Hello all, I have an employee who has a basic component in the salary of Rs. 16,000. He wants to continue deducting PF since he was deducting it in his previous company. Can you tell me how much PF we should deduct - 12% on the basic, i.e., on 16,000, or can we deduct PF on the maximum applicable limit of 6,500 also?
Thank you.
From India, New Delhi
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Thank you.
From India, New Delhi
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This depends on your policy.But you should apply uniform policy to every cases where basic is above Rs 6500/-pm. Varghese Mathew
From India, Thiruvananthapuram
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931From India, Thiruvananthapuram
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PF Deduction for Employees with Higher Starting Salary
Where the employee has a starting salary of more than Rs. 6500 (Basic + DA) and he wants to continue to have a PF account, he is entitled to do so under the law. Under the law, you are required to deduct and pay PF at 12% on the actual salary or Rs. 6500, whichever is lower. Therefore, in this case, you are required to deduct 12% of Rs. 6500 and contribute the same amount from your side. However, the employee can opt for a higher deduction. You are not required to match the same amount as the employer's contribution.
Hope this clarifies your doubt.
From India, Mumbai
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Where the employee has a starting salary of more than Rs. 6500 (Basic + DA) and he wants to continue to have a PF account, he is entitled to do so under the law. Under the law, you are required to deduct and pay PF at 12% on the actual salary or Rs. 6500, whichever is lower. Therefore, in this case, you are required to deduct 12% of Rs. 6500 and contribute the same amount from your side. However, the employee can opt for a higher deduction. You are not required to match the same amount as the employer's contribution.
Hope this clarifies your doubt.
From India, Mumbai
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I have a query. Is it mandatory to deduct the PF at 12% on the actual salary or on Rs 6,500, whichever is less? Because my actual basic pay is more than 6,500, and a 12% deduction is happening on the actual basic pay itself. Please update.
Thanks,
Naveen.
From India, Hyderabad
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Thanks,
Naveen.
From India, Hyderabad
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No, it is not mandatory to deduct PF beyond 12% of ₹6500. The excess will be voluntary. However, many companies have a policy of deducting more (and give a matching contribution from the employer side). This is beneficial to you, so you should let it continue.
From India, Mumbai
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From India, Mumbai
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SALARY with out PF Deduction.xls
PF Contribution on Leave Encashment - Clarification by EPFO.pdf