Ours is a covered organization. Recently, it came to my notice that there are some employees in my company who are not receiving PF benefits. I understand the ceiling part, but my query is if A was working with a company and contributing towards PF, now joins my company. As per our salary structure, A's new basic salary is INR 7000, and therefore, no more PF deductions are made towards PF contribution, A's salary being out of the ceiling.
I am, however, not sure on the part as to what the law says on this?
It is necessary for the employee or the employer to continue A's contribution towards PF? If not, is there any process like some monthly returns apart from Form 12A, challan, Form 5, Form 10, to be followed regularly?
I value your inputs.
Best Regards, Harsh
From India, Delhi
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2I am, however, not sure on the part as to what the law says on this?
It is necessary for the employee or the employer to continue A's contribution towards PF? If not, is there any process like some monthly returns apart from Form 12A, challan, Form 5, Form 10, to be followed regularly?
I value your inputs.
Best Regards, Harsh
From India, Delhi
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Dear Harsh, If A is still a member of the PF i.e. he has not withdrawn his previous accumulation, as per law you are liable to deduct PF from his salary. Regards Parag
From India
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From India
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Dear Harsh,
This employee can apply to the PF department to withdraw his previous PF accumulation. The form has to be duly signed by his previous employer.
Alternatively, he can provide you with the same PF number if you are covered by the same PF organization, allowing him to transfer his funds and link them to your organization.
Regards,
Renu
From Singapore
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This employee can apply to the PF department to withdraw his previous PF accumulation. The form has to be duly signed by his previous employer.
Alternatively, he can provide you with the same PF number if you are covered by the same PF organization, allowing him to transfer his funds and link them to your organization.
Regards,
Renu
From Singapore
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Thank you for the information, Parag. Could you please provide clarification on the following:
1. What if A has withdrawn his PF accumulation? In this scenario, would it not be necessary for us to deduct PF?
2. My accounts colleague mentions that it may not be necessary since his basic salary exceeds Rs. 6500. Additionally, he should not have withdrawn the PF accumulation yet, as it can only be done after 60 days of leaving the service. In his case, he departed from his previous organization just 10 days ago, indicating he is still a PF member.
Best regards,
Harsh
From India, Delhi
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1. What if A has withdrawn his PF accumulation? In this scenario, would it not be necessary for us to deduct PF?
2. My accounts colleague mentions that it may not be necessary since his basic salary exceeds Rs. 6500. Additionally, he should not have withdrawn the PF accumulation yet, as it can only be done after 60 days of leaving the service. In his case, he departed from his previous organization just 10 days ago, indicating he is still a PF member.
Best regards,
Harsh
From India, Delhi
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Dear Harsh,
What your accounts guy is saying is in the case of an "excluded employee." At the time of joining, an employee has to fill in Form 11 giving his previous employment details, if any. If he is a fresher and his basic is above 6500, he may be considered an "excluded employee." However, if an employee provides a declaration in Form 11 stating that he is no longer a member of the fund due to withdrawing the previous accumulation, he will be considered an excluded employee. By ensuring that Form 11 is filled out as described above, the responsibility will lie with the employee.
Parag
From India
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What your accounts guy is saying is in the case of an "excluded employee." At the time of joining, an employee has to fill in Form 11 giving his previous employment details, if any. If he is a fresher and his basic is above 6500, he may be considered an "excluded employee." However, if an employee provides a declaration in Form 11 stating that he is no longer a member of the fund due to withdrawing the previous accumulation, he will be considered an excluded employee. By ensuring that Form 11 is filled out as described above, the responsibility will lie with the employee.
Parag
From India
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Hi,
Can anybody tell me if an employee can withdraw some PF amount while working with the company if he has worked for more than a year or so. Eagerly waiting for some valuable inputs.
Regards,
Deepa
From India, Gurgaon
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Can anybody tell me if an employee can withdraw some PF amount while working with the company if he has worked for more than a year or so. Eagerly waiting for some valuable inputs.
Regards,
Deepa
From India, Gurgaon
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Hi Deepa,
It is only for a few cases like natural calamities, etc., that an advance can be taken from PF before completion of one year. An extract from the site www.epfindia.com is attached for your reference.
From India
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It is only for a few cases like natural calamities, etc., that an advance can be taken from PF before completion of one year. An extract from the site www.epfindia.com is attached for your reference.
From India
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Dear Harsh,
You didn't elaborate on the question. However, I could not understand your company's practices for PF.
I assumed that your concern is not deducting PF contribution for those employees whose basic salary exceeds Rs. 6500. In this case, if Mr. A joined with a basic salary of Rs. 7000, then no PF deduction is required. You should ask him to withdraw his earlier company PF & FPF.
If your company deducted PF contributions up to Rs. 6500 even when an employee's basic salary is higher than Rs. 6500, then in this case, you should deduct PF for Mr. A up to the extent of Rs. 6500.
For more clarifications, please revert.
Regards,
Bhushan Dahanukar
From India, Mumbai
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You didn't elaborate on the question. However, I could not understand your company's practices for PF.
I assumed that your concern is not deducting PF contribution for those employees whose basic salary exceeds Rs. 6500. In this case, if Mr. A joined with a basic salary of Rs. 7000, then no PF deduction is required. You should ask him to withdraw his earlier company PF & FPF.
If your company deducted PF contributions up to Rs. 6500 even when an employee's basic salary is higher than Rs. 6500, then in this case, you should deduct PF for Mr. A up to the extent of Rs. 6500.
For more clarifications, please revert.
Regards,
Bhushan Dahanukar
From India, Mumbai
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Hi Harsha,
Regarding P.F. Deduction, if any employee's basic salary is more than Rs 6500 or Rs 7000, then we only need to deduct based on the aforementioned amounts.
For instance, if a person's basic salary is Rs 9000, the employer is required to deduct P.F. based on Rs 7000.
If an employee wishes to have their P.F. deducted on Rs 9000, then only the employee's contribution should be submitted to the P.F. Department, with the employer's contribution limited to Rs 7000.
Regards,
Jay
09866555513
From India, Hyderabad
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Regarding P.F. Deduction, if any employee's basic salary is more than Rs 6500 or Rs 7000, then we only need to deduct based on the aforementioned amounts.
For instance, if a person's basic salary is Rs 9000, the employer is required to deduct P.F. based on Rs 7000.
If an employee wishes to have their P.F. deducted on Rs 9000, then only the employee's contribution should be submitted to the P.F. Department, with the employer's contribution limited to Rs 7000.
Regards,
Jay
09866555513
From India, Hyderabad
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Thanx Parag For your prompt reply,so i can assume an employee wihout any contigency cannot withdraw PF amount while working but only once he leaves the company right. Regards, Deepa
From India, Gurgaon
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From India, Gurgaon
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Dear Harsh,
Here I would like to inform you that an employee was a member of the previous company and has not withdrawn the PF & joined the new establishment. His Basic is Rs. 7000/= (more than the prescribed limit) in such case he will continue to be a member of EPF. The new company may deduct his PF on pay up to Rs 6500/= or on the entire Basic. So, please take Form no 11 in regard to all new joinees.
Regards H. R. Shah
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Here I would like to inform you that an employee was a member of the previous company and has not withdrawn the PF & joined the new establishment. His Basic is Rs. 7000/= (more than the prescribed limit) in such case he will continue to be a member of EPF. The new company may deduct his PF on pay up to Rs 6500/= or on the entire Basic. So, please take Form no 11 in regard to all new joinees.
Regards H. R. Shah
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Hi,
Employees' Provident Fund Scheme
Top1
Things to know about the Employee Provident Fund Scheme, 1952:
What benefits do you get from the scheme?
How does the scheme work?
How much interest do your PF contributions earn?
To whom does your PF money go when you die?
Can you transfer your PF account when you change jobs?
Can you make nominations?
Will you be kept informed of your PF balance every year?
What benefits do you get from the scheme?
The EPF scheme is meant to make available funds to you when you need them for:
Retirement
Medical care
Purchase of house
Family obligations
Children’s education
Financing an insurance policy
As a member of the EPF, you get the following benefits:
1. You can completely withdraw the amount that has accrued in your account if:
You retire at the age of 58.
You retire – god forbid – because of permanent and total debilitation. (This could be either mental or physical, but must be ‘permanent and total’ -- the scheme distinguishes between partial and total disabilities.)
You immigrate or take up employment abroad.
Your services are terminated because of retrenchment in your company.
You choose to terminate your service under a voluntary retirement scheme.
The establishment you work for shuts down.
The organisation you work for shuts down, and you join one that does not participate in the EPF scheme.
2. You can withdraw up to 90 per cent of the amount in your credit in the year before your retire -- that is, between the ages of 57 and 58.
3. You can withdraw money from your PF to buy life insurance policies. The rules don’t mention a ceiling on this amount, but then it’s not likely to cost you that much.
4. You can also get advances from your provident fund corpus:
To buy land, or to build or buy a house.
To repay any loans that you've taken to buy or build a house.
To finance the treatment or hospitalisation of you or any member of your family.
To finance the weddings or college expenses of your children.
In special cases, where the establishment you work is temporarily shut down, or if your services have been terminated and you have challenged that termination in court.
Top
How does the scheme work?
The EPF scheme ensures that a certain part of your salary goes towards building a retirement corpus for you. How does it work? Twelve per cent of your salary is deducted every month and put into that retirement kitty. (There are some special circumstances -- if the establishment you work for employs less than 20 persons, or has been referred to the Board for Industrial and Financial Reconstruction etc -- under which your contribution is 10 per cent, not 12 per cent.) Your employer also pitches in with 12 per cent of your salary every month. But of this, 8.33 per cent is diverted to your pension fund -- and the remaining amount put into the provident fund.
So, if you earn a basic salary -- inclusive of dearness allowance in case your salary package specifies it -- of Rs 10,000 a month, a sum of Rs 1,200 will be deducted from it under the head ‘EPF’. Your employer also contributes Rs 1,200 – but Rs 541 of that amount is diverted to your pension fund, and only Rs 659 goes into your provident fund. Irrespective of the basic salary you earn, your employer's contribution to the pension fund cannot exceed Rs 541 a month (8.33 per cent of a pensionable salary of Rs 6,500).
If you wish to, and can afford to, you can contribute more than 12 per cent towards your provident fund. Your employer can, if he so chooses, match your contribution beyond the statutory 12 per cent, but few employers contribute more than they are required to under the law.
Use the EPF calculator to compute approximately what you will get from your PF account when you retire.
Top
What interest rate do your PF contributions earn?
The rate of interest is fixed by the central government, in consultation with a central board of trustees, every year in March-April. The interest is credited to your account on a monthly running balance with effect from the last day in each year. With effect from 1 April 2001, the rate of interest is 9.5 per cent.
To whom does your money go on your death?
The amount will be paid to your nominees or legal heirs. They will be required to fill up and submit Form 20, available from EPF offices.
Can you transfer your PF account when you change jobs?
Yes. You will need to fill up and submit Form 13 for this. In case you have changed more than one job in a year, you can still get your provident fund money from various employers by transferring the amounts and consolidating them in your current PF account.
Let's say that in a year, you worked in three companies -- A, B and C -- before you joined your current employer, D. You'd have to fill up three different forms and submit them to your current employer. He will then do the follow-up work, and your PF will be transferred to your current PF account number. If you had worked for employers in different cities, too, you can do much the same.
However, if you do not take up another job or if the company you join is not covered under the Act, you can withdraw the entire balance in your account, but only after two months. You will need to fill up and submit Form 19 for this.
Regards
Diyona
From India, Madras
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Employees' Provident Fund Scheme
Top1
Things to know about the Employee Provident Fund Scheme, 1952:
What benefits do you get from the scheme?
How does the scheme work?
How much interest do your PF contributions earn?
To whom does your PF money go when you die?
Can you transfer your PF account when you change jobs?
Can you make nominations?
Will you be kept informed of your PF balance every year?
What benefits do you get from the scheme?
The EPF scheme is meant to make available funds to you when you need them for:
Retirement
Medical care
Purchase of house
Family obligations
Children’s education
Financing an insurance policy
As a member of the EPF, you get the following benefits:
1. You can completely withdraw the amount that has accrued in your account if:
You retire at the age of 58.
You retire – god forbid – because of permanent and total debilitation. (This could be either mental or physical, but must be ‘permanent and total’ -- the scheme distinguishes between partial and total disabilities.)
You immigrate or take up employment abroad.
Your services are terminated because of retrenchment in your company.
You choose to terminate your service under a voluntary retirement scheme.
The establishment you work for shuts down.
The organisation you work for shuts down, and you join one that does not participate in the EPF scheme.
2. You can withdraw up to 90 per cent of the amount in your credit in the year before your retire -- that is, between the ages of 57 and 58.
3. You can withdraw money from your PF to buy life insurance policies. The rules don’t mention a ceiling on this amount, but then it’s not likely to cost you that much.
4. You can also get advances from your provident fund corpus:
To buy land, or to build or buy a house.
To repay any loans that you've taken to buy or build a house.
To finance the treatment or hospitalisation of you or any member of your family.
To finance the weddings or college expenses of your children.
In special cases, where the establishment you work is temporarily shut down, or if your services have been terminated and you have challenged that termination in court.
Top
How does the scheme work?
The EPF scheme ensures that a certain part of your salary goes towards building a retirement corpus for you. How does it work? Twelve per cent of your salary is deducted every month and put into that retirement kitty. (There are some special circumstances -- if the establishment you work for employs less than 20 persons, or has been referred to the Board for Industrial and Financial Reconstruction etc -- under which your contribution is 10 per cent, not 12 per cent.) Your employer also pitches in with 12 per cent of your salary every month. But of this, 8.33 per cent is diverted to your pension fund -- and the remaining amount put into the provident fund.
So, if you earn a basic salary -- inclusive of dearness allowance in case your salary package specifies it -- of Rs 10,000 a month, a sum of Rs 1,200 will be deducted from it under the head ‘EPF’. Your employer also contributes Rs 1,200 – but Rs 541 of that amount is diverted to your pension fund, and only Rs 659 goes into your provident fund. Irrespective of the basic salary you earn, your employer's contribution to the pension fund cannot exceed Rs 541 a month (8.33 per cent of a pensionable salary of Rs 6,500).
If you wish to, and can afford to, you can contribute more than 12 per cent towards your provident fund. Your employer can, if he so chooses, match your contribution beyond the statutory 12 per cent, but few employers contribute more than they are required to under the law.
Use the EPF calculator to compute approximately what you will get from your PF account when you retire.
Top
What interest rate do your PF contributions earn?
The rate of interest is fixed by the central government, in consultation with a central board of trustees, every year in March-April. The interest is credited to your account on a monthly running balance with effect from the last day in each year. With effect from 1 April 2001, the rate of interest is 9.5 per cent.
To whom does your money go on your death?
The amount will be paid to your nominees or legal heirs. They will be required to fill up and submit Form 20, available from EPF offices.
Can you transfer your PF account when you change jobs?
Yes. You will need to fill up and submit Form 13 for this. In case you have changed more than one job in a year, you can still get your provident fund money from various employers by transferring the amounts and consolidating them in your current PF account.
Let's say that in a year, you worked in three companies -- A, B and C -- before you joined your current employer, D. You'd have to fill up three different forms and submit them to your current employer. He will then do the follow-up work, and your PF will be transferred to your current PF account number. If you had worked for employers in different cities, too, you can do much the same.
However, if you do not take up another job or if the company you join is not covered under the Act, you can withdraw the entire balance in your account, but only after two months. You will need to fill up and submit Form 19 for this.
Regards
Diyona
From India, Madras
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Hi,
There is a difference in opinion between Parag and Bhushan. Parag says it is required to cut PF if an individual has not filled Form 11, whereas Bhushan, you are saying what I understand is that it's the second company's own decision to determine this if he is hired on a package of more than 6500 basic. Can you please clarify this point? In our company, we are not deducting PF for employees with a basic salary of more than 6500, and even if an individual joins on a higher package, even if he was contributing to PF before, we are not deducting PF.
Please reply.
From India, Delhi
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There is a difference in opinion between Parag and Bhushan. Parag says it is required to cut PF if an individual has not filled Form 11, whereas Bhushan, you are saying what I understand is that it's the second company's own decision to determine this if he is hired on a package of more than 6500 basic. Can you please clarify this point? In our company, we are not deducting PF for employees with a basic salary of more than 6500, and even if an individual joins on a higher package, even if he was contributing to PF before, we are not deducting PF.
Please reply.
From India, Delhi
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Hi,
There is a difference in opinion between Parag and Bhushan. Parag says it is required to cut PF if an individual has not filled Form 11, whereas Bhushan, you are saying what I understand is that it's the second company's own decision to decide on this if he is hired on a package of more than 6500 basic. Can you please clarify this point? In our company, we are not cutting PF for employees with a basic salary of more than 6500, and if an individual joins on a higher package, even if he was contributing to PF before, we are not deducting PF. Please reply.
I agree with what Parag has said. He has explained it very well. Please find attached Form 11.doc.
Bhavik H Chheda
www.chhedaconsultancyservices.com
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There is a difference in opinion between Parag and Bhushan. Parag says it is required to cut PF if an individual has not filled Form 11, whereas Bhushan, you are saying what I understand is that it's the second company's own decision to decide on this if he is hired on a package of more than 6500 basic. Can you please clarify this point? In our company, we are not cutting PF for employees with a basic salary of more than 6500, and if an individual joins on a higher package, even if he was contributing to PF before, we are not deducting PF. Please reply.
I agree with what Parag has said. He has explained it very well. Please find attached Form 11.doc.
Bhavik H Chheda
www.chhedaconsultancyservices.com
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Hi,
There is a difference in opinion between Parag and Bhushan. Parag says it is required to deduct PF if an individual has not filled Form 11, whereas Bhushan, you are saying that what I understand is that it's the second company's decision to decide on this if the employee is hired on a package of more than 6500 basic.
Can you please clarify this point? In our company, we do not deduct PF for employees with a basic salary of more than 6500, and even if an individual joins on a higher package, even if they were contributing to PF before, we do not deduct PF.
Parag meant that if the employer is no longer contributing to the PF account, the employee must fill out a declaration in Form 11 stating that they are no longer a member of the PF. Then the employer is not liable.
Regards,
Harsh Mehta
From India, Delhi
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There is a difference in opinion between Parag and Bhushan. Parag says it is required to deduct PF if an individual has not filled Form 11, whereas Bhushan, you are saying that what I understand is that it's the second company's decision to decide on this if the employee is hired on a package of more than 6500 basic.
Can you please clarify this point? In our company, we do not deduct PF for employees with a basic salary of more than 6500, and even if an individual joins on a higher package, even if they were contributing to PF before, we do not deduct PF.
Parag meant that if the employer is no longer contributing to the PF account, the employee must fill out a declaration in Form 11 stating that they are no longer a member of the PF. Then the employer is not liable.
Regards,
Harsh Mehta
From India, Delhi
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