Respected Seniors/Friends,
Government Approval of PF Wage Increase
The Government has approved the increase of PF wage to Rs. 15,000/- per month. Enclosed herewith is the most awaited Notification regarding the same, published today itself:
Impact of the Amendment
• The employees whose monthly basic wage is Rs. 15,000/- and above, and the companies currently paying PF limited to Rs. 6,500/- for such employees, may have to increase the contribution limit to at least Rs. 15,000/-. (As per Section 6 of the PF Act, equal contribution is to be provided by the employer).
• The employees who have already opted out of PF coverage (whose basic is above Rs. 6,500) should be covered under the scheme in case their basic wages are up to Rs. 15,000/- per month.
• The companies that are currently extending PF benefits only on Rs. 6,500/- irrespective of their wages may have to increase the PF wages to Rs. 15,000/- and need to pay the employer contribution of 13.61% on Rs. 15,000/-.
• The pension amount maximum limit may also increase from Rs. 541/- to Rs. 1,000/-.
• Employees whose current basic wage is less than Rs. 15,000/- may have to pay the contribution based on the actual basic payable.
Regards
From India, Jabalpur
Acknowledge(10)
Amend(0)
21Government Approval of PF Wage Increase
The Government has approved the increase of PF wage to Rs. 15,000/- per month. Enclosed herewith is the most awaited Notification regarding the same, published today itself:
Impact of the Amendment
• The employees whose monthly basic wage is Rs. 15,000/- and above, and the companies currently paying PF limited to Rs. 6,500/- for such employees, may have to increase the contribution limit to at least Rs. 15,000/-. (As per Section 6 of the PF Act, equal contribution is to be provided by the employer).
• The employees who have already opted out of PF coverage (whose basic is above Rs. 6,500) should be covered under the scheme in case their basic wages are up to Rs. 15,000/- per month.
• The companies that are currently extending PF benefits only on Rs. 6,500/- irrespective of their wages may have to increase the PF wages to Rs. 15,000/- and need to pay the employer contribution of 13.61% on Rs. 15,000/-.
• The pension amount maximum limit may also increase from Rs. 541/- to Rs. 1,000/-.
• Employees whose current basic wage is less than Rs. 15,000/- may have to pay the contribution based on the actual basic payable.
Regards
From India, Jabalpur
Acknowledge(10)+5 more
Amend(0)
Please understand this concept similar to the ₹6,500/- limit for EPF deduction and the ₹15,000/- above salary, where individuals can get an exemption for PF deduction after filling up Form 11 (revised).
Regards,
Nilesh Bhatt
From India, Vadodara
Acknowledge(3)
Amend(0)
Regards,
Nilesh Bhatt
From India, Vadodara
Acknowledge(3)Amend(0)
Hi Nilesh, The concept and calculation shall remains same but the ceiling will be increased form Rs. 6500 to Rs.15000 w.e.f 1st September 2014.
From India, Jabalpur
Acknowledge(2)
Amend(0)
From India, Jabalpur
Acknowledge(2)Amend(0)
I have a little confusion regarding Sr. No. 4, where you mentioned that the maximum limit of the pension amount may increase from Rs. 541/- to Rs. 1,000/-. I believe the calculation process remains the same, where the pension fund must be calculated based on the actual basic wage but not exceeding Rs. 15,000/-, i.e., a maximum of Rs. 1,250/-.
For Example:
1. Basic Wage: Rs. 7,800
- Employee Share: Rs. 936/-
- Employer Share EPF: Rs. 286/-
- EPS: Rs. 650/-
2. Basic Wage: Rs. 15,000
- Employee Share: Rs. 1,800/-
- Employer Share EPF: Rs. 550/-
- EPS: Rs. 1,250/-
3. Basic Wage: Rs. 18,000
- Employee Share: Rs. 2,160/-
- Employer Share EPF: Rs. 9/-
I believe the notification is referring to the pension amount rather than the pension fund share. Am I correct? If not, could you please explain with an example? I would be grateful for your clarification.
From India, Mumbai
Acknowledge(2)
Amend(0)
For Example:
1. Basic Wage: Rs. 7,800
- Employee Share: Rs. 936/-
- Employer Share EPF: Rs. 286/-
- EPS: Rs. 650/-
2. Basic Wage: Rs. 15,000
- Employee Share: Rs. 1,800/-
- Employer Share EPF: Rs. 550/-
- EPS: Rs. 1,250/-
3. Basic Wage: Rs. 18,000
- Employee Share: Rs. 2,160/-
- Employer Share EPF: Rs. 9/-
I believe the notification is referring to the pension amount rather than the pension fund share. Am I correct? If not, could you please explain with an example? I would be grateful for your clarification.
From India, Mumbai
Acknowledge(2)Amend(0)
I have a little confusion regarding point number 4, where you mentioned that the maximum limit for the pension amount may increase from Rs. 541/- to Rs. 1,000/-. I believe the calculation process remains the same, where the pension fund must be calculated based on the actual basic wage but not exceeding Rs. 15,000/-, i.e., a maximum of Rs. 1,250/-.
For example:
1. Basic Wage: 7,800
- Employee share: 936/-
- Employer share EPF: 286/-
- EPS: 650/-
2. Basic Wage: 15,000
- Employee share: 1,800/-
- Employer share EPF: 550/-
- EPS: 1,250/-
3. Basic Wage: 18,000
- Employee Share: 2,160/-
- Employer Share EPF: 910/-
- Employer Share EPS: 1,250/-
The third case depends on the company's policy or the employer's preference regarding whether they want to contribute PF on amounts exceeding Rs. 15,000/- or not. I believe the notification is referring to the pension amount and not the pension fund share. Please clarify my doubt and correct me if I am mistaken.
Thank you & Regards,
Shailza
From India, Mumbai
Acknowledge(7)
Amend(0)
For example:
1. Basic Wage: 7,800
- Employee share: 936/-
- Employer share EPF: 286/-
- EPS: 650/-
2. Basic Wage: 15,000
- Employee share: 1,800/-
- Employer share EPF: 550/-
- EPS: 1,250/-
3. Basic Wage: 18,000
- Employee Share: 2,160/-
- Employer Share EPF: 910/-
- Employer Share EPS: 1,250/-
The third case depends on the company's policy or the employer's preference regarding whether they want to contribute PF on amounts exceeding Rs. 15,000/- or not. I believe the notification is referring to the pension amount and not the pension fund share. Please clarify my doubt and correct me if I am mistaken.
Thank you & Regards,
Shailza
From India, Mumbai
Acknowledge(7)+2 more
Amend(0)
Your understanding regarding the pension is absolutely correct. Yes, the notification is about the pension amount, not about the EPS, which is ₹1250 on ₹15,000/-. It was a typo, and I appreciate your observation of the same.
From India, Jabalpur
Acknowledge(1)Amend(0)
From India, Jabalpur
Acknowledge(1)Amend(0)
My organization currently follows a practice of a flat 12% PF deduction from employees. My organization is also compliant with minimum wage guidelines. I would appreciate your guidance to understand the impact and changes that I need to introduce in my organization following this notification.
Best wishes and regards
From India, Kolkata
Acknowledge(0)Amend(0)
Best wishes and regards
From India, Kolkata
Acknowledge(0)Amend(0)
The notification has created a challenge for HR professionals. On one side, the employee has to increase their contribution, while on the other side, management also needs to increase its contribution. The take-home salary will decrease, leading to an increase in the HR costs of companies. While the objective of the notification is appreciable, the significant rise from ₹6,500 to ₹15,000 has put many companies in a difficult situation amidst this challenging economic scenario.
Request for Suggestions from Senior Members
I would like to request senior members/professionals to suggest how companies can address this challenge in a way that minimizes the impact on both employees and employers.
Regards,
Bhavan
From India, Bangalore
Acknowledge(2)Amend(0)
Request for Suggestions from Senior Members
I would like to request senior members/professionals to suggest how companies can address this challenge in a way that minimizes the impact on both employees and employers.
Regards,
Bhavan
From India, Bangalore
Acknowledge(2)Amend(0)
Just go through the message from Shailza, and you will get clarity. According to the recent PF pension fund notification, everything else will remain the same except for an increase in the contribution to the Provident Fund share. Ultimately, the government requires more funds from this PF pension fund. Employers and employees are not contributing more; rather, employees are diverting their PF savings to the pension fund.
I hope I have understood this correctly.
Regards,
Mathan
From India, Madras
Acknowledge(2)
Amend(0)
I hope I have understood this correctly.
Regards,
Mathan
From India, Madras
Acknowledge(2)Amend(0)
Hi Indrani, Plz assume 15000, instead of 6500 per month wrt PF.
From India, Jabalpur
Acknowledge(0)Amend(0)
From India, Jabalpur
Acknowledge(0)Amend(0)
Impact of Operating in Multiple States on PF Contribution and Compliance
How is an organization impacted if it operates in multiple states and is doing the following:
• Applying a flat 12% rate towards PF contribution as the employee's share.
• Being compliant with state-prescribed minimum wage limits.
Please guide, dear seniors.
Best wishes.
From India, Kolkata
Acknowledge(1)Amend(0)
How is an organization impacted if it operates in multiple states and is doing the following:
• Applying a flat 12% rate towards PF contribution as the employee's share.
• Being compliant with state-prescribed minimum wage limits.
Please guide, dear seniors.
Best wishes.
From India, Kolkata
Acknowledge(1)Amend(0)
Thank you for your valuable information. I have a doubt. Our company is deducting a flat Rs. 780/- from all employees who are earning more than Rs. 10,000/-. Is this ceiling in need of being increased? If so, what will be the new ceiling? Will the employer also have to increase their ceiling accordingly? Kindly clarify.
Thanks,
Ramachandran
From India, Chennai
Acknowledge(0)Amend(0)
Thanks,
Ramachandran
From India, Chennai
Acknowledge(0)Amend(0)
Thank you for sharing such important information. The notification has brought about another impact/addition in the EDLI benefit, which is now a maximum of up to 3.6 Lac, whereas earlier it was 1.56 Lac.
From India, Delhi
Acknowledge(1)Amend(0)
From India, Delhi
Acknowledge(1)Amend(0)
Sir, I am getting a salary of Rs.20000/- while my basic salary is Rs. 9000/-. What would be my EPF and EPS calcualtions after 1.9.2014
From India, Calicut
Acknowledge(1)Amend(0)
From India, Calicut
Acknowledge(1)Amend(0)
Ramachandran Jee, The ceiling will be increased from 6500 (Basic+DA) to 15000 per month w.e.f 1st September 14.
From India, Jabalpur
Acknowledge(0)Amend(0)
From India, Jabalpur
Acknowledge(0)Amend(0)
Dear Mukund, If your basic+da is 9K than deduction would be 1080/month w.e.f 1st September as EPF and 750/month as EPS.
From India, Jabalpur
Acknowledge(1)Amend(0)
From India, Jabalpur
Acknowledge(1)Amend(0)
Dear Indranil, Its applicable to whole in India Except J&K. Employer’s liability is only upto 15000/-.
From India, Jabalpur
Acknowledge(0)Amend(0)
From India, Jabalpur
Acknowledge(0)Amend(0)
Dear Chaturvedi Sir, Pls tell about EDLI benefits? is there any changes?
From India, Trichy
Acknowledge(1)Amend(0)
From India, Trichy
Acknowledge(1)Amend(0)
Dear Bisht Sir, As per your comment, EDLI benefits changes is sure or not? (from 1.56 lac to 3.6 lac).
From India, Trichy
Acknowledge(1)Amend(0)
From India, Trichy
Acknowledge(1)Amend(0)
I have some doubts regarding PF calculation:
1. Which one is the correct calculation for PF - calculating from Basic or calculating from Basic + DA?
2. Which method is the legal procedure to calculate PF?
3. Are there any changes in EDLI benefits?
I would greatly appreciate your helpful reply.
From India, Trichy
Acknowledge(0)Amend(0)
1. Which one is the correct calculation for PF - calculating from Basic or calculating from Basic + DA?
2. Which method is the legal procedure to calculate PF?
3. Are there any changes in EDLI benefits?
I would greatly appreciate your helpful reply.
From India, Trichy
Acknowledge(0)Amend(0)
Dear Sirs, Could anyone clarify whether there is any particular percentage - the basic salary should be from Gross salary? Bcoz, it impacts on EPF reduction, minimum wages (Basic + DA), etc...
From India, Chennai
Acknowledge(0)Amend(0)
From India, Chennai
Acknowledge(0)Amend(0)
Dear Fellow Community Members,
One interesting feature has not been addressed by anyone in this forum. That is on getting 50% pension based on the last drawn wages. In this notification, it is touched upon as below: please confirm my understanding is on the right side of the EPS body. This is on the contribution made by the companies on the actual basic being drawn without limiting to the CAP of 15k. The notification gives 6 months' time to confirm by both the employer and employee.
Suppose one's basic is Rs. 20,000/-.
- Employee Share: 20,000 X 12% = 2,400
- Employer Share: 20,000 X (8.33% + 3.67%) = 1,666 + 734
If Rs. 1,666/- is contributed to EPS, then such an employee can draw 50% of the last drawn average basic as his pension. But one wise amendment made by the EPS body is:
Last Drawn Basic Wage Calculation
Last drawn Basic wage = average of the last 60 months basic prior to retirement. It was earlier the last 12 months' basic prior to retirement. Now it is hiked to 60 months.
Under the above, one can expect the pension to be as good as Govt. employees. Suppose one retires in 2030. The average basic salary between 2026 to 2030 is 40k, then he can expect a pension of Rs. 20k per month.
Let us publicize this benefit to all! Seeks views from all learned members!!!
Regards,
Rajan
From India, Alandur
Acknowledge(3)Amend(0)
One interesting feature has not been addressed by anyone in this forum. That is on getting 50% pension based on the last drawn wages. In this notification, it is touched upon as below: please confirm my understanding is on the right side of the EPS body. This is on the contribution made by the companies on the actual basic being drawn without limiting to the CAP of 15k. The notification gives 6 months' time to confirm by both the employer and employee.
Suppose one's basic is Rs. 20,000/-.
- Employee Share: 20,000 X 12% = 2,400
- Employer Share: 20,000 X (8.33% + 3.67%) = 1,666 + 734
If Rs. 1,666/- is contributed to EPS, then such an employee can draw 50% of the last drawn average basic as his pension. But one wise amendment made by the EPS body is:
Last Drawn Basic Wage Calculation
Last drawn Basic wage = average of the last 60 months basic prior to retirement. It was earlier the last 12 months' basic prior to retirement. Now it is hiked to 60 months.
Under the above, one can expect the pension to be as good as Govt. employees. Suppose one retires in 2030. The average basic salary between 2026 to 2030 is 40k, then he can expect a pension of Rs. 20k per month.
Let us publicize this benefit to all! Seeks views from all learned members!!!
Regards,
Rajan
From India, Alandur
Acknowledge(3)Amend(0)
Is the PF Calculation Correct?
Example-1 (Base Rs. 15,000/-)
- CTC Salary – Rs. 25,000/-
- Basic (60% of CTC) – Rs. 15,000/-
- Medical (Max.) - Rs. 1,250/-
- HRA (40% of Basic) – Rs. 6,000/-
- Conveyance (Max.) - Rs. 800/-
- Special Allowance – Rs. 1,950/-
Deduction:
- PF (Employee Contribution) = Rs. 15,000 * 12% = Rs. 1,800
- PF (Employer Contribution) = Rs. 15,000 * 13.61% = Rs. 2,041.50
Example-2
- CTC Salary – Rs. 25,002/-
- Basic (60% of CTC) – Rs. 15,001.2/-
- Medical (Max.) - Rs. 1,250/-
- HRA (40% of Basic) – Rs. 6,000.48/-
- Conveyance (Max.) - Rs. 800/-
- Special Allowance – Rs. 1,950.32/-
Deduction (as basic is above 15,000, exempted):
- PF (Employee Contribution) = Rs. 0 * 12% = Rs. 0
- PF (Employer Contribution) = Rs. 0 * 13.61% = Rs. 0
Example-3
- CTC Salary – Rs. 10,000/-
- Basic (60% of CTC) – Rs. 6,000/-
- Medical (12% of Basic) - Rs. 720/-
- HRA (40% of Basic) – Rs. 2,400/-
- Conveyance (Max.) - Rs. 240/-
- Special Allowance – Rs. 640/-
Deduction:
- PF (Employee Contribution) = Rs. 6,000 * 12% = Rs. 720
- PF (Employer Contribution) = Rs. 6,000 * 13.61% = Rs. 816.6
Regards
From India, Mumbai
Acknowledge(0)Amend(0)
Example-1 (Base Rs. 15,000/-)
- CTC Salary – Rs. 25,000/-
- Basic (60% of CTC) – Rs. 15,000/-
- Medical (Max.) - Rs. 1,250/-
- HRA (40% of Basic) – Rs. 6,000/-
- Conveyance (Max.) - Rs. 800/-
- Special Allowance – Rs. 1,950/-
Deduction:
- PF (Employee Contribution) = Rs. 15,000 * 12% = Rs. 1,800
- PF (Employer Contribution) = Rs. 15,000 * 13.61% = Rs. 2,041.50
Example-2
- CTC Salary – Rs. 25,002/-
- Basic (60% of CTC) – Rs. 15,001.2/-
- Medical (Max.) - Rs. 1,250/-
- HRA (40% of Basic) – Rs. 6,000.48/-
- Conveyance (Max.) - Rs. 800/-
- Special Allowance – Rs. 1,950.32/-
Deduction (as basic is above 15,000, exempted):
- PF (Employee Contribution) = Rs. 0 * 12% = Rs. 0
- PF (Employer Contribution) = Rs. 0 * 13.61% = Rs. 0
Example-3
- CTC Salary – Rs. 10,000/-
- Basic (60% of CTC) – Rs. 6,000/-
- Medical (12% of Basic) - Rs. 720/-
- HRA (40% of Basic) – Rs. 2,400/-
- Conveyance (Max.) - Rs. 240/-
- Special Allowance – Rs. 640/-
Deduction:
- PF (Employee Contribution) = Rs. 6,000 * 12% = Rs. 720
- PF (Employer Contribution) = Rs. 6,000 * 13.61% = Rs. 816.6
Regards
From India, Mumbai
Acknowledge(0)Amend(0)
Hi Tatkare Jee, Its all about Basic+DA only if you are not having DA component please consider Basic only for deduction.
From India, Jabalpur
Acknowledge(0)Amend(0)
From India, Jabalpur
Acknowledge(0)Amend(0)
If you have a separate DA component in your CTC/Gross fixation format, then add this amount to the basic for the calculation of PF wages. If you do not have a separate DA component, then consider only the basic.
Increased EDLI Benefit
The EDLI benefit has also increased to 3.6 Lakhs.
From India, Jabalpur
Acknowledge(0)Amend(0)
Increased EDLI Benefit
The EDLI benefit has also increased to 3.6 Lakhs.
From India, Jabalpur
Acknowledge(0)Amend(0)
Please take note of the following point in the Pension amendment.
Pension Amendment Details
Paragraph 4 states: "The existing members as of 1/9/14 who, at the option of the employer and employee, had been contributing on a salary exceeding 6500/- may, on a fresh option, continue to contribute on a salary exceeding 15000/-. Provided that the aforementioned members have to contribute @1.16% on a salary exceeding 15000/- as an additional contribution payable by employees for each month."
From what I understand about pensions, there was no option to contribute on a salary above the statutory limit. Previously, it was 6500/-, so the pension contribution of employees who were contributing above the statutory limit was 541/-, which was contributed by the employer. Now, in this scheme, it discusses contributions over and above the wage ceiling as well as additional contributions by those who are contributing over and above the wage ceiling.
This situation creates confusion about what the current structure of PF and Pension calculation will be.
Thank you.
From India, Ahmedabad
Acknowledge(0)Amend(0)
Pension Amendment Details
Paragraph 4 states: "The existing members as of 1/9/14 who, at the option of the employer and employee, had been contributing on a salary exceeding 6500/- may, on a fresh option, continue to contribute on a salary exceeding 15000/-. Provided that the aforementioned members have to contribute @1.16% on a salary exceeding 15000/- as an additional contribution payable by employees for each month."
From what I understand about pensions, there was no option to contribute on a salary above the statutory limit. Previously, it was 6500/-, so the pension contribution of employees who were contributing above the statutory limit was 541/-, which was contributed by the employer. Now, in this scheme, it discusses contributions over and above the wage ceiling as well as additional contributions by those who are contributing over and above the wage ceiling.
This situation creates confusion about what the current structure of PF and Pension calculation will be.
Thank you.
From India, Ahmedabad
Acknowledge(0)Amend(0)
Dear members,
It will take some time for the confusion to subside and for us to understand the full crux of the notification. In addition to the above, please be reminded about the following clause in the notification.
"Effective September 1, 2014, all new EPF members shall not become a member of EPS if their pay is more than INR 15,000 per month at the time of joining. In other words, no allocation towards the pension fund will be made for such new members, and the entire employee and employer contribution will go to the provident fund account. For existing subscribers drawing more than 15,000/-, a 'fresh option' has to be exercised for willingness to contribute."
At the maximum, the employer may restrict contributions to 15,000/- for EPS/EPS as usual. Many small-sized companies are unwilling to meet the extra contribution, and so are the employees facing high deductions. Let's wait and see the course of action.
Regards,
Chandru
From India, Madras
Acknowledge(2)
Amend(0)
It will take some time for the confusion to subside and for us to understand the full crux of the notification. In addition to the above, please be reminded about the following clause in the notification.
"Effective September 1, 2014, all new EPF members shall not become a member of EPS if their pay is more than INR 15,000 per month at the time of joining. In other words, no allocation towards the pension fund will be made for such new members, and the entire employee and employer contribution will go to the provident fund account. For existing subscribers drawing more than 15,000/-, a 'fresh option' has to be exercised for willingness to contribute."
At the maximum, the employer may restrict contributions to 15,000/- for EPS/EPS as usual. Many small-sized companies are unwilling to meet the extra contribution, and so are the employees facing high deductions. Let's wait and see the course of action.
Regards,
Chandru
From India, Madras
Acknowledge(2)Amend(0)
Can anyone explain to me the below clause of the new notification by PF enhancing the limit from 6,500 to 15,000 wage ceiling?
"Clause Explanation
On salary exceeding six thousand and five hundred rupees per month, may, on a fresh option to be exercised jointly by the employer and employee, continue to contribute on salary exceeding fifteen thousand rupees per month:
Provided that the aforesaid members have to contribute at the rate of 1.16 percent on salary exceeding fifteen thousand rupees as an additional contribution from and out of the contributions payable by the employees for each month under the provisions of the Act or the rules made thereunder.
Looking forward to an early response.
Thanks,
Regards, Sajid
From India, Delhi
Acknowledge(0)Amend(0)
"Clause Explanation
On salary exceeding six thousand and five hundred rupees per month, may, on a fresh option to be exercised jointly by the employer and employee, continue to contribute on salary exceeding fifteen thousand rupees per month:
Provided that the aforesaid members have to contribute at the rate of 1.16 percent on salary exceeding fifteen thousand rupees as an additional contribution from and out of the contributions payable by the employees for each month under the provisions of the Act or the rules made thereunder.
Looking forward to an early response.
Thanks,
Regards, Sajid
From India, Delhi
Acknowledge(0)Amend(0)
Dear Jagriti Bhagat, CTC means cost to the company. so the management may deduct both the share from the employee. But the bigh question is, is it ethical?
From India, Mumbai
Acknowledge(1)Amend(0)
From India, Mumbai
Acknowledge(1)Amend(0)
The management can deduct the employer's share as well as the employee's share from CTC because all costs that incur due to recruiting an individual constitute a part of CTC. I hope you are well aware that all salary components are included in CTC.
Understanding CTC Components
It's like this: Basic Salary + Dearness Allowance + House Rent Allowance + Conveyance Allowance + Leave Travel Allowance + Medical Allowance + Other & Special Allowance + All employer contributions to deductions = Cost to the Company. Cost to the Company - All employer contributions to deductions = Gross Salary. Gross Salary - All employee contributions to deductions = Net Salary.
Types of Deductions
In these deductions are mostly EPF, ESI, PT, Loan, TDS, etc. So, it is not a question of ethics but rather a matter of individual perception.
Regards
From India, Chennai
Acknowledge(0)Amend(0)
Understanding CTC Components
It's like this: Basic Salary + Dearness Allowance + House Rent Allowance + Conveyance Allowance + Leave Travel Allowance + Medical Allowance + Other & Special Allowance + All employer contributions to deductions = Cost to the Company. Cost to the Company - All employer contributions to deductions = Gross Salary. Gross Salary - All employee contributions to deductions = Net Salary.
Types of Deductions
In these deductions are mostly EPF, ESI, PT, Loan, TDS, etc. So, it is not a question of ethics but rather a matter of individual perception.
Regards
From India, Chennai
Acknowledge(0)Amend(0)
Except for the below effect, nothing will be changed; it remains the same. There is no reduction in net salary.
Impact on EDLI Contributions
EDLI will be calculated at 0.5% on the Pension wage, currently Rs 6500. If it is increased to Rs 15000, we need to calculate 0.5% on Rs 15000, and it is also applicable for admin charges of EDLI at 0.01% on Rs 15000. (It costs the employer only).
Due to this, there will be an impact on employer EDLI contributions.
• The difference amount would be added to the EPF amount of 3.67%, same as before.
If Basic is Rs 20000 (Greater than Rs 15000):
• EPF Contribution from Employee: Rs 2400 (12% on Basic 20000)
• EPS Contribution from Employer: Rs 1250 (8.33% on the maximum limit Rs 15000*)
• EPF Contribution from Employer: Rs 1150 (3.67% on 20000 + the difference amount of 416)
If Basic Salary is Less than Rs 15000:
The Pension Contribution would be 8.33% on Basic, and the PF Contribution from the employer would be 3.67% on Basic. There will not be any difference amount to add to the value of EPF (3.67%).
• If Basic is 10000 (Less than Rs 15000):
• EPF Contribution from Employee: Rs 1200 (12% on Basic 10000)
• EPS Contribution from Employer: Rs 833 (8.33% on Basic 10000)
• EPF Contribution from Employer: Rs 367 (3.67% on Basic 10000)
From India, Visakhapatnam
Acknowledge(0)Amend(0)
Impact on EDLI Contributions
EDLI will be calculated at 0.5% on the Pension wage, currently Rs 6500. If it is increased to Rs 15000, we need to calculate 0.5% on Rs 15000, and it is also applicable for admin charges of EDLI at 0.01% on Rs 15000. (It costs the employer only).
Due to this, there will be an impact on employer EDLI contributions.
• The difference amount would be added to the EPF amount of 3.67%, same as before.
If Basic is Rs 20000 (Greater than Rs 15000):
• EPF Contribution from Employee: Rs 2400 (12% on Basic 20000)
• EPS Contribution from Employer: Rs 1250 (8.33% on the maximum limit Rs 15000*)
• EPF Contribution from Employer: Rs 1150 (3.67% on 20000 + the difference amount of 416)
If Basic Salary is Less than Rs 15000:
The Pension Contribution would be 8.33% on Basic, and the PF Contribution from the employer would be 3.67% on Basic. There will not be any difference amount to add to the value of EPF (3.67%).
• If Basic is 10000 (Less than Rs 15000):
• EPF Contribution from Employee: Rs 1200 (12% on Basic 10000)
• EPS Contribution from Employer: Rs 833 (8.33% on Basic 10000)
• EPF Contribution from Employer: Rs 367 (3.67% on Basic 10000)
From India, Visakhapatnam
Acknowledge(0)Amend(0)
Subject: Need Urgent Reply
Hi All, please let me know what most companies are doing for PF (from 6,500 to 15,000 Basic) based on Gross or CTC. If an existing employee (working for more than 1 year) has a Basic of 12,000/-, what are companies doing from this month (Sep 14)? Are they paying the employer's share or showing the total salary as CTC and deducting two parts from the employee?
From India, Hyderabad
Acknowledge(0)Amend(0)
Hi All, please let me know what most companies are doing for PF (from 6,500 to 15,000 Basic) based on Gross or CTC. If an existing employee (working for more than 1 year) has a Basic of 12,000/-, what are companies doing from this month (Sep 14)? Are they paying the employer's share or showing the total salary as CTC and deducting two parts from the employee?
From India, Hyderabad
Acknowledge(0)Amend(0)
For the past two weeks, I have been facing a lot of pressure from both management and employees. Management states that any deductions of PF are to be subtracted from the CTC itself, which is indeed accurate. However, this results in employees receiving a significantly reduced amount in hand since both the employee and employer contributions are deducted from the employee's salary directly.
Handling PF Deductions
How are you all handling this situation?
From India, Mumbai
Acknowledge(1)Amend(0)
Handling PF Deductions
How are you all handling this situation?
From India, Mumbai
Acknowledge(1)Amend(0)
Can anyone tell me what salary heads need to be considered for the calculation of PF according to these notifications? We have Basic, HRA, Conveyance, Medical Allowance, Special Allowance, and currently, we are calculating PF on Basic + Special Allowance. Please clarify my query.
Regards,
Gajendra
From India, Bangalore
Acknowledge(0)Amend(0)
Regards,
Gajendra
From India, Bangalore
Acknowledge(0)Amend(0)
if employees' total salary is Rs.10000/- and basic+ DA is Rs. 7500/-, then pf will be calculated on Rs. 10000/- or on Rs. 7500/-?
From India, Bangalore
Acknowledge(0)Amend(0)
From India, Bangalore
Acknowledge(0)Amend(0)
PF Deduction Components Under the PF Act
Under the PF Act, the following components of salary do not attract PF deduction:
- House Rent Allowance
- Overtime Allowance
- Bonus
- Commission or any other similar allowance
As per judgments delivered by the Gujarat, Madhya Pradesh, and Madras High Courts, it has been held that all allowances (i.e., Conveyance, Medical, Education, Attire, Special & other allowances, etc.) which are paid universally, necessarily, and ordinarily to all employees will be treated as part and parcel of basic wages and will attract the PF contribution. However, appeals have been filed in the Supreme Court by M/s. Surya Roshini Ltd. & others, which are likely to be heard and decided in the near future.
Also, the Basic should be calculated at not less than 55% of gross.
I hope this helps!
Regards
From India, Mumbai
Acknowledge(0)Amend(0)
Under the PF Act, the following components of salary do not attract PF deduction:
- House Rent Allowance
- Overtime Allowance
- Bonus
- Commission or any other similar allowance
As per judgments delivered by the Gujarat, Madhya Pradesh, and Madras High Courts, it has been held that all allowances (i.e., Conveyance, Medical, Education, Attire, Special & other allowances, etc.) which are paid universally, necessarily, and ordinarily to all employees will be treated as part and parcel of basic wages and will attract the PF contribution. However, appeals have been filed in the Supreme Court by M/s. Surya Roshini Ltd. & others, which are likely to be heard and decided in the near future.
Also, the Basic should be calculated at not less than 55% of gross.
I hope this helps!
Regards
From India, Mumbai
Acknowledge(0)Amend(0)
Kindly help me clarify these doubts. Whether an employee who joins PF on or after 1st September can become a member of the pension scheme, or would the whole 12% EMPLOYER CONTRIBUTION go to PF? If there is any change in rules (for employees joining on or after September 2014), then is it applicable for both categories, one with a salary under Rs. 15,000/- and the other exceeding Rs. 15,000/-?
Regards
From India, Ernakulam
Acknowledge(0)Amend(0)
Regards
From India, Ernakulam
Acknowledge(0)Amend(0)
Hi all, I heard about it. Is it correct? Due to the increase in the pension wage limit from Rs 6,500 to Rs 15,000, is there any effect on International Workers' contributions? Will the entire contribution be deposited into the PF account instead of 8.33% in the pension account? If so, is it applicable to all international workers who were working before and after 1st September 2014?
From India, Visakhapatnam
Acknowledge(0)Amend(0)
From India, Visakhapatnam
Acknowledge(0)Amend(0)
One of my clients has registered themselves under the PF Act with effect from September 2014. Now, we are going to generate the ECR for the months of September and October 2014. However, the issue is they have 21 employees for whom the ECR needs to be processed, and out of these employees, the basic salary of 20 employees is above Rs. 15,000. Most of the employees do not want to have PF deductions from their salaries. What is required to be done in this case as we have not submitted any forms to the EPF office regarding the exemption of employees?
From India, Bhopal
Acknowledge(0)Amend(0)
From India, Bhopal
Acknowledge(0)Amend(0)
Clarification on Basic Salary and PF Contribution
I want to confirm how much basic salary we can keep as per government law. As per the new rule of PF (revision in wage ceiling), I have implemented 12% on every employee's basic salary. However, some employees have a salary less than ₹6,500. Is that correct, or do I need to change the basic wages?
Waiting for your responses and suggestions.
Thanks & Regards,
Aashima
From India, Delhi
Acknowledge(1)Amend(0)
I want to confirm how much basic salary we can keep as per government law. As per the new rule of PF (revision in wage ceiling), I have implemented 12% on every employee's basic salary. However, some employees have a salary less than ₹6,500. Is that correct, or do I need to change the basic wages?
Waiting for your responses and suggestions.
Thanks & Regards,
Aashima
From India, Delhi
Acknowledge(1)Amend(0)
I have one question: I am currently working directly as a contract employee in the Jharkhand government. My salary is ₹12,000 per month, and I do not have a pension account provided by the Jharkhand government. Am I eligible for the Employee Pension Amendment 2014?
Thank you.
Regards
From India, Ranchi
Acknowledge(0)Amend(0)
Thank you.
Regards
From India, Ranchi
Acknowledge(0)Amend(0)
That is alright about Rs. 6500 & Rs.15000.. Plz provide me the break up percentage of the employer contribution monthly in PF. Also the employee contribution in percentage....
From India, Mumbai
Acknowledge(0)Amend(0)
From India, Mumbai
Acknowledge(0)Amend(0)
Hi Sir,
I have a query. My basic salary is 10000/-, and I am applicable to have PF deducted. My firm is deducting both my share and the employer's share from my salary itself. Is this the right way? As far as I know, I am only supposed to pay the employee's share, and the employer's share should be paid by the company.
Please suggest me.
From India,
Acknowledge(0)Amend(0)
I have a query. My basic salary is 10000/-, and I am applicable to have PF deducted. My firm is deducting both my share and the employer's share from my salary itself. Is this the right way? As far as I know, I am only supposed to pay the employee's share, and the employer's share should be paid by the company.
Please suggest me.
From India,
Acknowledge(0)Amend(0)
Up to September 2014, my contribution in PF was $1768, and the employer's contribution in PF was $1227, with an additional $541 in the pension fund. However, after receiving a notification in October 2014, there was a reversal in the employer's contribution. Since October 2014, the employer's contribution to PF has been $541, and towards the pension fund is $1227. I am having trouble understanding this change. Please help me out.
Regards.
From India, Bisrakh
Acknowledge(0)Amend(0)
Regards.
From India, Bisrakh
Acknowledge(0)Amend(0)
Your ID on Cite HR is KK2121, which I see as a combination of pairs "K-K" and "21-21." Like your ID, your basic pay also forms a pair of "Employee-Employer" contributions.
PF Computation Till Sep-2014:
A. Employee's Contribution to EPF: Rs. 14,730 * 12% = Rs. 1,768.
B. Employer's Contribution to EPS: Rs. 14,730 * 8.33% = Rs. 1,227 (limited up to Rs. 541, which is Rs. 6,500 * 8.33%).
C. Employer's Contribution to EPF = A - B, i.e., Rs. 1,768 - 541 = Rs. 1,227.
PF Computation After Oct-2014:
A. Employee's Contribution to EPF: Rs. 14,730 * 12% = Rs. 1,768.
B. Employer's Contribution to EPS: Rs. 14,730 * 8.33% = Rs. 1,227 (less than the higher limit of Rs. 1,250, which is Rs. 15,000 * 8.33%).
C. Employer's Contribution to EPF = A - B, i.e., Rs. 1,768 - Rs. 1,227 = Rs. 541.
Thus, in your case, the amounts of the employer's contribution towards EPF and EPS are just reversed. I hope the computation has clarified your doubts.
Besides the functional points, in mathematical terms, I will term Basic (approximately Rs. 14,730) as "Reversing Basic," which is forming a pair of reversing amounts of contribution.
Regards
From India, Mumbai
Acknowledge(0)Amend(0)
PF Computation Till Sep-2014:
A. Employee's Contribution to EPF: Rs. 14,730 * 12% = Rs. 1,768.
B. Employer's Contribution to EPS: Rs. 14,730 * 8.33% = Rs. 1,227 (limited up to Rs. 541, which is Rs. 6,500 * 8.33%).
C. Employer's Contribution to EPF = A - B, i.e., Rs. 1,768 - 541 = Rs. 1,227.
PF Computation After Oct-2014:
A. Employee's Contribution to EPF: Rs. 14,730 * 12% = Rs. 1,768.
B. Employer's Contribution to EPS: Rs. 14,730 * 8.33% = Rs. 1,227 (less than the higher limit of Rs. 1,250, which is Rs. 15,000 * 8.33%).
C. Employer's Contribution to EPF = A - B, i.e., Rs. 1,768 - Rs. 1,227 = Rs. 541.
Thus, in your case, the amounts of the employer's contribution towards EPF and EPS are just reversed. I hope the computation has clarified your doubts.
Besides the functional points, in mathematical terms, I will term Basic (approximately Rs. 14,730) as "Reversing Basic," which is forming a pair of reversing amounts of contribution.
Regards
From India, Mumbai
Acknowledge(0)Amend(0)
Understanding EPS Calculation Logic
Please help me understand the EPS calculation logic. I would like to know if we can calculate EPS based on scenarios 2 and 3 (on a pro-rata basis), or if we can pay based on the number of days worked in a month, excluding absences, as shown in scenario 1?
Scenario 1
Actual Salary for July 2016:
PF wages: 25000
PF: 3000
EPS Wages: 15000
EPS: 1250
Employer share: 1750
Scenario 2
Paid 25 days for July 2016 (absent 6 days):
PF wages: 20161
PF: 2419
EPS Wages: 12097
EPS: 1008
Employer share: 1411
Scenario 3
Paid 31 days for Salary August 2016 and also paid 6 days for July 2016 as arrears:
PF wages: 25000
PF wages Arrears: 4839
PF + Arrears: 3581
EPS Wages: 15000
EPS Wages Arrears: 2903
EPS: 1491
Employer share: 2090
Regards,
Shanu
From India, New Delhi
Acknowledge(0)Amend(0)
Please help me understand the EPS calculation logic. I would like to know if we can calculate EPS based on scenarios 2 and 3 (on a pro-rata basis), or if we can pay based on the number of days worked in a month, excluding absences, as shown in scenario 1?
Scenario 1
Actual Salary for July 2016:
PF wages: 25000
PF: 3000
EPS Wages: 15000
EPS: 1250
Employer share: 1750
Scenario 2
Paid 25 days for July 2016 (absent 6 days):
PF wages: 20161
PF: 2419
EPS Wages: 12097
EPS: 1008
Employer share: 1411
Scenario 3
Paid 31 days for Salary August 2016 and also paid 6 days for July 2016 as arrears:
PF wages: 25000
PF wages Arrears: 4839
PF + Arrears: 3581
EPS Wages: 15000
EPS Wages Arrears: 2903
EPS: 1491
Employer share: 2090
Regards,
Shanu
From India, New Delhi
Acknowledge(0)Amend(0)
Hi,
Please see the attached notification. As per it, an international worker joining the establishment on or after 01.09.2014 should not be made a member of EPS. The entire 12% employer contribution should go to EPF.
From India, Bengaluru
Acknowledge(0)Amend(0)
Please see the attached notification. As per it, an international worker joining the establishment on or after 01.09.2014 should not be made a member of EPS. The entire 12% employer contribution should go to EPF.
From India, Bengaluru
Acknowledge(0)Amend(0)
Dear Experts,
Can an employer offer different options for PF contribution to employees, such as INR 1800 per month (each side) for one employee and 12% on actual basic salary for another employee, assuming the basic salary is greater than INR 15,000 per month?
I would be grateful if you could support your views with any government notification. Is it possible?
From India, Kota
Acknowledge(0)Amend(0)
Can an employer offer different options for PF contribution to employees, such as INR 1800 per month (each side) for one employee and 12% on actual basic salary for another employee, assuming the basic salary is greater than INR 15,000 per month?
I would be grateful if you could support your views with any government notification. Is it possible?
From India, Kota
Acknowledge(0)Amend(0)CiteHR is an AI-augmented HR knowledge and collaboration platform, enabling HR professionals to solve real-world challenges, validate decisions, and stay ahead through collective intelligence and machine-enhanced guidance. Join Our Platform.
Minimum Wages Revision - Notification.PD F