Provident Fund Calculation Query
1. If Basic+DA is less than 6500 (if the employee is not a member of PF or was a member of PF prior).
2. If Basic+DA is greater than 6500 (if the employee is not a member of PF or was a member of PF prior).
3. What percentage of Basic should be of the gross salary?
4. Can we restrict PF contribution to 780 p.m. irrespective of the basic wage? As the 6500 amount is revised to 15000, does it all go the same way for 15000 as well?
Regards,
Neha
From India, Gurgaon
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1. If Basic+DA is less than 6500 (if the employee is not a member of PF or was a member of PF prior).
2. If Basic+DA is greater than 6500 (if the employee is not a member of PF or was a member of PF prior).
3. What percentage of Basic should be of the gross salary?
4. Can we restrict PF contribution to 780 p.m. irrespective of the basic wage? As the 6500 amount is revised to 15000, does it all go the same way for 15000 as well?
Regards,
Neha
From India, Gurgaon
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Provident Fund Contribution Cases
Case 1 - PF is compulsory at 12% of the actual Basic + DA.
Case 2 - PF is optional, subject to liability limited to 12% of Rs 6500/- or actual.
Additional Queries
Q3: There is no law in this regard.
Q4: Yes.
As of today, it is Rs 6500/- only. When it is enhanced to Rs 15000/-, it will apply in the same way as it does to Rs 6500/-.
Regards,
Varghese Mathew
[Phone Number Removed For Privacy Reasons]
From India, Thiruvananthapuram
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931Case 1 - PF is compulsory at 12% of the actual Basic + DA.
Case 2 - PF is optional, subject to liability limited to 12% of Rs 6500/- or actual.
Additional Queries
Q3: There is no law in this regard.
Q4: Yes.
As of today, it is Rs 6500/- only. When it is enhanced to Rs 15000/-, it will apply in the same way as it does to Rs 6500/-.
Regards,
Varghese Mathew
[Phone Number Removed For Privacy Reasons]
From India, Thiruvananthapuram
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Dear Neha,
Reply to Provident Fund Queries
1. If an employee's Basic + DA is less than Rs 6500/-, it is mandatory that the employee should be a member if the firm is registered with EPFO (see eligibility).
2. If an employee is not a member and their Basic plus DA is above Rs 6500/-, an exemption can be sought. Please refer to para 36, Form No. 11 to be filled in.
3. There is no law for this, but practice suggests that 40% of CTC should be Basic Pay, wherein HRA should be 40/50% of Basic Pay. Please take note of this. This is a common practice across the industry.
4. Yes, we can restrict it to Rs 780/- as per EPF. If the wage ceiling goes up to Rs 15000/-, it will change accordingly. Gazette Notification is still awaited.
Hope I have made things clear.
Regards,
V K Sharma HR Tarapu
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Reply to Provident Fund Queries
1. If an employee's Basic + DA is less than Rs 6500/-, it is mandatory that the employee should be a member if the firm is registered with EPFO (see eligibility).
2. If an employee is not a member and their Basic plus DA is above Rs 6500/-, an exemption can be sought. Please refer to para 36, Form No. 11 to be filled in.
3. There is no law for this, but practice suggests that 40% of CTC should be Basic Pay, wherein HRA should be 40/50% of Basic Pay. Please take note of this. This is a common practice across the industry.
4. Yes, we can restrict it to Rs 780/- as per EPF. If the wage ceiling goes up to Rs 15000/-, it will change accordingly. Gazette Notification is still awaited.
Hope I have made things clear.
Regards,
V K Sharma HR Tarapu
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Clarification on EPFO Circular
There was a circular issued on 14.07.2014 from EPFO (Ministry of Labour, Govt. of India), New Delhi. As I mentioned in my recent thread, this is only a circular. The Gazette Notification is awaited, so there is no need to confuse or get confused.
Regards,
V K Sharma
HR
Tarapur
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There was a circular issued on 14.07.2014 from EPFO (Ministry of Labour, Govt. of India), New Delhi. As I mentioned in my recent thread, this is only a circular. The Gazette Notification is awaited, so there is no need to confuse or get confused.
Regards,
V K Sharma
HR
Tarapur
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Dear Sharma, If gross salary Rs.8000/- its for Consolidated Salary, so what about the EPF section says. if any section????? Regards, Suresh Kumar M
From India, Coimbatore
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From India, Coimbatore
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I second the reply given by Mr. Varghese Mathew with only one correction in Point 4:
Can we restrict PF contributions to ₹780 per month irrespective of the basic wage? Yes, if the basic wage is above the cap, i.e., ₹6,500 per month. If the basic wage is below the cap, the contribution should be 12% of the actual basic wage.
From India, Ahmadabad
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Can we restrict PF contributions to ₹780 per month irrespective of the basic wage? Yes, if the basic wage is above the cap, i.e., ₹6,500 per month. If the basic wage is below the cap, the contribution should be 12% of the actual basic wage.
From India, Ahmadabad
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If the basic salary is less than or more than Rs 6500/-, the rate of the employer's contribution will be 12% only. Nothing in the Act prevents the employer from contributing more than Rs 6500/-.
Regards,
Varghese Mathew
From India, Thiruvananthapuram
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Regards,
Varghese Mathew
From India, Thiruvananthapuram
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With due respect, I do agree, but the member has asked whether the employer can restrict the PF Contribution to Rs. 780 per month. For this query, I replied that if the basic salary is Rs. 6500 or more, the employer can limit the contribution to Rs. 780 per month. If the basic salary is below Rs. 6500, the contribution towards PF will be 12% of the actual basic salary.
Regards
From India, Ahmadabad
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Regards
From India, Ahmadabad
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If Basic+DA is less than 6500 (if the employee is not a member of PF or a member of PF prior):
- If it is less than Rs. 6500/-, there is no PF contribution possible.
- If it is less than Rs. 6500/-, the contribution amount is fixed at 12% of Basic and DA.
If Basic+DA is greater than 6500 (if the employee is not a member of PF or a member of PF prior):
- This is a very hypothetical situation. Once an employee becomes a member of PF, they have to remain a member until resignation from employment.
Regarding the Percentage of Basic in the Gross Salary:
- 50%-60% in metros
- 40%-50% in non-metros
Can We Restrict PF Contribution to 780 p.m. Irrespective of the Basic Wage?
- It is possible only when the Basic is capped at 6500/-. As the 6500 amount has been revised to 15000; does the same rule apply for 15000 as well? This is still under discussion and not implemented yet.
Feel free to ask any queries.
Regards,
Neha
Source: https://www.citehr.com/501708-provid...#ixzz39Q0rAnI6
From India, Mumbai
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- If it is less than Rs. 6500/-, there is no PF contribution possible.
- If it is less than Rs. 6500/-, the contribution amount is fixed at 12% of Basic and DA.
If Basic+DA is greater than 6500 (if the employee is not a member of PF or a member of PF prior):
- This is a very hypothetical situation. Once an employee becomes a member of PF, they have to remain a member until resignation from employment.
Regarding the Percentage of Basic in the Gross Salary:
- 50%-60% in metros
- 40%-50% in non-metros
Can We Restrict PF Contribution to 780 p.m. Irrespective of the Basic Wage?
- It is possible only when the Basic is capped at 6500/-. As the 6500 amount has been revised to 15000; does the same rule apply for 15000 as well? This is still under discussion and not implemented yet.
Feel free to ask any queries.
Regards,
Neha
Source: https://www.citehr.com/501708-provid...#ixzz39Q0rAnI6
From India, Mumbai
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I feel the members have given correct and adequate information on the PF contribution query. So far as the query on the percentage of Basic to Gross is concerned, based on experience in Compensation & Benefits, it's best to retain Basic at a minimum of 40% for high salaried individuals and a minimum of 50% for junior levels, especially those who come under PF. In most of the companies I've seen, these benchmarks serve well in terms of long-term compliance initiatives.
The point in case being - recently PF has asked its officers to check if companies are avoiding PF by lowering the Basic+DA wage of employees and thereby trying to reduce the employer's PF liability. Also, please find the link to a popular news website which has an article on the same.
Hope this helps.
Warm Regards,
Deena Jagasia
From India, Mumbai
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The point in case being - recently PF has asked its officers to check if companies are avoiding PF by lowering the Basic+DA wage of employees and thereby trying to reduce the employer's PF liability. Also, please find the link to a popular news website which has an article on the same.
Hope this helps.
Warm Regards,
Deena Jagasia
From India, Mumbai
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PF Contribution on not less than Minimum Wage.pdf