Clarification on PF Deductions for Salaries Above Rs 6500
I too would like to clarify a few points related to PF:
• Exemption from PF for Salaries Above Rs 6500
For those employees whose basic salary is more than Rs 6500, some companies exempt them from PF. What should be the legal procedure for this? Even if an employee opts for PF, they may not be receiving the same now.
• PF Deductions for Salaries Above Rs 6500
Secondly, for any employees whose basic salary is more than Rs 6500 (e.g., Rs 10000), what should be the deduction? Please see below the deduction and indicate which is correct:
Basic -- Rs 10000
A) PF deducted from the employee: Rs 1200
PF deducted from the employer: Rs 1200 (of which Rs 541 goes to pension and the rest to the employee’s account)
OR
A) PF deducted from the employee: Rs 780
PF deducted from the employer: Rs 780
Please provide clarification.
• Employer's Contribution to PF Charges
As per the act, I understand that 1.61% of the PF charges are to be covered by the employer. Should the same percentage be considered when calculating the CTC or not?
• Legal Requirement for PF Deductions
If an employee's basic salary is above Rs 6500, is there a legal requirement for the company to deduct only Rs 780 from their salary as PF deduction and not the original amount?
Please reply soon.
Regards,
Daya
From India, Calcutta
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2I too would like to clarify a few points related to PF:
• Exemption from PF for Salaries Above Rs 6500
For those employees whose basic salary is more than Rs 6500, some companies exempt them from PF. What should be the legal procedure for this? Even if an employee opts for PF, they may not be receiving the same now.
• PF Deductions for Salaries Above Rs 6500
Secondly, for any employees whose basic salary is more than Rs 6500 (e.g., Rs 10000), what should be the deduction? Please see below the deduction and indicate which is correct:
Basic -- Rs 10000
A) PF deducted from the employee: Rs 1200
PF deducted from the employer: Rs 1200 (of which Rs 541 goes to pension and the rest to the employee’s account)
OR
A) PF deducted from the employee: Rs 780
PF deducted from the employer: Rs 780
Please provide clarification.
• Employer's Contribution to PF Charges
As per the act, I understand that 1.61% of the PF charges are to be covered by the employer. Should the same percentage be considered when calculating the CTC or not?
• Legal Requirement for PF Deductions
If an employee's basic salary is above Rs 6500, is there a legal requirement for the company to deduct only Rs 780 from their salary as PF deduction and not the original amount?
Please reply soon.
Regards,
Daya
From India, Calcutta
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There is nothing in the Act which says that the employer should restrict contributions to Rs 6500, but it is optional for the employer. If they are willing to contribute on a higher salary, they can do so. However, the Pension Fund contribution of 8.33% shall be calculated on a maximum salary of Rs 6500. That means if the employer is contributing Rs 1200 (12% of Rs 10000), then they can remit Rs 541 to the Pension fund and the balance, Rs 659, shall be remitted to the Provident fund along with the employee's share of Rs 1200.
Coverage and Eligibility
Regarding coverage, it is mandatory that every person whose salary at the time of joining is not more than Rs 6500 should be covered. That means, if the salary of the employee at the time of joining is more than Rs 6500, they may be excluded, provided they have never been a member of the PF or if they had withdrawn their PF benefits or are receiving a PF Pension. Here also, the company policy with regard to this social security cover is important, and if the employer is ready to extend the cover to all irrespective of salary, they can do so. An employee once covered by the Act will continue to be covered irrespective of any increase in their salary.
1.16% is the share of the Government towards the Pension fund of the member.
Regards,
Madhu.T.K
From India, Kannur
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Coverage and Eligibility
Regarding coverage, it is mandatory that every person whose salary at the time of joining is not more than Rs 6500 should be covered. That means, if the salary of the employee at the time of joining is more than Rs 6500, they may be excluded, provided they have never been a member of the PF or if they had withdrawn their PF benefits or are receiving a PF Pension. Here also, the company policy with regard to this social security cover is important, and if the employer is ready to extend the cover to all irrespective of salary, they can do so. An employee once covered by the Act will continue to be covered irrespective of any increase in their salary.
1.16% is the share of the Government towards the Pension fund of the member.
Regards,
Madhu.T.K
From India, Kannur
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Dear Daya, On Addition to Madhu i would like to say kindly filled Form-11 for excluded employees and send to the local PF office. Regards Ratikanta Rath
From India, Durgapur
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From India, Durgapur
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Dear Daya,
Greetings for the day. Madhu is right that there is no hard and fast rule to restrict the EPF on Rs. 6500/-. Rs. 6500/- is the ceiling for EPS/EDLI, not for EPF. EPF deduction should be done on basic + DA/VDA + food conc. (if any).
Thanks & regards,
Sumit Kumar Saxena.
From India, Ghaziabad
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Greetings for the day. Madhu is right that there is no hard and fast rule to restrict the EPF on Rs. 6500/-. Rs. 6500/- is the ceiling for EPS/EDLI, not for EPF. EPF deduction should be done on basic + DA/VDA + food conc. (if any).
Thanks & regards,
Sumit Kumar Saxena.
From India, Ghaziabad
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Exemptions Under EPF MISC Provisions 1952 Rules
Regarding your query on the above subject, the following points should be observed for exemptions for both employees and employers under the provisions of EPF MISC Provisions 1952 Rules.
• Exempted Employee
At the time of inception, for individuals whose wages/salaries are above Rs. 6,500 per month, there is no requirement to continue as a member under the PF Act 1952 Rules. You can exempt the employee from the PF Act (Refer Sec 43).
• Exempted Establishments
Establishments must establish a trust in accordance with the guidelines of PRFO/CPFO to provide additional benefits of the existing schemes under Sec.17(1) and to seek a Relaxation order for exemption under the EDLI Scheme of Sec 17(1) C of the EPF Act.
Regards,
V. R. RAO PULIPAKA
From India, Bangalore
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Regarding your query on the above subject, the following points should be observed for exemptions for both employees and employers under the provisions of EPF MISC Provisions 1952 Rules.
• Exempted Employee
At the time of inception, for individuals whose wages/salaries are above Rs. 6,500 per month, there is no requirement to continue as a member under the PF Act 1952 Rules. You can exempt the employee from the PF Act (Refer Sec 43).
• Exempted Establishments
Establishments must establish a trust in accordance with the guidelines of PRFO/CPFO to provide additional benefits of the existing schemes under Sec.17(1) and to seek a Relaxation order for exemption under the EDLI Scheme of Sec 17(1) C of the EPF Act.
Regards,
V. R. RAO PULIPAKA
From India, Bangalore
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Procedure for Withdrawing PF Accumulations
Regarding your query about the procedure for withdrawing your accumulations from PF, please note the following points carefully:
• Withdrawal is permitted when leaving the organization due to resignation, retirement, death, permanent disability, settling abroad, or if a female employee chooses not to continue in service after marriage, etc.
• If an employee resigns, a 60-day grace period is required to withdraw the amount held by EPFO. In other cases, as mentioned above, a grace period is not necessary.
• To process the withdrawal, you must submit Form 19 & 10C along with copies of Form 5 & 10, Form 3A showing current year contribution details, and a photocopy of the first page of your SB Account Pass Book or an unused cheque to the relevant office.
• EPFO will deposit the amount directly into your bank account within 30 days if all the necessary documents are provided promptly.
Regards,
V R RAO PULIPAKA
From India, Bangalore
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Regarding your query about the procedure for withdrawing your accumulations from PF, please note the following points carefully:
• Withdrawal is permitted when leaving the organization due to resignation, retirement, death, permanent disability, settling abroad, or if a female employee chooses not to continue in service after marriage, etc.
• If an employee resigns, a 60-day grace period is required to withdraw the amount held by EPFO. In other cases, as mentioned above, a grace period is not necessary.
• To process the withdrawal, you must submit Form 19 & 10C along with copies of Form 5 & 10, Form 3A showing current year contribution details, and a photocopy of the first page of your SB Account Pass Book or an unused cheque to the relevant office.
• EPFO will deposit the amount directly into your bank account within 30 days if all the necessary documents are provided promptly.
Regards,
V R RAO PULIPAKA
From India, Bangalore
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Hi all Que. if my basic salary is Rs. 10000 can i opt for pf deduction on 6500 only of my basic salary & what was my subscription? please tell me with the of law.
From India, Delhi
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From India, Delhi
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Mr. Madhu mentioned in last para as 1.16 % is the share of the govt. Pension fund. Its wrong, i think it is typical error. 1.61 % is correct. Dharani dharan V Manager HR Unipel Logistics
From India, Bangalore
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From India, Bangalore
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Employee Contribution and Employer Contribution Details
Employee Contribution is Rs. 780/- if INR 6500/- as per government rule. Employer Contribution is 13.61% (Employer 8.33%, Employer Pension fund 3.67% = Total 12%, Admin charges 1.61%).
FYI,
PI
Dharani Dharan V
From India, Bangalore
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Employee Contribution is Rs. 780/- if INR 6500/- as per government rule. Employer Contribution is 13.61% (Employer 8.33%, Employer Pension fund 3.67% = Total 12%, Admin charges 1.61%).
FYI,
PI
Dharani Dharan V
From India, Bangalore
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Clarification on Pension Fund Contribution
What I have stated about the pension fund contribution by the Central Government is correct, I believe. I don't know whether the Government has made any amendment today. The discussed share of 1.61% is not a contribution by the employer but a payment by the employer towards the administration of funds, namely Provident Fund and Employees' Deposit Linked Insurance. Contribution should be distinguished from payments, and the latter are expenses not forming part of wages. I agree that administration charges total 1.61% of PF and EDLI qualifying wages.
Please note that what I have stated is that the Government will contribute at 1.16% of wages towards employees' Pension Fund. For details, please refer to the Pension Scheme.
Regards,
Madhu.T.K
From India, Kannur
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What I have stated about the pension fund contribution by the Central Government is correct, I believe. I don't know whether the Government has made any amendment today. The discussed share of 1.61% is not a contribution by the employer but a payment by the employer towards the administration of funds, namely Provident Fund and Employees' Deposit Linked Insurance. Contribution should be distinguished from payments, and the latter are expenses not forming part of wages. I agree that administration charges total 1.61% of PF and EDLI qualifying wages.
Please note that what I have stated is that the Government will contribute at 1.16% of wages towards employees' Pension Fund. For details, please refer to the Pension Scheme.
Regards,
Madhu.T.K
From India, Kannur
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Thank you very much for your quick and valuable suggestion, especially to Mr. Madhu. While going through the whole message, one clarification remains unclear to me. I would like all of you to focus on it and provide me with your suggestions.
Clarification Needed on Administrative Charge
The point is as follows:
We all know that 1.61% is the administrative charge borne by the employer for the government. My question is whether the employee needs to bear this amount, and if the same calculation needs to be shown in the CTC, or if this part should be completely waived in the CTC as it is borne by the company.
Regards,
Daya
From India, Calcutta
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Clarification Needed on Administrative Charge
The point is as follows:
We all know that 1.61% is the administrative charge borne by the employer for the government. My question is whether the employee needs to bear this amount, and if the same calculation needs to be shown in the CTC, or if this part should be completely waived in the CTC as it is borne by the company.
Regards,
Daya
From India, Calcutta
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(Fact Checked)-The employer is responsible for bearing the administrative charges of 1.61% for PF, not the employee. This should be shown in the CTC without deduction from the employee's salary. (1 Acknowledge point)
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I hope your apprehension is whether we should include the administration charges of 1.61% in the CTC or not. In my opinion, it should not be included, even though it is a payment made by or cost incurred by the employer for the employee. If it is to be shown as a cost to the company, we will have to include costs like the costs of newspapers placed in the restroom, drinking water, electricity bills, welfare costs, and so on, because all these are incurred for the employees and to retain their labor.
Regards,
Madhu.T.K
From India, Kannur
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Regards,
Madhu.T.K
From India, Kannur
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Can any one tell me total structure PF? What type of formalities have to do? how to maintain? Regards. Rahul
From India, Pune
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From India, Pune
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I am working for a Thailand MNC, Charoen Pokphand India Pvt Limited. I need the details of Provident Fund applicability and other clarifications such as withdrawal of PF and pension fund. Kindly share the data available with you.
Regards,
AVGN Vara Prasad
From India, Kakinada
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Regards,
AVGN Vara Prasad
From India, Kakinada
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Dear Seniors, I am working for a Thailand MNC, Charoen Pokphand India Pvt Limited. I need the details of Provident Fund applicability and other clarifications such as withdrawal of PF and pension fund, in respect of international workers. Kindly share the data available with you.
Regards, AVGN Vara Prasad.
From India, Kakinada
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Regards, AVGN Vara Prasad.
From India, Kakinada
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Dear sir Please guide me the PF contribution stucture and various forms required for PF contribution ,Withdrawal ,Loan on PF. Regards Rashi Agrawal
From India, Delhi
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From India, Delhi
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Dear Rashi, Kindly go through EPF India Website, there ur all query will be resolved. If still u face any problem feel free to ask. Regards Ratikanta Rath
From India, Durgapur
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From India, Durgapur
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I did not understand whether point #4 below has been answered. Senior members, please help me understand.
1. Is it mandatory for an organization to contribute an amount of 12% of the mentioned basic salary towards PF, OR
2. Can the organization choose to pay an amount not exceeding Rs. 780/- towards PF? In both the above cases, the basic salary of an employee is greater than Rs. 10,000/month.
Regards,
From India
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1. Is it mandatory for an organization to contribute an amount of 12% of the mentioned basic salary towards PF, OR
2. Can the organization choose to pay an amount not exceeding Rs. 780/- towards PF? In both the above cases, the basic salary of an employee is greater than Rs. 10,000/month.
Regards,
From India
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Provident Fund - Excluded Employee - Definition.pdf
PROVIDENT FUND CALCULATION.xls
CiteHR.AI
(Fact Checked)-The user reply contains accurate information regarding the Provident Fund (PF) contributions, coverage criteria, and the optional nature of employer contributions above Rs 6500. The details provided align with the latest laws and regulations. (1 Acknowledge point)