In my organization, a few employees who have been impacted by the increase in ESI limit want to opt out of PF contribution or reduce PF contribution to a minimum of Rs. 780 flat (12% of 6500) by submitting a declaration. Kindly suggest if this is possible?
From India, Delhi
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From India, Delhi
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As per epf actthe employers liability is limited to rs.780/- rest depends on management policy.
From India, New Delhi
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7From India, New Delhi
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Hi Shish Thanks for your response !! What if someone is paying more PF contribution currently & wants to limit it to 780 in future... is there any provision to reduce the contribution ??
From India, Delhi
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From India, Delhi
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No, you cannot reduce. It's compulsory to deduct up to Rs. 6500 basic. If the basic is less than Rs. 6500, then you have to deduct a lesser amount. If the basic is Rs. 5000, then 12% would be Rs. 600 only. You can see it on the P.F. website.
Thanks,
Minal
From India, Vadodara
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Thanks,
Minal
From India, Vadodara
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Hi Sish,
Kindly tell me which rule or amendment in PF asks an employer to limit the PF contribution to 780/-. As far as I know about the PF, there is no such rule. If an employee falls into the PF bracket, then he/she has to pay 12%. However, if the company is providing PF to employees with a basic salary of more than 6500/-, it's still 12% of the basic.
Any views on this?
From India, New Delhi
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Kindly tell me which rule or amendment in PF asks an employer to limit the PF contribution to 780/-. As far as I know about the PF, there is no such rule. If an employee falls into the PF bracket, then he/she has to pay 12%. However, if the company is providing PF to employees with a basic salary of more than 6500/-, it's still 12% of the basic.
Any views on this?
From India, New Delhi
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Dear All,
As per the Employees' Provident Fund (EPF) Act, all companies covered under the act should deduct 12% from employees with a basic salary of up to Rs. 6500. If a company is deducting 12% of the actual basic salary, for example, 12% of Rs. 10000, which is Rs. 1200, then they cannot reduce it to 12% of Rs. 6500, which is Rs. 780. Additionally, if any basic salary is less than Rs. 6500, then 12% of the actual basic salary should be deducted. If an employee's basic salary exceeds Rs. 6500, the company still needs to continue the deduction based on the actual basic salary, following the same percentage as applied to staff with a basic salary of Rs. 6500 as per the act.
Thanks & Regards
From India, Gurgaon
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As per the Employees' Provident Fund (EPF) Act, all companies covered under the act should deduct 12% from employees with a basic salary of up to Rs. 6500. If a company is deducting 12% of the actual basic salary, for example, 12% of Rs. 10000, which is Rs. 1200, then they cannot reduce it to 12% of Rs. 6500, which is Rs. 780. Additionally, if any basic salary is less than Rs. 6500, then 12% of the actual basic salary should be deducted. If an employee's basic salary exceeds Rs. 6500, the company still needs to continue the deduction based on the actual basic salary, following the same percentage as applied to staff with a basic salary of Rs. 6500 as per the act.
Thanks & Regards
From India, Gurgaon
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Dear Himansu,
As per the PF Act, an employee's PF can be deducted at a minimum of INR 6500 basic, even if their salary rises above 6500. However, the key point here is that as an HR professional, you must guide your employees properly and inform them that PF and ESI are distinct. In PF, if a higher PF rate is deducted at a higher value, the employer's contribution of the same amount is also added, which is beneficial for future pension programs.
Furthermore, in the event of a person's demise, their pension is calculated based on the higher rate, providing an advantage to their dependents as well. Another crucial aspect is that the PF interest rate is higher than any other interest rate currently offered by banks, so it is essential to provide proper guidance to employees regarding this matter.
Please ensure that your employees are well-informed about these points for their financial planning and security.
Thank you.
From India, Angul
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As per the PF Act, an employee's PF can be deducted at a minimum of INR 6500 basic, even if their salary rises above 6500. However, the key point here is that as an HR professional, you must guide your employees properly and inform them that PF and ESI are distinct. In PF, if a higher PF rate is deducted at a higher value, the employer's contribution of the same amount is also added, which is beneficial for future pension programs.
Furthermore, in the event of a person's demise, their pension is calculated based on the higher rate, providing an advantage to their dependents as well. Another crucial aspect is that the PF interest rate is higher than any other interest rate currently offered by banks, so it is essential to provide proper guidance to employees regarding this matter.
Please ensure that your employees are well-informed about these points for their financial planning and security.
Thank you.
From India, Angul
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Dear Seniors,
In our company, we are deducting PF at 12% of the actual basic salary even if the salary exceeds Rs. 6500/-. While inquiring about Form 23 at our EPF office, the accounts officer asked me how we can remit more contributions above the ceiling limit of Rs. 6500 if management wishes to continue PF deductions for actuals above Rs. 6500. You would need to get permission from EPFO in such a case. I then asked the officer for the format to apply for permission, but she informed me that a mistake had been found, and they would send a notice to your organization before you can apply for the same.
Please clarify if prior permission is required for additional contributions. I look forward to your valuable guidance.
Regards,
B. Saravanakumar
From India, Coimbatore
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In our company, we are deducting PF at 12% of the actual basic salary even if the salary exceeds Rs. 6500/-. While inquiring about Form 23 at our EPF office, the accounts officer asked me how we can remit more contributions above the ceiling limit of Rs. 6500 if management wishes to continue PF deductions for actuals above Rs. 6500. You would need to get permission from EPFO in such a case. I then asked the officer for the format to apply for permission, but she informed me that a mistake had been found, and they would send a notice to your organization before you can apply for the same.
Please clarify if prior permission is required for additional contributions. I look forward to your valuable guidance.
Regards,
B. Saravanakumar
From India, Coimbatore
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Dear Mr. Saravan Kumar,
There is no requirement for prior permission for the deduction of additional contributions because you are not violating any rules related to the P.F. Act, even if you are contributing more than the rules stipulate.
Regards,
Rajesh Chakraborty
From India, New Delhi
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There is no requirement for prior permission for the deduction of additional contributions because you are not violating any rules related to the P.F. Act, even if you are contributing more than the rules stipulate.
Regards,
Rajesh Chakraborty
From India, New Delhi
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I do not think it is mandatory to get permission from PF authorities if we are deducting and remitting PF when the basic of the employee is more than INR 6500. However, we can never revert back or reduce the PF contribution.
From India, Mumbai
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From India, Mumbai
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Permission not required for deduction / contribution for salary above Rs.6,500/- however, it is mandatory to give a joint request to EPFO
From India, Tiruchchirappalli
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From India, Tiruchchirappalli
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Yes you can do that by taking special provision from the EPF dep’t after taking the approval for the desired lot you can deposit above 780 Slot
From India, Vadodara
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From India, Vadodara
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Dear All,
Once an employee comes under the cover of PF, they have to pay 12% on Basic + DA with an equal contribution from Management. However, if Basic + DA crosses Rs. 6500/-, there are the following options:
1) Management contribution need not be paid at all.
2) Management can restrict its contribution to the limit of Basic + DA of Rs. 6500/-.
3) The employee can also restrict the contribution to the limit of Basic + DA of Rs. 6500/- or voluntarily pay on the current salary since the interest is attractive and offers safe savings.
Sundara.R
From India, Madras
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Once an employee comes under the cover of PF, they have to pay 12% on Basic + DA with an equal contribution from Management. However, if Basic + DA crosses Rs. 6500/-, there are the following options:
1) Management contribution need not be paid at all.
2) Management can restrict its contribution to the limit of Basic + DA of Rs. 6500/-.
3) The employee can also restrict the contribution to the limit of Basic + DA of Rs. 6500/- or voluntarily pay on the current salary since the interest is attractive and offers safe savings.
Sundara.R
From India, Madras
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Hi Sundara,
I need more clarification on Point No. 1: Can management stop contributing once an employee becomes a member?
Point No. 2: Is special permission to be taken from the employee and/or EPFO? Does the employer need not pay more than their contribution according to 6500+DA even if the employee is contributing more?
Point No. 3: Does the employer have to match the contributing part of the employee?
Regards,
Manish Gupta
From India, Mumbai
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I need more clarification on Point No. 1: Can management stop contributing once an employee becomes a member?
Point No. 2: Is special permission to be taken from the employee and/or EPFO? Does the employer need not pay more than their contribution according to 6500+DA even if the employee is contributing more?
Point No. 3: Does the employer have to match the contributing part of the employee?
Regards,
Manish Gupta
From India, Mumbai
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Dear Manish,
Replies to your questions:
1) Can Management stop contributing once an employee becomes a member?
Ans: No, there is equal contribution from both the member and the Company. Even if the employee's salary exceeds Rs. 6500/- after becoming a member, the deduction will continue from both parties.
2) Is special permission to be taken from the Employee and EPFO?
Ans: If you are deducting PF up to Rs. 6500/- and any staff member wants more deduction based on the actual basic salary, which may be Rs. 10000/- or a higher rate like 20%, they need to request this in writing. Previously, permission from EPFO was required by submitting a prescribed format, but now they only concern themselves with voluntary PF for companies with less than 10 employees or a special rate of deduction at 10%.
3) Does the Employer have to match the contribution of the Employee?
If the Company is deducting additional PF, such as 12% of the actual basic salary (e.g., Rs. 10000/-) or 20% of the basic uniformly for other employees, then yes, equal contribution is required. However, if only a few employees opt for voluntary deductions, then the company can contribute to the extent required by statute.
Thanks & Regards,
Shonarth Consultancy
From India, Gurgaon
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Replies to your questions:
1) Can Management stop contributing once an employee becomes a member?
Ans: No, there is equal contribution from both the member and the Company. Even if the employee's salary exceeds Rs. 6500/- after becoming a member, the deduction will continue from both parties.
2) Is special permission to be taken from the Employee and EPFO?
Ans: If you are deducting PF up to Rs. 6500/- and any staff member wants more deduction based on the actual basic salary, which may be Rs. 10000/- or a higher rate like 20%, they need to request this in writing. Previously, permission from EPFO was required by submitting a prescribed format, but now they only concern themselves with voluntary PF for companies with less than 10 employees or a special rate of deduction at 10%.
3) Does the Employer have to match the contribution of the Employee?
If the Company is deducting additional PF, such as 12% of the actual basic salary (e.g., Rs. 10000/-) or 20% of the basic uniformly for other employees, then yes, equal contribution is required. However, if only a few employees opt for voluntary deductions, then the company can contribute to the extent required by statute.
Thanks & Regards,
Shonarth Consultancy
From India, Gurgaon
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