,
John
From India, Delhi
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I have a question. If the PF is deducted for 10 years, then are the employees working with private companies also eligible to get pension benefits? I heard that it was there for government employees only and that too is now not being given to freshly hired government employees.
Please throw some light on this.
From India, Delhi
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Please throw some light on this.
From India, Delhi
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Hi Karthik,
Kindly recheck what you have mentioned in the PowerPoint presentation regarding the EDLI contribution. I believe it is 0.50%, and the EDLI administrative charges are 0.01%. Please also forward this to Vandana.
Thank you.
Priya J.
From India, Hapur
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Kindly recheck what you have mentioned in the PowerPoint presentation regarding the EDLI contribution. I believe it is 0.50%, and the EDLI administrative charges are 0.01%. Please also forward this to Vandana.
Thank you.
Priya J.
From India, Hapur
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Hello Gentlemen,
How to register the E.S.I & P.F? And how to provide the E.S.I & P.F to the employees? What are the minimum and maximum employees' rates and all? Kindly provide me with detailed information about E.S.I & P.F.
Thank you.
[IMG]https://www.citehr.com/misc.php?do=email_dev&email=dmVua2F0cmFvcGFtYXJ0aG lAZ21haWwuY29t[/IMG]
From India, Hyderabad
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How to register the E.S.I & P.F? And how to provide the E.S.I & P.F to the employees? What are the minimum and maximum employees' rates and all? Kindly provide me with detailed information about E.S.I & P.F.
Thank you.
[IMG]https://www.citehr.com/misc.php?do=email_dev&email=dmVua2F0cmFvcGFtYXJ0aG lAZ21haWwuY29t[/IMG]
From India, Hyderabad
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Dear Vandana,
If your organization has been paying contributions on the full basic salary, then it has to continue with that. Once a statutory benefit is offered to an employee, it cannot be reduced during the continuation of his/her service. It will have serious legal implications.
However, for new joiners, you may choose to contribute only up to the basic of Rs 6500. Also, any contribution made over and above Rs 6500 is NOT a Voluntary PF if the similar amount has been contributed by the employer as well. Any organization once covered under the purview of the EPF Act MUST equally contribute towards the PF of employees.
VPF is Voluntary PF, which an employee opts for, wherein the employer does not contribute towards it.
Hope this clarifies. Probably my response may confuse you as to which response is correct. You may check with some other senior individuals as well for your satisfaction. However, just for your information, I lead the HR ops team for my organization and have more than 8 years of experience.
Regards, Mukul Mathur
From India, Mumbai
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If your organization has been paying contributions on the full basic salary, then it has to continue with that. Once a statutory benefit is offered to an employee, it cannot be reduced during the continuation of his/her service. It will have serious legal implications.
However, for new joiners, you may choose to contribute only up to the basic of Rs 6500. Also, any contribution made over and above Rs 6500 is NOT a Voluntary PF if the similar amount has been contributed by the employer as well. Any organization once covered under the purview of the EPF Act MUST equally contribute towards the PF of employees.
VPF is Voluntary PF, which an employee opts for, wherein the employer does not contribute towards it.
Hope this clarifies. Probably my response may confuse you as to which response is correct. You may check with some other senior individuals as well for your satisfaction. However, just for your information, I lead the HR ops team for my organization and have more than 8 years of experience.
Regards, Mukul Mathur
From India, Mumbai
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Dear All,
Thanks for sharing knowledge. I have a question on PF: what will happen when the employee exceeds his basic pay beyond Rs 6500, for example, Rs 8000? In this case, is it mandatory for the employee to contribute 12% of Rs 8000 (basic), or is there an option for the employee to stick to Rs 6500 only?
Regards,
Bhawana
From India, Bangalore
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Thanks for sharing knowledge. I have a question on PF: what will happen when the employee exceeds his basic pay beyond Rs 6500, for example, Rs 8000? In this case, is it mandatory for the employee to contribute 12% of Rs 8000 (basic), or is there an option for the employee to stick to Rs 6500 only?
Regards,
Bhawana
From India, Bangalore
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HI Venkat, Under ESI - 1.75 from employee contribution, 4.75 from employer contribution =6.50 calculating from gross salary, PF will calculated from basic.FYI. Thanks Bharath.S.R
From India, Madras
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From India, Madras
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SC Judgment-No obligation to excess contribution than Statutory Limit.docx
PF Contribution on Leave Encashment - Clarification by EPFO.pdf