EPF Ceiling Limit and Contribution Clarification
Some consultants are suggesting that the EPF ceiling limit is fixed at ₹6,500. The employer is liable to pay contributions only on ₹6,500, regardless of the basic salary. Is this correct? If an employee's basic salary is over and above the ceiling limit of ₹6,500, what should we do in such cases?
Please let me know the breakdown and kindly explain the changes in EPF rules as of 2012.
Thanks in advance.
Regards,
Brinda
From India, Madras
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Some consultants are suggesting that the EPF ceiling limit is fixed at ₹6,500. The employer is liable to pay contributions only on ₹6,500, regardless of the basic salary. Is this correct? If an employee's basic salary is over and above the ceiling limit of ₹6,500, what should we do in such cases?
Please let me know the breakdown and kindly explain the changes in EPF rules as of 2012.
Thanks in advance.
Regards,
Brinda
From India, Madras
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Dear Brinda, If Employees basic salary is 6500/- pm or it is above 6500/- even then he has to contribute PF on 6500/- only. 6500/- 3.67% (PF) 6500/- 8.33%(Pension Fund) Rgrds Vikram
From India, Pune
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14From India, Pune
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As you said, that is correct. For EPF contribution, there are various options:
a) Both EE & ER shall restrict to Basic till 6500/-.
b) Both EE & ER shall contribute on full Basic.
c) Employee shall contribute on full Basic & ER shall restrict to 6500/-.
:)
From India, Bangalore
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a) Both EE & ER shall restrict to Basic till 6500/-.
b) Both EE & ER shall contribute on full Basic.
c) Employee shall contribute on full Basic & ER shall restrict to 6500/-.
:)
From India, Bangalore
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EPF Ceiling and Contribution Clarification
As per the EPF Act, the ceiling is fixed up to Rs. 6500 (basic & DA) per month. There is no doubt about it. We have to deduct the PF amount from both the employer and employee. It is mandatory to deduct the PF amount from the wages. If the employee is receiving wages above Rs. 6501 (basic & DA), we can obtain an exemption from PF through Form 11.
Thanks & Regards,
Muthukumar
Senior HR Executive
Devi Exports Corporation
From India, Chennai
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As per the EPF Act, the ceiling is fixed up to Rs. 6500 (basic & DA) per month. There is no doubt about it. We have to deduct the PF amount from both the employer and employee. It is mandatory to deduct the PF amount from the wages. If the employee is receiving wages above Rs. 6501 (basic & DA), we can obtain an exemption from PF through Form 11.
Thanks & Regards,
Muthukumar
Senior HR Executive
Devi Exports Corporation
From India, Chennai
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Clarification on EPF Contribution Limits
As per the EPF Act, if the starting salary (Basic + DA) is fixed over and above Rs. 6,500/- (Rs. 6,501), it is entirely exempted from PF. If the starting salary (Basic + DA) is fixed below Rs. 6,500/-, then the employee is eligible for PF even after it increases above Rs. 6,500/-. Moreover, Rs. 6,500 is the limit. If it is more than that, it is at the employer's option.
With regards,
V. SUBBARAO
[Phone Number Removed For Privacy Reasons]
From India, Madras
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As per the EPF Act, if the starting salary (Basic + DA) is fixed over and above Rs. 6,500/- (Rs. 6,501), it is entirely exempted from PF. If the starting salary (Basic + DA) is fixed below Rs. 6,500/-, then the employee is eligible for PF even after it increases above Rs. 6,500/-. Moreover, Rs. 6,500 is the limit. If it is more than that, it is at the employer's option.
With regards,
V. SUBBARAO
[Phone Number Removed For Privacy Reasons]
From India, Madras
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Can you tell me if the employee has a gross salary of Rs. 40,000 and the basic salary is Rs. 16,000, what would be the amount of PF deduction for both the employee and the employer? Is it based on the maximum ceiling limit of Rs. 6,500 or on Rs. 16,000?
Thanks and regards,
Rahal Rana
[Phone Number Removed For Privacy Reasons]
From India, Faridabad
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Thanks and regards,
Rahal Rana
[Phone Number Removed For Privacy Reasons]
From India, Faridabad
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I have a question. If Mr. A, who is working at XYZ Co. and contributing to PF, resigns from XYZ Co. and joins ABC & Co. with a basic salary exceeding Rs. 6500/-, is it mandatory for him to contribute to PF at ABC & Co.? Or will he be exempted as the basic salary is higher than Rs. 6500/-?
Thanks & Regards
From India, Gurgaon
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Thanks & Regards
From India, Gurgaon
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There are various calculations to be adopted as per your company policies:
1. In the case of the first employment and if the salary is Rs. 6501 and above, the employee may be covered or can make a contribution to EPF. In the case of an excluded employee, obtain Form 11.
2. In the case of a salary exceeding Rs. 6501:
- The employee may contribute for the full basic (both EYER & EYEE), or
- The employee may restrict to Rs. 6500 as E.YEE & E.YER, or
- The employee may contribute to the full basic and restrict the E.YER to Rs. 6500.
In any case, the contribution to the Pension (EPS) cannot exceed Rs. 541 or 8.33%. If you have any doubts, please call [Phone Number Removed For Privacy Reasons].
From India
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1. In the case of the first employment and if the salary is Rs. 6501 and above, the employee may be covered or can make a contribution to EPF. In the case of an excluded employee, obtain Form 11.
2. In the case of a salary exceeding Rs. 6501:
- The employee may contribute for the full basic (both EYER & EYEE), or
- The employee may restrict to Rs. 6500 as E.YEE & E.YER, or
- The employee may contribute to the full basic and restrict the E.YER to Rs. 6500.
In any case, the contribution to the Pension (EPS) cannot exceed Rs. 541 or 8.33%. If you have any doubts, please call [Phone Number Removed For Privacy Reasons].
From India
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PF Contribution Requirement for High Basic Salary
If Mr. A, who is working at XYZ Co. and contributing to PF, resigns from XYZ Co. and joins ABC & Co. with a basic salary exceeding Rs. 6500, is it mandatory to contribute to PF at ABC & Co? Or will he be exempted since the basic salary is higher than Rs. 6500?
Is it possible not to contribute to PF when the basic salary is Rs. 7,000? (in relation to the above case)
From India, Gurgaon
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If Mr. A, who is working at XYZ Co. and contributing to PF, resigns from XYZ Co. and joins ABC & Co. with a basic salary exceeding Rs. 6500, is it mandatory to contribute to PF at ABC & Co? Or will he be exempted since the basic salary is higher than Rs. 6500?
Is it possible not to contribute to PF when the basic salary is Rs. 7,000? (in relation to the above case)
From India, Gurgaon
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If employee is getting starting salary more than Rs.6500 ,then can employer deny him EPF facility ? Please clarify.
From India, Bhopal
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From India, Bhopal
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Hi Medhana You mean that Gorss salary more than 6500/- or basic?. If basic is above 6500/- then if he don’t have PF in previous organisation then there is possibility for non contribution.
From India, Bangalore
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From India, Bangalore
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Dear sir / madam deduction of EPF is compelled to trainees also ? pls. guide us any notification or Judgement pls forward Regards jayasheel
From India, Bangalore
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From India, Bangalore
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It is up to company policy for deducting PF on a basic fixed above 6500 for any employee. In this case, the following are outcomes:
1. Employer and Employee both pay contributions on a 16000 basic, i.e., 1920 * 2 (both sides) + admin charges 1.61% by the employer.
2. Employer restricts himself by paying contributions up to 6500 only, i.e., 780 + admin charge, and the Employee pays/deducts contributions from the full basic, i.e., on 16000 * 12% = 1944.
3. Both the employee and employer contribute on a 6500 basic, not more than that.
4. Employee and employer both do not want to contribute PF as the basic limit of basic + DA - 6500 exceeds in this case, and the legal liability of the employer to pay and deduct contributions, conditional to that the Employee should not be a member of PF at the time of joining the company. Otherwise, once a member of PF, he/she will be a lifelong member irrespective of the rise in basic.
If this is the case, then fill out the PF Exemption form and file it for PF officer visit purposes.
These all 4 options are legal and practiced in the industry.
I hope I made the point clear and helped you.
Thanks,
Dilip
HR Manager
From India, Surat
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1. Employer and Employee both pay contributions on a 16000 basic, i.e., 1920 * 2 (both sides) + admin charges 1.61% by the employer.
2. Employer restricts himself by paying contributions up to 6500 only, i.e., 780 + admin charge, and the Employee pays/deducts contributions from the full basic, i.e., on 16000 * 12% = 1944.
3. Both the employee and employer contribute on a 6500 basic, not more than that.
4. Employee and employer both do not want to contribute PF as the basic limit of basic + DA - 6500 exceeds in this case, and the legal liability of the employer to pay and deduct contributions, conditional to that the Employee should not be a member of PF at the time of joining the company. Otherwise, once a member of PF, he/she will be a lifelong member irrespective of the rise in basic.
If this is the case, then fill out the PF Exemption form and file it for PF officer visit purposes.
These all 4 options are legal and practiced in the industry.
I hope I made the point clear and helped you.
Thanks,
Dilip
HR Manager
From India, Surat
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Dear Dilip Sir,
That was a nice explanation by you. Could you please elaborate on the 4th point that you stated?
Employee and Employer PF Contribution
"4. Employee and employer both do not want to contribute to PF as the basic limit of basic + DA - 6500 is exceeded in this case. The legal liability of the employer to pay and deduct contributions applies, with the condition that the employee should not be a member of PF at the time of joining the company. Otherwise, once a member of PF, they will be a lifelong member regardless of any rise in basic.
If this is the case, then fill out the PF Exemption form and file it for the PF officer's visit."
Looking forward to your reply soon.
Regards
From India, Visakhapatnam
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That was a nice explanation by you. Could you please elaborate on the 4th point that you stated?
Employee and Employer PF Contribution
"4. Employee and employer both do not want to contribute to PF as the basic limit of basic + DA - 6500 is exceeded in this case. The legal liability of the employer to pay and deduct contributions applies, with the condition that the employee should not be a member of PF at the time of joining the company. Otherwise, once a member of PF, they will be a lifelong member regardless of any rise in basic.
If this is the case, then fill out the PF Exemption form and file it for the PF officer's visit."
Looking forward to your reply soon.
Regards
From India, Visakhapatnam
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Yes, it is correct. The PF ceiling limit is Rs. 6500 per month. However, if the employer wants to pay contributions without any ceiling, there is no restriction. It can be done.
Regards,
D. Gurumurthy LL. HR. IR. Consultant, Hyderabad.
From India, Hyderabad
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Regards,
D. Gurumurthy LL. HR. IR. Consultant, Hyderabad.
From India, Hyderabad
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