Hello Seniors,
We are deducting PF contributions only for those whose salary is less than 6500/-. Both the employer and employee equally contribute to the PF. However, for those earning above 6500/-, the employer does not contribute any amount, and the employee has the option to voluntarily contribute to the PF from their salary, with the entire 24% deducted if interested.
I have received varying opinions on this matter from different individuals. Therefore, I kindly request your suggestions on whether we are following the correct procedure or if any adjustments are needed concerning the employer's contributions and obligations towards all employees, regardless of their salary range, with regards to PF contributions.
Thanks in advance.
Sandhya.
From India, Visakhapatnam
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1We are deducting PF contributions only for those whose salary is less than 6500/-. Both the employer and employee equally contribute to the PF. However, for those earning above 6500/-, the employer does not contribute any amount, and the employee has the option to voluntarily contribute to the PF from their salary, with the entire 24% deducted if interested.
I have received varying opinions on this matter from different individuals. Therefore, I kindly request your suggestions on whether we are following the correct procedure or if any adjustments are needed concerning the employer's contributions and obligations towards all employees, regardless of their salary range, with regards to PF contributions.
Thanks in advance.
Sandhya.
From India, Visakhapatnam
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You are not supposed to deduct anything from the employee towards the employer's contribution. It is the duty of the employer to contribute their part. Please advise the management accordingly.
Regards,
S. Sethupathy, Erode.
From India, Selam
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Regards,
S. Sethupathy, Erode.
From India, Selam
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Hi Sandhya,
I totally disagree with Sethupathy. If an employee is earning less than or equal to 6500/- per month, they are eligible for EPF with a contribution of 12% from both the employee and the employer. Furthermore, if an employee with a salary exceeding 6500/- per month chooses to contribute to the EPF by declaring it on Form 2 and Form 11, they are also eligible. However, in terms of the employer's contribution, the limit is defined as 780/- rs per month on EPF. Any amount above this limit is considered part of management discrimination.
From India
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I totally disagree with Sethupathy. If an employee is earning less than or equal to 6500/- per month, they are eligible for EPF with a contribution of 12% from both the employee and the employer. Furthermore, if an employee with a salary exceeding 6500/- per month chooses to contribute to the EPF by declaring it on Form 2 and Form 11, they are also eligible. However, in terms of the employer's contribution, the limit is defined as 780/- rs per month on EPF. Any amount above this limit is considered part of management discrimination.
From India
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I want to know if the basic pay of an employee is Rs. 7500/-. In this case, the employer's 12% share is Rs. 900, and the breakup should be Rs. 541 under the Pension fund (6500 x 8.33%) and the balance Rs. 359 under the provident fund (900-541), or the percentage formula 8.33% and 3.67% of Rs. 7500 should apply. Which one is the correct way?
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From India, Delhi
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From India, Delhi
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But till now we have not contributed anything on behalf of employer part for the above 6,500/- salaried employees. Shall we start new from this assessment year. Is that possible. Sandhya.
From India, Visakhapatnam
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From India, Visakhapatnam
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one more thing once started the PF contribution cant we stop in between, is there any specific period of contribution. Sandhya.
From India, Visakhapatnam
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From India, Visakhapatnam
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Both are correct. However, for the second option, you have to get consent from the concerned RPFC. Otherwise, you have to follow the first option only.
Regards,
Abbas.P.S
From India, Bangalore
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Regards,
Abbas.P.S
From India, Bangalore
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Dear Sandhya,
The company should contribute for PF up to a salary of Rs. 6500 (Basic + DA).
If an employee has withdrawn his PF from his previous company, he becomes ineligible for PF in the next company.
If an employee does not have a PF account and his salary is more than Rs. 6500 (Basic + DA), then he will not be eligible for PF as he is an Exempted employee from PF and EDLI as per the Act. In that case, the company should contribute to the Pension fund, which is 8.33% of the salary (Basic + DA). However, if the company desires, it can contribute to PF, but once started, the contribution cannot be stopped.
Getting Form No. 11 filled out from new joiners is also important.
If an employee wants to contribute more, he can, but the employer should contribute up to Rs. 6500 only as it is mandatory. If the employer wishes, he can contribute more (i.e., equal to the employee's contribution).
Any employer cannot deduct employer contributions from employee's salary; it is an offense and shall be liable for legal action.
If you have deducted employer contributions from employees' salary, then give the amount back to employees by cheque. It will remove legal obligations, and the company will be safe from any legal action.
Kindly ensure compliance with the above guidelines.
Thank you.
From India, Mumbai
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The company should contribute for PF up to a salary of Rs. 6500 (Basic + DA).
If an employee has withdrawn his PF from his previous company, he becomes ineligible for PF in the next company.
If an employee does not have a PF account and his salary is more than Rs. 6500 (Basic + DA), then he will not be eligible for PF as he is an Exempted employee from PF and EDLI as per the Act. In that case, the company should contribute to the Pension fund, which is 8.33% of the salary (Basic + DA). However, if the company desires, it can contribute to PF, but once started, the contribution cannot be stopped.
Getting Form No. 11 filled out from new joiners is also important.
If an employee wants to contribute more, he can, but the employer should contribute up to Rs. 6500 only as it is mandatory. If the employer wishes, he can contribute more (i.e., equal to the employee's contribution).
Any employer cannot deduct employer contributions from employee's salary; it is an offense and shall be liable for legal action.
If you have deducted employer contributions from employees' salary, then give the amount back to employees by cheque. It will remove legal obligations, and the company will be safe from any legal action.
Kindly ensure compliance with the above guidelines.
Thank you.
From India, Mumbai
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But till now we have not followed any of these above given rules, can we start these from this assessment year. Sandhya.
From India, Visakhapatnam
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From India, Visakhapatnam
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Dear Suhas, your post made me confused. My company is a CTC-based company, and PF deduction for all the employees is such that both the contributions (employee PF & employer PF) are deducted from the employee's salary itself. Please guide me in this matter.
From India, Pune
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From India, Pune
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Thanks, Suhas, for the wonderful explanation.
Some companies offer CTC, which includes the employer's share of PF amount as well. In such cases, there won't be any further amount given to the employee apart from the CTC offered to them at the time of joining.
In that situation, how do they show their payslips?
Please give your opinion on this.
Sandhya
From India, Visakhapatnam
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Some companies offer CTC, which includes the employer's share of PF amount as well. In such cases, there won't be any further amount given to the employee apart from the CTC offered to them at the time of joining.
In that situation, how do they show their payslips?
Please give your opinion on this.
Sandhya
From India, Visakhapatnam
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Dear Sandhya,
As per my knowledge, if you go through the company's compensation policy, then it will be easier for you to understand the exact situation. In most companies, when we calculate the gross salary (according to the Appointment Letter), the employer's contribution to PF and ESI is included in the compensation structure. If you deduct the PF and ESI contributions of the employee, then you get the exact CTC of the employee, from which you are deducting the employee's PF and ESI contributions.
Regards,
Dipak
From India, Bhubaneswar
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As per my knowledge, if you go through the company's compensation policy, then it will be easier for you to understand the exact situation. In most companies, when we calculate the gross salary (according to the Appointment Letter), the employer's contribution to PF and ESI is included in the compensation structure. If you deduct the PF and ESI contributions of the employee, then you get the exact CTC of the employee, from which you are deducting the employee's PF and ESI contributions.
Regards,
Dipak
From India, Bhubaneswar
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Hi Nikhil, Here i am giving you Provident fund Calculation sheet, please go through it.
From India
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From India
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Dear Sandhya,
In actual case, CTC is not salary but salary is a part of CTC.
CTC is the total expenses incurred by the company on a particular employee, and it includes salary, insurance premium, PF and ESIC contributions of the employer, house rent paid by the company, company vehicle, telephone, etc.
As the company pays for the employee, it becomes a cost to the company. If you are considering PF contribution of the employer as part of CTC, then you cannot say that you are deducting it from the employee's salary.
In actual case, you are paying it from the employer's pocket and not from the employees, and it is legal.
In the payslip, the employer should show Gross salary (its Breakup: BASIC, DA, HRA, CCA, etc.)
Amount of PF deducted (only Employee's Contribution i.e. 12% of salary (Basic+DA) maximum up to Rs. 780 Amount of ESIC deducted (only Employee's Contribution 1.75% of Gross salary (if gross salary <=15000)) Amount of PT (professional Tax) deducted Amount of Income tax (TDS) Deducted
Net salary = (Gross salary - (all deductions(PF+ESIC+PT+TDS)))
Thank you.
From India, Mumbai
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In actual case, CTC is not salary but salary is a part of CTC.
CTC is the total expenses incurred by the company on a particular employee, and it includes salary, insurance premium, PF and ESIC contributions of the employer, house rent paid by the company, company vehicle, telephone, etc.
As the company pays for the employee, it becomes a cost to the company. If you are considering PF contribution of the employer as part of CTC, then you cannot say that you are deducting it from the employee's salary.
In actual case, you are paying it from the employer's pocket and not from the employees, and it is legal.
In the payslip, the employer should show Gross salary (its Breakup: BASIC, DA, HRA, CCA, etc.)
Amount of PF deducted (only Employee's Contribution i.e. 12% of salary (Basic+DA) maximum up to Rs. 780 Amount of ESIC deducted (only Employee's Contribution 1.75% of Gross salary (if gross salary <=15000)) Amount of PT (professional Tax) deducted Amount of Income tax (TDS) Deducted
Net salary = (Gross salary - (all deductions(PF+ESIC+PT+TDS)))
Thank you.
From India, Mumbai
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[QUOTE=suhaskhambe;1526059]
Dear Sandhya,
If any employee has withdrawn his PF from his previous company, he becomes ineligible for PF in the next company.
Dear suhaskhambe,
I am not clear about the above statement. What does it mean?
Regards,
anabayan
From India, Madras
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Dear Sandhya,
If any employee has withdrawn his PF from his previous company, he becomes ineligible for PF in the next company.
Dear suhaskhambe,
I am not clear about the above statement. What does it mean?
Regards,
anabayan
From India, Madras
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Dear Anabayan,
If any employee withdraws the full amount of PF from his/her PF account (that is, settles his/her account), then he/she becomes ineligible for PF in the next company.
As per the PF Act, an employee has to transfer his/her account to the next company by submitting Form No. 13 and not withdraw.
When an employee withdraws the full amount from his/her PF account, the government assumes that he/she will not work in any company after leaving his/her current company. Form No. 11 states the facts.
From India, Mumbai
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If any employee withdraws the full amount of PF from his/her PF account (that is, settles his/her account), then he/she becomes ineligible for PF in the next company.
As per the PF Act, an employee has to transfer his/her account to the next company by submitting Form No. 13 and not withdraw.
When an employee withdraws the full amount from his/her PF account, the government assumes that he/she will not work in any company after leaving his/her current company. Form No. 11 states the facts.
From India, Mumbai
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Hi Suhas,
I disagreed. Let me clear this.
Suppose RAM (Hypothetical Name) is working in ABC company and getting a salary of 6000 rs. He is eligible for E.P.F. After 2 years, Mr. Ram switches to another job and before joining the new company, he withdraws E.P.F., clears all amounts, and accordingly, his E.P.F. account is closed.
When Mr. Ram joins a new manufacturing house, a salary of 6500 pm is given to him, and he is eligible for E.P.F. again. The employer's responsibility is to deduct the employee's part from his salary and share the employer's part. Under this condition, Mr. Ram will get a new account number from the E.P.F. department.
Moreover, if Mr. Ram's salary is more than 10000 in the new company and he has been declared for contributing to E.P.F., he is also eligible. However, the employer's contribution is restricted to 780 Rs pm, and the contribution part on this totally depends on the employer's decision.
From India
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I disagreed. Let me clear this.
Suppose RAM (Hypothetical Name) is working in ABC company and getting a salary of 6000 rs. He is eligible for E.P.F. After 2 years, Mr. Ram switches to another job and before joining the new company, he withdraws E.P.F., clears all amounts, and accordingly, his E.P.F. account is closed.
When Mr. Ram joins a new manufacturing house, a salary of 6500 pm is given to him, and he is eligible for E.P.F. again. The employer's responsibility is to deduct the employee's part from his salary and share the employer's part. Under this condition, Mr. Ram will get a new account number from the E.P.F. department.
Moreover, if Mr. Ram's salary is more than 10000 in the new company and he has been declared for contributing to E.P.F., he is also eligible. However, the employer's contribution is restricted to 780 Rs pm, and the contribution part on this totally depends on the employer's decision.
From India
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Yeah, it's true because I have seen people stop their PF deductions in between even though they don't shift from one company to another. They simply mention in the form that the employee has crossed the base of 6,500/-; hence, they would like to stop, or sometimes they say they left the company. After some time, they again start deducting the PF amount when they get a new PF account.
Sandhya
From India, Visakhapatnam
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Sandhya
From India, Visakhapatnam
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Dear Vikasji,
Yes, this is happening all over as you have stated in the case and because of the following reasons,
First thing is that if we (HR) don't ask the employee if he had a PF account in the previous company and what he did, we generally don't ask them (newly joined employees) to submit Form No. 11. We simply get a nomination and declaration form from that person and submit it with the allocation of a different account number to him. The PF office receives a lot of forms in a single day, so they don't bother about inquiring if the person had/had another PF account and if it is still active or if a withdrawal has been made. They simply accept the account number assuming that the employer has done all the necessary inquiries.
If a person has made a withdrawal from his previous account and his next employer is willing to open a new account, then the PF office has no objection.
However, if the employer refuses to open a new PF account for the person who has made a withdrawal and closed the PF account from his previous company, then it is 100% legal (no legal obligation on the employer).
If a person's salary is not more than 6500 at the time of joining the fund for the first time, then he is eligible for PF even if his salary increases after a few days or months. The only condition is that he should transfer his PF account by submitting Form No. 13 when switching to a new company. If he withdraws and reapplies in the next company, then he becomes an exempted employee. However, if his next employer is willing to open his new PF account, then the PF office accepts it, giving importance to the employer's will because the PF office assumes that the employer is doing it for the well-being of the employee (but there is no legal obligation on the employer in this case).
Please correct me if I am going wrong.
From India, Mumbai
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Yes, this is happening all over as you have stated in the case and because of the following reasons,
First thing is that if we (HR) don't ask the employee if he had a PF account in the previous company and what he did, we generally don't ask them (newly joined employees) to submit Form No. 11. We simply get a nomination and declaration form from that person and submit it with the allocation of a different account number to him. The PF office receives a lot of forms in a single day, so they don't bother about inquiring if the person had/had another PF account and if it is still active or if a withdrawal has been made. They simply accept the account number assuming that the employer has done all the necessary inquiries.
If a person has made a withdrawal from his previous account and his next employer is willing to open a new account, then the PF office has no objection.
However, if the employer refuses to open a new PF account for the person who has made a withdrawal and closed the PF account from his previous company, then it is 100% legal (no legal obligation on the employer).
If a person's salary is not more than 6500 at the time of joining the fund for the first time, then he is eligible for PF even if his salary increases after a few days or months. The only condition is that he should transfer his PF account by submitting Form No. 13 when switching to a new company. If he withdraws and reapplies in the next company, then he becomes an exempted employee. However, if his next employer is willing to open his new PF account, then the PF office accepts it, giving importance to the employer's will because the PF office assumes that the employer is doing it for the well-being of the employee (but there is no legal obligation on the employer in this case).
Please correct me if I am going wrong.
From India, Mumbai
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Hi Seniors Please Suggest me, The P.F Contribute is Emploee 12% & Employer 12%, Who can Contribute the EDLI Charges, EPF Admin Charges & EDLI Admin Charges. Sujit
From India, Delhi
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From India, Delhi
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Hi Sujit EDLI, Admin Charge and EDLI Admin charge will contribute by Employer this is the employer responsibility.
From India
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From India
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Dear Seniors, Please suggest to me if an employee completes 10 years of service and their basic salary is 5000/- per month, how much they can withdraw from the PF Office and provide some knowledge regarding EPS.
Thanks and regards,
Sujit Jena
From India, Delhi
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Thanks and regards,
Sujit Jena
From India, Delhi
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Dear Sujit Jena,
You have not mentioned your age in your query, friend. Pension under EPS 1995 is payable only after the completion of 58 years of age. Before 58 years, one may opt for reduced pension, which is calculated at 4% less for every year short of 58 years and that too only after the completion of 50 years of age. However, one has the option to claim a pension after completing 58 years of age. The other option is to obtain a scheme certificate for the past service and apply for the benefits when other service is also rendered during subsequent career. Please provide details of your present age and whether there is any possibility of you taking up another suitable job. The pension fund cannot be withdrawn in a normal case. One can apply for the return of capital, but your full details are necessary for correct advice.
Thanks and regards
From India, Pune
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You have not mentioned your age in your query, friend. Pension under EPS 1995 is payable only after the completion of 58 years of age. Before 58 years, one may opt for reduced pension, which is calculated at 4% less for every year short of 58 years and that too only after the completion of 50 years of age. However, one has the option to claim a pension after completing 58 years of age. The other option is to obtain a scheme certificate for the past service and apply for the benefits when other service is also rendered during subsequent career. Please provide details of your present age and whether there is any possibility of you taking up another suitable job. The pension fund cannot be withdrawn in a normal case. One can apply for the return of capital, but your full details are necessary for correct advice.
Thanks and regards
From India, Pune
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Dear Sir, Thaks for your advaice, My Full Details are as follows I am 27 years My basic salary is 5000/- PM Now i geting knowdge what is the claculation of of penson in PF. Sujit Jena
From India, Delhi
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From India, Delhi
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Hi all,
I work for a mid-sized software company in Chennai.
I have a clarification on one of the issues that happened recently to us regarding PF.
We recently received a summons from the PF office for not paying PF appropriately and were asked to present a list of documents to them. To my knowledge, we did pay all the contributions correctly.
When we went there with the documents, they said that we are calculating the basic wrongly. For example, employees who are making 12000 as salary and their basic is 40% (as per our company policy) which is 4800, but the PF officer instead said that we have to make the basic as 6500 for people whose basic is less than 6500, and for people who are earning 6500 or less, their entire salary should be considered as basic. They asked us to make adjustments for the past year and pay the remaining contributions. As you know, in the IT industry, half of the employees who worked last year are not present this year.
Can anyone tell me if this is the common norm that we follow? Is there any rule or notice issued for this? Or how should I approach this?
Regards,
Vasanth Raja
msgvasanth@yahoo.co.in
From India, Madras
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I work for a mid-sized software company in Chennai.
I have a clarification on one of the issues that happened recently to us regarding PF.
We recently received a summons from the PF office for not paying PF appropriately and were asked to present a list of documents to them. To my knowledge, we did pay all the contributions correctly.
When we went there with the documents, they said that we are calculating the basic wrongly. For example, employees who are making 12000 as salary and their basic is 40% (as per our company policy) which is 4800, but the PF officer instead said that we have to make the basic as 6500 for people whose basic is less than 6500, and for people who are earning 6500 or less, their entire salary should be considered as basic. They asked us to make adjustments for the past year and pay the remaining contributions. As you know, in the IT industry, half of the employees who worked last year are not present this year.
Can anyone tell me if this is the common norm that we follow? Is there any rule or notice issued for this? Or how should I approach this?
Regards,
Vasanth Raja
msgvasanth@yahoo.co.in
From India, Madras
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Dear Sujit Ji,
If you have already withdrawn your PF dues, please apply for the issue of a scheme certificate and preserve it until you reach 58 years of age. When you apply for a pension upon superannuation, submit the scheme certificate along with your application in Form 10 D. You will then benefit from your past service.
If you have not yet withdrawn your PF, please do not withdraw it. When you take up another better assignment, continue the present account regardless of any break period. You will receive the benefits of account continuation, both for PF and EPS. Remember to preserve account slips invariably.
Thanks and regards.
From India, Pune
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If you have already withdrawn your PF dues, please apply for the issue of a scheme certificate and preserve it until you reach 58 years of age. When you apply for a pension upon superannuation, submit the scheme certificate along with your application in Form 10 D. You will then benefit from your past service.
If you have not yet withdrawn your PF, please do not withdraw it. When you take up another better assignment, continue the present account regardless of any break period. You will receive the benefits of account continuation, both for PF and EPS. Remember to preserve account slips invariably.
Thanks and regards.
From India, Pune
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PF Calculation Sheet To The Subscribers At the Time Of Provident Fund Withdrawal.pdf
PROVIDENT FUND CALCULATION.xls