PF Deduction Concerns in IT Companies
I work in an IT company registered in India, located in Chennai. I have been here for 2 years. I have a question regarding PF deduction. In my company, I bear both the employee and employer's contribution of PF plus some administration charges every month if I opt for PF. I hear the same is being followed by many small or mid-level companies.
I inquired about this with people I know who work in small companies, and they say that the PF policies have changed now. Companies can avoid contributing towards PF, and the same can be deducted from the employee's salary because it's included in the CTC.
Legal and Fairness of PF Contribution Practices
Is it legal for the organization not to contribute its part and deduct both from the employee's salary? Is this practice followed by many companies?
I was with a different company until 2010, and during that time, I did not face any issues with PF because a certain amount was deducted from my salary, and the same amount was contributed by the company. After joining this company, I am not on a contract role; I am a permanent employee.
Even my payslip shows two PF deductions as employee contribution and employer's contribution plus admin charges (the employer's contribution is more than that of the employee's contribution; when I asked HR, they told me it's for administration charges), which exceeds what I could claim on tax benefits. I am actually not benefiting from the PF concept or tax benefits.
Could you please provide me with some insights on whether this practice is legal and fair to the employees?
Regards,
Dolly
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2I work in an IT company registered in India, located in Chennai. I have been here for 2 years. I have a question regarding PF deduction. In my company, I bear both the employee and employer's contribution of PF plus some administration charges every month if I opt for PF. I hear the same is being followed by many small or mid-level companies.
I inquired about this with people I know who work in small companies, and they say that the PF policies have changed now. Companies can avoid contributing towards PF, and the same can be deducted from the employee's salary because it's included in the CTC.
Legal and Fairness of PF Contribution Practices
Is it legal for the organization not to contribute its part and deduct both from the employee's salary? Is this practice followed by many companies?
I was with a different company until 2010, and during that time, I did not face any issues with PF because a certain amount was deducted from my salary, and the same amount was contributed by the company. After joining this company, I am not on a contract role; I am a permanent employee.
Even my payslip shows two PF deductions as employee contribution and employer's contribution plus admin charges (the employer's contribution is more than that of the employee's contribution; when I asked HR, they told me it's for administration charges), which exceeds what I could claim on tax benefits. I am actually not benefiting from the PF concept or tax benefits.
Could you please provide me with some insights on whether this practice is legal and fair to the employees?
Regards,
Dolly
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As per the Statute Laws, the employer has to contribute its part from the employer only and not from the employee. We have discussed the same a couple of days back. Please click on the following link to understand the matter at its best.
CiteHR Attribution: https://www.citehr.com/455791-force-...ml#post2041731
From India, Visakhapatnam
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CiteHR Attribution: https://www.citehr.com/455791-force-...ml#post2041731
From India, Visakhapatnam
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Thank you, Sharmila, I have a question. In your reply, you mentioned that if the basic salary is more than Rs. 6500, then the employee must pay PF. However, in my company, the employee can opt either to go for PF or not, even if the basic salary is higher than Rs. 6500.
One of my colleagues opted for no PF and has opened a PPF in a bank for the same amount, and her basic salary is around Rs. 17000.
Legality of PF Contribution
If it's illegal not to contribute towards PF, how does the company still run? I mean, these are very basic employee benefits. Can the company deviate from basic benefits and still be in business? Is there not some kind of audit run by the government every year on companies to check if they follow the basic requirements?
What bothers me is that not only my company, but many companies in India follow the same policy on PF. The public has started to talk like it's also legal for companies not to contribute towards PF. Because I have had many arguments with my own company staff when I asked them to join me to talk to the management about it. Can something be done on this issue nationwide?
Even my other friends in other companies have the same issue, and they say that it's all legal now. How did this situation come about, and how are companies doing such illegal things very boldly (by mentioning both the deductions on the pay-slip)?
Once again, thank you so much for your reply. I didn't post it to hurt anyone, just to clarify things that have been bothering me for many months.
Regards,
Dolly
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One of my colleagues opted for no PF and has opened a PPF in a bank for the same amount, and her basic salary is around Rs. 17000.
Legality of PF Contribution
If it's illegal not to contribute towards PF, how does the company still run? I mean, these are very basic employee benefits. Can the company deviate from basic benefits and still be in business? Is there not some kind of audit run by the government every year on companies to check if they follow the basic requirements?
What bothers me is that not only my company, but many companies in India follow the same policy on PF. The public has started to talk like it's also legal for companies not to contribute towards PF. Because I have had many arguments with my own company staff when I asked them to join me to talk to the management about it. Can something be done on this issue nationwide?
Even my other friends in other companies have the same issue, and they say that it's all legal now. How did this situation come about, and how are companies doing such illegal things very boldly (by mentioning both the deductions on the pay-slip)?
Once again, thank you so much for your reply. I didn't post it to hurt anyone, just to clarify things that have been bothering me for many months.
Regards,
Dolly
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You haven't read the point clearly, have you? Let me reframe it once again: If the employee has not withdrawn their PF from the previous employer and their salary is ≤ Rs. 6500, they would still remain a member of PF.
If the employee has no previous EPF account or has just joined the services, they are still exempted.
If the company has 20 or more employees, the employer is required to contribute towards PF. Are you sure that the employer is filing Monthly/Annual returns? - PF Monthly Return is for employees to remit contributions monthly, and PF Annual Returns are for the accounting year starting from March to February for your employees. The employer should provide the contributory slips on or before the end of May for the employees to know their balances. Please check with the HR department if they are filing such returns and if all the contributions are sent to the EPFO. A copy of these returns is filed for audit purposes.
The real issue arises when employees face difficulties due to not contributing towards PF. You and your company staff (if inclined) should approach your area Labor Commissioner and file a complaint if you feel affected by the employer-employee contributions.
As per the procedure mentioned above, you may consult a conciliation officer to get answers from the employer.
There is nothing to feel hurt or good about here. This forum provides a platform for people to help each other fulfill their obligations. Members in this group discuss and remember they are here to help, not to get hurt. Cheers!
From India, Visakhapatnam
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If the employee has no previous EPF account or has just joined the services, they are still exempted.
If the company has 20 or more employees, the employer is required to contribute towards PF. Are you sure that the employer is filing Monthly/Annual returns? - PF Monthly Return is for employees to remit contributions monthly, and PF Annual Returns are for the accounting year starting from March to February for your employees. The employer should provide the contributory slips on or before the end of May for the employees to know their balances. Please check with the HR department if they are filing such returns and if all the contributions are sent to the EPFO. A copy of these returns is filed for audit purposes.
The real issue arises when employees face difficulties due to not contributing towards PF. You and your company staff (if inclined) should approach your area Labor Commissioner and file a complaint if you feel affected by the employer-employee contributions.
As per the procedure mentioned above, you may consult a conciliation officer to get answers from the employer.
There is nothing to feel hurt or good about here. This forum provides a platform for people to help each other fulfill their obligations. Members in this group discuss and remember they are here to help, not to get hurt. Cheers!
From India, Visakhapatnam
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Thank you once again, Sharmila. As far as I have inquired, entry-level employees who do not have a previous PF account and the most experienced employee who had PF from a previous job and joined here, all have to go through the same PF structure in my company. They can either opt for it or avoid paying PF.
My company's strength is 500+, and they should be filing returns because they do deduct the money from our accounts. They may show it on audits that they contribute towards PF with the money they deduct from us, but I don't know the exact process. I have checked with my HR many times, but they are not transparent in providing information, such as about annual returns and other details.
I posted my query to understand how PF works and if there have been any recent changes in the PF policy. Your post has answered all the doubts I had.
Thank you so much once again, Sharmila.
Regards,
Dolly
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My company's strength is 500+, and they should be filing returns because they do deduct the money from our accounts. They may show it on audits that they contribute towards PF with the money they deduct from us, but I don't know the exact process. I have checked with my HR many times, but they are not transparent in providing information, such as about annual returns and other details.
I posted my query to understand how PF works and if there have been any recent changes in the PF policy. Your post has answered all the doubts I had.
Thank you so much once again, Sharmila.
Regards,
Dolly
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When it comes to EPF or Employee PF, we have two sides of contributions:
1. **Employee's Side:** This is deducted from your salary, i.e., from your monthly gross. The minimum contribution as per the PF Act is 12%, and you can voluntarily scale it up to a maximum of 20%.
2. **Employer's Side:** This is not deducted from your salary. This is included in your CTC to show the transaction. (I shall explain how it should be reflected). As per the PF Act, the employer is supposed to contribute 12% of your Basic + DA to your PF & Pension Account. Out of this 12%, 8.33% goes to the Pension Account, and only 3.67% goes to the PF Account.
In addition to the 12% contribution made by the Employer, he is also liable to pay:
- Administrative Charges: Handling for PF/Pension account
- Employee Insurance Charge
- Employee Insurance Handling Charge
However, if the company provides a better insurance scheme, they can opt out of the insurance scheme in the PF Act.
Now, to see how the PFs should be reflected in your CTC:
Basic
DA
HRA
Conveyance
Medical Allowance
Other Allowances (if any)
=========================
GROSS
==========================
Gratuity (Calculated as 15/26 * 1 * Last drawn salary, i.e., basic + DA and this amount is contributed to the gratuity account that the company has with some LIC or related firm)
PF (This is the employer's contribution)
ESIC (if applicable - again employer's contribution)
Annual Bonus
LTA (if provided by your company)
=============================
CTC (i.e., cost to company)
Now from your monthly gross:
Gross (basic + DA + HRA + conveyance + medical allowance + other allowances)
(less) PF (This is the employee's contribution)
(less) Professional Tax
(less) TDS
===================
MONTHLY IN-HAND
===================
So, if you see that PF contribution can be deducted only once from your gross. The PF that was mentioned in your CTC is very much correct as that amount is also deposited in your PF account. I hope if this was the doubt it was cleared.
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Again, as mentioned by the Act:
1. A firm becomes eligible for the PF Act only when it has more than 20 employees. Once the firm has more than 20 employees and is covered under the PF Act, then even if the employment reduces to below 20, the firm still has to go on contributing to the PF account.
2. A person is eligible to be covered under the PF Act only if his Basic + DA is less than or equal to 6500.
3. If a person is in the firm and was appointed at a basic + DA less than or equal to 6500 and hence was covered under the PF Act, and if this worker is, for example, given an increment so that now his basic + DA is more than 6500, the person continues to be applicable under the PF Act. The contributions to be made 12% on the 6500 ceiling amount. If the contribution is made on the actual basic + DA, any excess amount over 12% of 6500 is taxed.
4. If you are covered under the PF Act in this firm. Now you change your employment. Your new employer is also covered under the PF Act. But because of the change in employment, your salary is revised and now your basic + DA is more than 6500, and hence in the new employment you do not become eligible for the PF contribution.
Yet I would want seniors to clarify this point as from Ms. Sharmila's post it seems that if I am covered under PF, even if I change my employer I continue to be covered, and my employer is obliged to contribute to my PF.
Hope this helped to clarify your doubts.
From India, Mumbai
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1. **Employee's Side:** This is deducted from your salary, i.e., from your monthly gross. The minimum contribution as per the PF Act is 12%, and you can voluntarily scale it up to a maximum of 20%.
2. **Employer's Side:** This is not deducted from your salary. This is included in your CTC to show the transaction. (I shall explain how it should be reflected). As per the PF Act, the employer is supposed to contribute 12% of your Basic + DA to your PF & Pension Account. Out of this 12%, 8.33% goes to the Pension Account, and only 3.67% goes to the PF Account.
In addition to the 12% contribution made by the Employer, he is also liable to pay:
- Administrative Charges: Handling for PF/Pension account
- Employee Insurance Charge
- Employee Insurance Handling Charge
However, if the company provides a better insurance scheme, they can opt out of the insurance scheme in the PF Act.
Now, to see how the PFs should be reflected in your CTC:
Basic
DA
HRA
Conveyance
Medical Allowance
Other Allowances (if any)
=========================
GROSS
==========================
Gratuity (Calculated as 15/26 * 1 * Last drawn salary, i.e., basic + DA and this amount is contributed to the gratuity account that the company has with some LIC or related firm)
PF (This is the employer's contribution)
ESIC (if applicable - again employer's contribution)
Annual Bonus
LTA (if provided by your company)
=============================
CTC (i.e., cost to company)
Now from your monthly gross:
Gross (basic + DA + HRA + conveyance + medical allowance + other allowances)
(less) PF (This is the employee's contribution)
(less) Professional Tax
(less) TDS
===================
MONTHLY IN-HAND
===================
So, if you see that PF contribution can be deducted only once from your gross. The PF that was mentioned in your CTC is very much correct as that amount is also deposited in your PF account. I hope if this was the doubt it was cleared.
================================================== ====
Again, as mentioned by the Act:
1. A firm becomes eligible for the PF Act only when it has more than 20 employees. Once the firm has more than 20 employees and is covered under the PF Act, then even if the employment reduces to below 20, the firm still has to go on contributing to the PF account.
2. A person is eligible to be covered under the PF Act only if his Basic + DA is less than or equal to 6500.
3. If a person is in the firm and was appointed at a basic + DA less than or equal to 6500 and hence was covered under the PF Act, and if this worker is, for example, given an increment so that now his basic + DA is more than 6500, the person continues to be applicable under the PF Act. The contributions to be made 12% on the 6500 ceiling amount. If the contribution is made on the actual basic + DA, any excess amount over 12% of 6500 is taxed.
4. If you are covered under the PF Act in this firm. Now you change your employment. Your new employer is also covered under the PF Act. But because of the change in employment, your salary is revised and now your basic + DA is more than 6500, and hence in the new employment you do not become eligible for the PF contribution.
Yet I would want seniors to clarify this point as from Ms. Sharmila's post it seems that if I am covered under PF, even if I change my employer I continue to be covered, and my employer is obliged to contribute to my PF.
Hope this helped to clarify your doubts.
From India, Mumbai
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Ms. Ankita has covered various facets of CTC and EPF provisions. Now to add:
EPF Membership and Contributions
A) When a person becomes a member under the EPF & MP Act, they continue to be a member until the withdrawal of the contribution due to separation from service on various grounds. In such a case, the contribution, along with the employer's contribution and administrative charges, irrespective of the salary being less or more than Rs. 6500, is to be remitted.
Violation of EPF Provisions
B) The instance of recovery of employer contribution and administrative charges may be brought to the notice of EPFO with proof of payslip. This is a violation of the provisions of the Act on the part of the employer. You can later file an RTI application with EPFO seeking information on action taken on your complaint against the employer. This way, you can discipline the employer as well as EPFO officials.
Further, regarding the remittance of contributions, you may visit the EPFO site and get the information by registering.
Regards,
From India, Mumbai
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EPF Membership and Contributions
A) When a person becomes a member under the EPF & MP Act, they continue to be a member until the withdrawal of the contribution due to separation from service on various grounds. In such a case, the contribution, along with the employer's contribution and administrative charges, irrespective of the salary being less or more than Rs. 6500, is to be remitted.
Violation of EPF Provisions
B) The instance of recovery of employer contribution and administrative charges may be brought to the notice of EPFO with proof of payslip. This is a violation of the provisions of the Act on the part of the employer. You can later file an RTI application with EPFO seeking information on action taken on your complaint against the employer. This way, you can discipline the employer as well as EPFO officials.
Further, regarding the remittance of contributions, you may visit the EPFO site and get the information by registering.
Regards,
From India, Mumbai
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A good discussion is taking place regarding PF. Can anyone clarify whether casual staffs are eligible for PF
From India, Kolkata
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From India, Kolkata
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Yes Ankita The exemption is available only to those whose starting salary in the company is above 6500 and who do not have an existing PF account at the time of joining the new company.
From India, Mumbai
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From India, Mumbai
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PF Applicability for Different Employee Types
PF is applicable to every employee, whether permanent, contract, or temporary. The only exemption is for apprentices who are not considered employees. However, for that exemption to apply, they must be apprentices under the Apprentice Act or specified in the standing orders.
From India, Mumbai
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PF is applicable to every employee, whether permanent, contract, or temporary. The only exemption is for apprentices who are not considered employees. However, for that exemption to apply, they must be apprentices under the Apprentice Act or specified in the standing orders.
From India, Mumbai
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I am still unclear. Please do not mind. Kindly correct me if I misunderstood.
A person had his first job where he was covered under PF and had basic + DA less than 6500. Now he has served for 1 year, and his salary has increased so that his basic + DA is more than 6500 while still in the same employment. But he would still be covered under the PF Act, and contributions are mandatory at the same 12% rate, which can be reduced to 780 (12% of 6500).
Now, if he changes to new employment (obviously with a salary hike), the new employer still will have to contribute 780 pm only because he had once been covered, and so he continues to be covered for a lifetime?
============================
I have a doubt here, sir, if it could be cleared.
A person was working with some firm for some years and was covered under the PF Act. He quit that job and joined us a few years back. We are not covered under the PF Act. In this case, should the person who has a PF account be given a contribution for PF? Or should he close his PF account?
==============================
PF Account Transfer and Withdrawal
As per the rule, actually, an employee is supposed to transfer the PF account when he changes employment. Meaning to say that, suppose I am covered under the PF Act in my current firm. Now, when I join another firm for better prospects, I should be submitting some form in my office so that they initiate some process, and my account is transferred to the new employment. But it is a common practice that many employees just withdraw their PF amount and close the PF Account.
Is this beneficial? Is this not tracked?
Looking forward to further guidance. Thank you in advance for the patience and knowledge shared.
From India, Mumbai
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A person had his first job where he was covered under PF and had basic + DA less than 6500. Now he has served for 1 year, and his salary has increased so that his basic + DA is more than 6500 while still in the same employment. But he would still be covered under the PF Act, and contributions are mandatory at the same 12% rate, which can be reduced to 780 (12% of 6500).
Now, if he changes to new employment (obviously with a salary hike), the new employer still will have to contribute 780 pm only because he had once been covered, and so he continues to be covered for a lifetime?
============================
I have a doubt here, sir, if it could be cleared.
A person was working with some firm for some years and was covered under the PF Act. He quit that job and joined us a few years back. We are not covered under the PF Act. In this case, should the person who has a PF account be given a contribution for PF? Or should he close his PF account?
==============================
PF Account Transfer and Withdrawal
As per the rule, actually, an employee is supposed to transfer the PF account when he changes employment. Meaning to say that, suppose I am covered under the PF Act in my current firm. Now, when I join another firm for better prospects, I should be submitting some form in my office so that they initiate some process, and my account is transferred to the new employment. But it is a common practice that many employees just withdraw their PF amount and close the PF Account.
Is this beneficial? Is this not tracked?
Looking forward to further guidance. Thank you in advance for the patience and knowledge shared.
From India, Mumbai
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Clarification on PF Coverage and Contributions
I am still unclear. Please do not mind. Kindly correct me if I misunderstood.
A person had his first job where he was covered under PF and had a basic + DA less than 6500. Now he has served for 1 year, and his salary has increased so that his basic + DA is more than 6500, and he is in the same employment. But he would still be covered under the PF Act, and contributions are mandatory at the same 12% rate, which can be reduced to 780 (12% of 6500).
Now if he changed to new employment (obviously with a salary hike), the new employer still will have to contribute 780 pm only because he had once been covered and so he continues to be covered for a lifetime? Yes, he will be covered in the new company with the max statutory amount of 780 per month (he can opt for a higher amount, but that is not mandatory). This new employer will be required to contribute the same amount of 780 per month.
============================
Doubt Regarding PF Account Management
I have a doubt here, sir, if it could be cleared. A person was working with some firm for some years and was covered under the PF Act. He quit that job and joined us a few years back. We are not covered under the PF Act. In this case, should the person who has a PF account be given a contribution for PF? Or should he close his PF account? He can withdraw his PF amount. However, if he does not do that, he will earn interest for the next 3 years, after which it will stop. So, the answer to your question depends on what his long-term aims are. If he is going to join another company in 3 years which has PF, then probably he can keep it and transfer when he joins. He will get 8.5% tax-free income in the meanwhile plus increased savings. If he does not want to wait or does not know his future plans, he may withdraw it.
As per the rule, actually, an employee is supposed to transfer the PF account when he changes employment. Meaning to say that suppose I am covered under the PF Act in my current firm. Now when I join another firm for better prospects, I should be submitting some form in my this office so that they initiate some process and my account is transferred to the new employment. But it is a common practice that many employees just withdraw their PF amount and close the PF Account. Is this benefiting? Is this not tracked? Looking forward to further guidance. Thank you in advance for patience and knowledge shared.
Most employees are short-sighted and want to draw the amount as quickly as possible. They do not look at the long-term impact. In order to do that, they give a false declaration to the old company and to PF that they are not working anymore. And to the new company, a declaration that they do not have an existing PF account.
A different point of view that was posted earlier in the forum was that after 10 years of PF contribution, the amount in the pension fund gets activated. If you withdraw before 10 years are over, you get the full amount of your and your employer's contribution back. That money properly invested will give you more than the pension under FPF. That is IF you invest it :)
So, it's a complex thing that each one needs to decide on. It is not currently tracked. However, the PF department has already asked companies to put in the Aadhar ID of the employee in the PF application, and they will track it from there. I expect the tracking mechanism will be effective in 2 years' time.
Regards,
From India, Mumbai
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I am still unclear. Please do not mind. Kindly correct me if I misunderstood.
A person had his first job where he was covered under PF and had a basic + DA less than 6500. Now he has served for 1 year, and his salary has increased so that his basic + DA is more than 6500, and he is in the same employment. But he would still be covered under the PF Act, and contributions are mandatory at the same 12% rate, which can be reduced to 780 (12% of 6500).
Now if he changed to new employment (obviously with a salary hike), the new employer still will have to contribute 780 pm only because he had once been covered and so he continues to be covered for a lifetime? Yes, he will be covered in the new company with the max statutory amount of 780 per month (he can opt for a higher amount, but that is not mandatory). This new employer will be required to contribute the same amount of 780 per month.
============================
Doubt Regarding PF Account Management
I have a doubt here, sir, if it could be cleared. A person was working with some firm for some years and was covered under the PF Act. He quit that job and joined us a few years back. We are not covered under the PF Act. In this case, should the person who has a PF account be given a contribution for PF? Or should he close his PF account? He can withdraw his PF amount. However, if he does not do that, he will earn interest for the next 3 years, after which it will stop. So, the answer to your question depends on what his long-term aims are. If he is going to join another company in 3 years which has PF, then probably he can keep it and transfer when he joins. He will get 8.5% tax-free income in the meanwhile plus increased savings. If he does not want to wait or does not know his future plans, he may withdraw it.
As per the rule, actually, an employee is supposed to transfer the PF account when he changes employment. Meaning to say that suppose I am covered under the PF Act in my current firm. Now when I join another firm for better prospects, I should be submitting some form in my this office so that they initiate some process and my account is transferred to the new employment. But it is a common practice that many employees just withdraw their PF amount and close the PF Account. Is this benefiting? Is this not tracked? Looking forward to further guidance. Thank you in advance for patience and knowledge shared.
Most employees are short-sighted and want to draw the amount as quickly as possible. They do not look at the long-term impact. In order to do that, they give a false declaration to the old company and to PF that they are not working anymore. And to the new company, a declaration that they do not have an existing PF account.
A different point of view that was posted earlier in the forum was that after 10 years of PF contribution, the amount in the pension fund gets activated. If you withdraw before 10 years are over, you get the full amount of your and your employer's contribution back. That money properly invested will give you more than the pension under FPF. That is IF you invest it :)
So, it's a complex thing that each one needs to decide on. It is not currently tracked. However, the PF department has already asked companies to put in the Aadhar ID of the employee in the PF application, and they will track it from there. I expect the tracking mechanism will be effective in 2 years' time.
Regards,
From India, Mumbai
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Thank you, Saswata Banerjee, for your insights.
A different point of view that was posted earlier in the forum was that after 10 years of PF contribution, the amount in the pension fund gets activated. If you withdraw before 10 years are over, you get the full amount of your and your employer's contribution back. That money, properly invested, will give you more than the pension under FPF. That is IF you invest it.
I had not known this. I was told by this employee that when they withdrew their PF account, they had got 100% full money. I thought it must only be the 12% employee contribution and 3.67% of the employer's contribution (which goes to the PF account) and the 8.33% of the employer's contribution that goes to the pension fund perhaps would not be handed over.
Thank you for the insight and clearing the doubts.
From India, Mumbai
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A different point of view that was posted earlier in the forum was that after 10 years of PF contribution, the amount in the pension fund gets activated. If you withdraw before 10 years are over, you get the full amount of your and your employer's contribution back. That money, properly invested, will give you more than the pension under FPF. That is IF you invest it.
I had not known this. I was told by this employee that when they withdrew their PF account, they had got 100% full money. I thought it must only be the 12% employee contribution and 3.67% of the employer's contribution (which goes to the PF account) and the 8.33% of the employer's contribution that goes to the pension fund perhaps would not be handed over.
Thank you for the insight and clearing the doubts.
From India, Mumbai
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Understanding PF Withdrawal Rules
Wait! Before we confuse each other. If the amount is withdrawn before completing 10 years of PF contribution, then they get 100% back. If they withdraw after 10 years of contribution, then they get as you just said. The 10 years include multiple companies you have worked for, and if you have multiple accounts that have been transferred to the latest account.
From India, Mumbai
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Wait! Before we confuse each other. If the amount is withdrawn before completing 10 years of PF contribution, then they get 100% back. If they withdraw after 10 years of contribution, then they get as you just said. The 10 years include multiple companies you have worked for, and if you have multiple accounts that have been transferred to the latest account.
From India, Mumbai
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Sorry, but again I read something contradicting what you mentioned yesterday. You mentioned that:
However, what I read today is:
You Might Not Get 100% of Your EPF Money
Imagine your contribution plus employer contribution has been a total of Rs 3,50,000 to date. Out of this Rs 3,50,000, suppose Rs 2,50,000 has gone into EPF, and the rest Rs 1,00,000 has gone into EPS (for pension). Now if you quit your job in the 6th year of employment and opt for withdrawal of your EPF money (EPF + EPS actually), do you think you will get the total Rs 3,50,000? NO!
That's because you always get 100% of your EPF part, but for EPS there is a separate rule. There is something called Table “D”, under which it's mentioned how much you get at the time of exit from your job. There is a slab for each completed year, and you get n times of your last drawn salary (depending on the completed year of service) subject to a maximum of Rs 6,500 per month. So if your salary in this case was Rs 30,000 per month, you will still be given only 6,500 * 6.40 = Rs 41,600. Note that Table D is up to 9 years only, because if 10 years are crossed, then you are liable for a pension.
Source - Attachment "10 facts you may not know about PF" on post no.5 by loginmiracle on https://www.citehr.com/456226-pf-ded...ml#post2043209
Can there be some better explanation as it is just increasing the confusion? It may sound like I am asking too much, but honestly, I have 0 idea on it and would like to know.
Thanks in advance and sorry for all the troubles.
From India, Mumbai
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However, what I read today is:
You Might Not Get 100% of Your EPF Money
Imagine your contribution plus employer contribution has been a total of Rs 3,50,000 to date. Out of this Rs 3,50,000, suppose Rs 2,50,000 has gone into EPF, and the rest Rs 1,00,000 has gone into EPS (for pension). Now if you quit your job in the 6th year of employment and opt for withdrawal of your EPF money (EPF + EPS actually), do you think you will get the total Rs 3,50,000? NO!
That's because you always get 100% of your EPF part, but for EPS there is a separate rule. There is something called Table “D”, under which it's mentioned how much you get at the time of exit from your job. There is a slab for each completed year, and you get n times of your last drawn salary (depending on the completed year of service) subject to a maximum of Rs 6,500 per month. So if your salary in this case was Rs 30,000 per month, you will still be given only 6,500 * 6.40 = Rs 41,600. Note that Table D is up to 9 years only, because if 10 years are crossed, then you are liable for a pension.
Source - Attachment "10 facts you may not know about PF" on post no.5 by loginmiracle on https://www.citehr.com/456226-pf-ded...ml#post2043209
Can there be some better explanation as it is just increasing the confusion? It may sound like I am asking too much, but honestly, I have 0 idea on it and would like to know.
Thanks in advance and sorry for all the troubles.
From India, Mumbai
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thank you Saswat for the information. The staffs generally leave within 6 months only so i thought it will not be applicable but thnx again for answering my query
From India, Kolkata
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From India, Kolkata
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I need to check on this and come back to you. I do not have the full answer. I also learned this morning during a discussion that in the first 6 months if you leave a company, your EPF amount is not returned or transferable to the new company. I need time to figure out and get back to you, as I will now need to read the full PF scheme document before I open my mouth again.
From India, Mumbai
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From India, Mumbai
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I cross-checked this matter this morning during a compliance review. Many people seem to have confusion or misinformation that PF is not payable for the first 6 months. That is completely wrong. PF is payable from the first day an employee joins. If someone leaves within 6 months, they can get their PF withdrawn or transferred to another PF account, but they will lose their EPF amount. EPF is 8.33% of the employer's contribution. The PF amount, therefore, is 12% of the employee's contribution and 3.67% of the employer's contribution.
From India, Mumbai
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From India, Mumbai
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Employer-PF-res trict to wages of Rs 6500.pdf