Hi friends,
Please explain the above topic to me. If an employee's salary is $25,000, with its basic salary being 60% of its gross salary (25000 * 60% = $15,000), should I deduct 12% (EPF) from its basic salary or deduct the ceiling amount of EPF $6,500 that I want to deduct? Please suggest.
Regards,
Ram
From United States, Southfield
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6Please explain the above topic to me. If an employee's salary is $25,000, with its basic salary being 60% of its gross salary (25000 * 60% = $15,000), should I deduct 12% (EPF) from its basic salary or deduct the ceiling amount of EPF $6,500 that I want to deduct? Please suggest.
Regards,
Ram
From United States, Southfield
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Hi Ram,
If an employee's Basic is more than 6500, PF will be deducted only after employee and employer both agree. Deduction will be 12% on the basic, and out of the 12%, only Rs. 541 will be deposited into FPS, and the rest will go to EPF.
Regards,
Ranjeet
9871898784
From India, New Delhi
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If an employee's Basic is more than 6500, PF will be deducted only after employee and employer both agree. Deduction will be 12% on the basic, and out of the 12%, only Rs. 541 will be deposited into FPS, and the rest will go to EPF.
Regards,
Ranjeet
9871898784
From India, New Delhi
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Hi Ram,
You will have to deduct 12% PF on the whole amount (BASIC+DA). Rs. 6500/- is just a criterion; if a person has less than Rs. 6500/-, PF is mandatory for them. For people with (BASIC+DA) more than Rs. 6500/-, it is their choice whether to continue with PF or not.
In case they want to continue, 12% of (BASIC+DA) will be deducted.
Santosh Iyer
santosh_iyer79@rediffmail.com
From India, Pune
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You will have to deduct 12% PF on the whole amount (BASIC+DA). Rs. 6500/- is just a criterion; if a person has less than Rs. 6500/-, PF is mandatory for them. For people with (BASIC+DA) more than Rs. 6500/-, it is their choice whether to continue with PF or not.
In case they want to continue, 12% of (BASIC+DA) will be deducted.
Santosh Iyer
santosh_iyer79@rediffmail.com
From India, Pune
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Hi Ram, Yes you can cut PF on Rs. 15000, but the employers contribution will not divided like regular case.
From India, Indore
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From India, Indore
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Dear Ram, You can deduct PF 12% on Rs.15000/- or Rs.6500/- (if the employee is new pf member). For new joining it is optional/management decision to deduct the PF on >Rs.6500/- Regards, Jony_M
From India, New Delhi
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From India, New Delhi
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Dear Member,
Employee Contribution:
Option 1 - Employee contribution may be fixed up to Rs 6500/-
Option 2 - If an employee willingly wants to contribute Rs 15000 (Basic+DA), he can do so if he has a new PF account.
Employer Contribution:
The employer's contribution will be limited to Rs 6500/- only, subject to mutual consent between the employer and employee.
Regards,
Yandamuri
From India, Visakhapatnam
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Employee Contribution:
Option 1 - Employee contribution may be fixed up to Rs 6500/-
Option 2 - If an employee willingly wants to contribute Rs 15000 (Basic+DA), he can do so if he has a new PF account.
Employer Contribution:
The employer's contribution will be limited to Rs 6500/- only, subject to mutual consent between the employer and employee.
Regards,
Yandamuri
From India, Visakhapatnam
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Hi Ram,
Rakesh Kumar Sharma from Gurgaon. Your query is to deduct EPF, i.e., @12% on basic, i.e., ₹15,000/- or ceiling amount, i.e., a maximum of ₹6,500/-.
In my view, it is not binding on the employer to deduct and contribute more than the ceiling amount, i.e., a maximum of ₹6,500/-. However, it depends on the organization's policy, whether they adhere to the ceiling or the full amount. Generally, in the interest of employees, organizations opt for the full amount.
Please feel free to share with me if you receive more comments on this issue.
Regards,
Rakesh Kumar Sharma
9810680048
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Rakesh Kumar Sharma from Gurgaon. Your query is to deduct EPF, i.e., @12% on basic, i.e., ₹15,000/- or ceiling amount, i.e., a maximum of ₹6,500/-.
In my view, it is not binding on the employer to deduct and contribute more than the ceiling amount, i.e., a maximum of ₹6,500/-. However, it depends on the organization's policy, whether they adhere to the ceiling or the full amount. Generally, in the interest of employees, organizations opt for the full amount.
Please feel free to share with me if you receive more comments on this issue.
Regards,
Rakesh Kumar Sharma
9810680048
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Hi Dear,
I wish to guide and suggest you as follows:
1. You have to first find out whether the salary is CTC, which includes PF contribution as well.
2. If yes, it would not make any difference for any employer to restrict the deduction of PF up to a limit of Rs. 6500/- as mentioned.
3. PF Act does not restrict voluntary deduction and contribution beyond the stated limit of Rs. 6500/- provided the employer is willing to contribute. If CTC covers PF contribution as well, no employer in my opinion shall have any objection to such a higher deduction, irrespective of any amount of Basic or DA or in combination.
4. Higher contribution may be restricted to one employee or be allowed for all employees depending upon the employer's wish. Generally, HR professionals should suggest uniformity.
5. Once opted, you as an employee or even an employer are not obliged to opt for lesser deduction in the future until an employee remains in the employment of the company.
Hope this shall give you enough clarity though other provisions of the Act need to be understood for making any policy on PF.
Regards,
Rajpal
From India, Mumbai
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I wish to guide and suggest you as follows:
1. You have to first find out whether the salary is CTC, which includes PF contribution as well.
2. If yes, it would not make any difference for any employer to restrict the deduction of PF up to a limit of Rs. 6500/- as mentioned.
3. PF Act does not restrict voluntary deduction and contribution beyond the stated limit of Rs. 6500/- provided the employer is willing to contribute. If CTC covers PF contribution as well, no employer in my opinion shall have any objection to such a higher deduction, irrespective of any amount of Basic or DA or in combination.
4. Higher contribution may be restricted to one employee or be allowed for all employees depending upon the employer's wish. Generally, HR professionals should suggest uniformity.
5. Once opted, you as an employee or even an employer are not obliged to opt for lesser deduction in the future until an employee remains in the employment of the company.
Hope this shall give you enough clarity though other provisions of the Act need to be understood for making any policy on PF.
Regards,
Rajpal
From India, Mumbai
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Hi, ok, i cut PF on Rs. 15000 and you mentioned that employers contribution will not divided like regular case, then how it will be divided rgrds ram
From United States, Southfield
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From United States, Southfield
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Dear Ram,
If the salary on which PF is to be deducted exceeds Rs. 6,500.00, then you may not deduct PF at all, or deduct it on only Rs. 6,500.00, or deduct it on the full amount. All three possibilities exist.
You will have to first see on what amount PF was being deducted by the previous employer because that becomes the lower limit. Suppose the previous employer was not deducting any PF, then the employee can opt for any of the three choices (the right of choice is with the employee and not with the employer). If the previous employer was deducting PF only on Rs. 6,500.00, then the employee can opt for either PF on Rs. 6,500.00 or the full amount (the choice of no PF deduction is not available in this case).
If the previous employer was deducting PF on the full amount, then now also it has to be done similarly, and no choice exists with anybody.
KKT
From India, Delhi
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If the salary on which PF is to be deducted exceeds Rs. 6,500.00, then you may not deduct PF at all, or deduct it on only Rs. 6,500.00, or deduct it on the full amount. All three possibilities exist.
You will have to first see on what amount PF was being deducted by the previous employer because that becomes the lower limit. Suppose the previous employer was not deducting any PF, then the employee can opt for any of the three choices (the right of choice is with the employee and not with the employer). If the previous employer was deducting PF only on Rs. 6,500.00, then the employee can opt for either PF on Rs. 6,500.00 or the full amount (the choice of no PF deduction is not available in this case).
If the previous employer was deducting PF on the full amount, then now also it has to be done similarly, and no choice exists with anybody.
KKT
From India, Delhi
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Hi Jony, Cud u pls explain furthur on this optional thing when an employee is declaring PF for the first time. Thanx Jenny
From India, Mumbai
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From India, Mumbai
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can anybody tell me that where can i get knowledge (practically as well as theoritical) about PF/ESIC/Pension/Graduity/Bonus regards manish
From India, Delhi
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From India, Delhi
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Dear Manish,
You have to go through books on Labour and Industrial Laws which cover these topics. There are many writers like P.L. Malik, H.L. Kumar, etc. These books (every act will have Act and then rules) may not cover state rules for which you may need to buy additional books.
KKT
From India, Delhi
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You have to go through books on Labour and Industrial Laws which cover these topics. There are many writers like P.L. Malik, H.L. Kumar, etc. These books (every act will have Act and then rules) may not cover state rules for which you may need to buy additional books.
KKT
From India, Delhi
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Hello, Limit for deducting PF is 6500/-. Inc ase one needs to deduct the PF on the higher basic then special permission from the PF department is to be obtained. Regards, Meeca
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FPS stands for the Family Pension Scheme. In this account, only 8.33% of the basic salary is deducted. This means that 8.33% of the basic salary or 541, whichever is lower, is deducted. 541 represents 8.33% of 6500, which is the highest limit on which FPS can be deducted.
Regards
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Regards
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Dear Ram, FPS is Family pension scheme. 8.33% of 6500/- is equal to Rs. 541. hope I have made clear to you. Regards, Sashmita
From India, Delhi
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From India, Delhi
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Hi,
I am new to this community.
I have the following queries related to P.F. provisions:
1) If an employee rejoins his employer without having withdrawn his P.F. accumulations, can the employer issue the same OLD P.F. number to the employee, or does a new number have to be issued?
2) If an employee whose basic salary was more than Rs.8,000/- and was contributing to P.F. on the full basic salary resigns and rejoins the same employer after 5-6 months without closing his P.F. Account, and the current basic salary of the employee is Rs.15,000/-. In this case, can the employee opt for P.F. deduction to the extent of Rs.6,500/-, or does he have to contribute on the full basic salary?
3) In the scenario mentioned in question 2, what is the employer's legal obligation? Does the employer have to contribute based on the full basic salary i.e. Rs.15,000/-?
4) In the case of a CTC salary package where the employer's P.F. contribution is also a part of CTC, is it possible for the employer to deduct P.F. to the extent of Rs.6,500/- if the employee wants more take-home salary?
5) Can the employer restrict P.F. deduction to Rs.6,500/- (basic) even if the employee's drawing basic salary is more than Rs.6,500/-?
Regards,
Sanjeev
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I am new to this community.
I have the following queries related to P.F. provisions:
1) If an employee rejoins his employer without having withdrawn his P.F. accumulations, can the employer issue the same OLD P.F. number to the employee, or does a new number have to be issued?
2) If an employee whose basic salary was more than Rs.8,000/- and was contributing to P.F. on the full basic salary resigns and rejoins the same employer after 5-6 months without closing his P.F. Account, and the current basic salary of the employee is Rs.15,000/-. In this case, can the employee opt for P.F. deduction to the extent of Rs.6,500/-, or does he have to contribute on the full basic salary?
3) In the scenario mentioned in question 2, what is the employer's legal obligation? Does the employer have to contribute based on the full basic salary i.e. Rs.15,000/-?
4) In the case of a CTC salary package where the employer's P.F. contribution is also a part of CTC, is it possible for the employer to deduct P.F. to the extent of Rs.6,500/- if the employee wants more take-home salary?
5) Can the employer restrict P.F. deduction to Rs.6,500/- (basic) even if the employee's drawing basic salary is more than Rs.6,500/-?
Regards,
Sanjeev
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Hi Rakesh,
What is there, as per law, that is most important and legally binding on every employer, not an individual's opinion? In case an employee wishes to contribute their full basic salary, which is more than Rs. 6500/-, and the employer accepts the same, in this case, the employer also has to contribute based on the same basic salary on which the employee is contributing. Please correct me if I am wrong.
Regards,
Sanjeev
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What is there, as per law, that is most important and legally binding on every employer, not an individual's opinion? In case an employee wishes to contribute their full basic salary, which is more than Rs. 6500/-, and the employer accepts the same, in this case, the employer also has to contribute based on the same basic salary on which the employee is contributing. Please correct me if I am wrong.
Regards,
Sanjeev
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Mr. Sanjeeve,
1) If you have sent Form No. 10 after an employee resigns or is terminated from your organization, then if he joins after some months, it is mandatory to give him a new PF Account No.
This situation has some advantages and disadvantages. I am a practical person with PF, seeing a lot of cases happening in front of me.
2) If an employee has more than Rs. 6500 wages (basic + DA) at the date of joining, they can be excluded from PF.
3) If an employee wants to contribute to his full extent, i.e., on wages of Rs. 8000, he can contribute. But the employer has no compulsion for that.
In my opinion, to avoid this complexity, you have to convince the employee for Voluntary Contribution for PF. This means all employees contribute at 12% with the organization. However, an employee can contribute more than that, e.g., 20% or 30% contribution. It is a really easy way for the organization to avoid complications.
For example, if an employee's wages are Rs. 5000, and he wants to contribute at 20%:
From his wages, Rs. 1000 will go to PF, while at the same time, the organization will contribute Rs. 600.
More posts about clarification are welcome!
Regards,
Prashant Patil
From India, Nagpur
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1) If you have sent Form No. 10 after an employee resigns or is terminated from your organization, then if he joins after some months, it is mandatory to give him a new PF Account No.
This situation has some advantages and disadvantages. I am a practical person with PF, seeing a lot of cases happening in front of me.
2) If an employee has more than Rs. 6500 wages (basic + DA) at the date of joining, they can be excluded from PF.
3) If an employee wants to contribute to his full extent, i.e., on wages of Rs. 8000, he can contribute. But the employer has no compulsion for that.
In my opinion, to avoid this complexity, you have to convince the employee for Voluntary Contribution for PF. This means all employees contribute at 12% with the organization. However, an employee can contribute more than that, e.g., 20% or 30% contribution. It is a really easy way for the organization to avoid complications.
For example, if an employee's wages are Rs. 5000, and he wants to contribute at 20%:
From his wages, Rs. 1000 will go to PF, while at the same time, the organization will contribute Rs. 600.
More posts about clarification are welcome!
Regards,
Prashant Patil
From India, Nagpur
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Dear Rajpal,
I wish to guide and suggest you as follows:
1. You have to first find out whether the salary is CTC, which includes PF contribution as well.
2. If yes, it would not make any difference for any employer to restrict the deduction of PF up to a limit of Rs. 6500/- as mentioned.
3. The PF Act does not restrict voluntary deduction and contribution beyond the stated limit of Rs. 6500/- provided the employer is willing to contribute. If CTC covers PF contribution as well, no employer in my opinion shall have any objection to such higher deduction, irrespective of any amount of Basic or DA or in combination.
4. Higher contribution may be restricted to one employee or be allowed for all employees depending upon the employer's wish. Generally, HR professionals should suggest uniformity.
5. Once opted, you as an employee or even an employer are not obliged to opt for lesser deduction in the future till an employee remains in the employment of the company.
Hope this shall give you enough clarity, though other provisions of the Act need to be understood for making any policy on PF.
Regards,
Rajpal
Dear Rajpal,
As per your reply mentioned under point no. 5, an employee or employer cannot reduce the amount of PF wages (Basic + DA) if an employee has opted to contribute, let's say Rs. 15,000/-. However, if that employee quits and rejoins the same employer after 5-6 months with a higher Basic salary, in this case, whether the contribution will be on the new basic salary or it can be restricted to Rs. 6500/- as the employee wants more take-home salary.
Please advise.
Regards,
Sanjeev
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I wish to guide and suggest you as follows:
1. You have to first find out whether the salary is CTC, which includes PF contribution as well.
2. If yes, it would not make any difference for any employer to restrict the deduction of PF up to a limit of Rs. 6500/- as mentioned.
3. The PF Act does not restrict voluntary deduction and contribution beyond the stated limit of Rs. 6500/- provided the employer is willing to contribute. If CTC covers PF contribution as well, no employer in my opinion shall have any objection to such higher deduction, irrespective of any amount of Basic or DA or in combination.
4. Higher contribution may be restricted to one employee or be allowed for all employees depending upon the employer's wish. Generally, HR professionals should suggest uniformity.
5. Once opted, you as an employee or even an employer are not obliged to opt for lesser deduction in the future till an employee remains in the employment of the company.
Hope this shall give you enough clarity, though other provisions of the Act need to be understood for making any policy on PF.
Regards,
Rajpal
Dear Rajpal,
As per your reply mentioned under point no. 5, an employee or employer cannot reduce the amount of PF wages (Basic + DA) if an employee has opted to contribute, let's say Rs. 15,000/-. However, if that employee quits and rejoins the same employer after 5-6 months with a higher Basic salary, in this case, whether the contribution will be on the new basic salary or it can be restricted to Rs. 6500/- as the employee wants more take-home salary.
Please advise.
Regards,
Sanjeev
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PF Judgement - Bom HC - Temp employee.doc
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