My name is Kesari, and I am from Hyderabad. I work in an organization as an HR and Accountant. We have registered our organization under the EPFO Act for voluntary coverage with 15 employees. All the employees have a Basic and DA salary exceeding 15,000/-. The employer has been paying EPF on the full Basic and DA amounts (which are above 15,000). However, suddenly, after one year, my management is requesting to fix the PF deduction at 1800/- (i.e., 15,000 of Basic and DA). I would like to know if this is legally correct.
Example:
Since one year, they have been paying EPF as shown below:
| No. | Employee | Gross Pay (PM) | Basic Pay (PM) | PF 12% (PM) |
|-----|----------|----------------|----------------|-------------|
| 1 | Syed | 100,000 | 70,000 | 8,400/- |
| 2 | Mohad | 90,000 | 63,000 | 7,560/- |
Now, all of a sudden, they want to change this to the following:
| No. | Employee | Gross Pay (PM) | Basic Pay (PM) | PF 12% (PM) |
|-----|----------|----------------|----------------|-------------|
| 1 | Syed | 100,000 | 70,000 | 1,800/- |
| 2 | Mohad | 90,000 | 63,000 | 1,800/- |
Could you kindly advise me with your valuable suggestions?
From India, Hyderabad
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Example:
Since one year, they have been paying EPF as shown below:
| No. | Employee | Gross Pay (PM) | Basic Pay (PM) | PF 12% (PM) |
|-----|----------|----------------|----------------|-------------|
| 1 | Syed | 100,000 | 70,000 | 8,400/- |
| 2 | Mohad | 90,000 | 63,000 | 7,560/- |
Now, all of a sudden, they want to change this to the following:
| No. | Employee | Gross Pay (PM) | Basic Pay (PM) | PF 12% (PM) |
|-----|----------|----------------|----------------|-------------|
| 1 | Syed | 100,000 | 70,000 | 1,800/- |
| 2 | Mohad | 90,000 | 63,000 | 1,800/- |
Could you kindly advise me with your valuable suggestions?
From India, Hyderabad
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There is a mistake in understanding the calculation of EPF by you. Please refer to the EPF Act carefully and understand the latest rules and notifications. The upper limit for EPF wages for the employer is 15,000. The EDLI contribution is locked at 15,000 by EPF. Please rework on your EPF calculations given in the post.
From India, Vadodara
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382From India, Vadodara
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EPFO has no intervention for employees who draw a basic salary above 15000/-. Employee and employer policy matters pertain to contributions exceeding the 15000 limit. However, the ECR format requires details such as GROSS Wages, EPF wages, EPS wages, and EDLI wages.
EPFO does not request information on basic and DA in their ECR format. Instead, they require EPF wages for contribution calculation. It is important to accurately report EPF wages when filing the ECR.
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EPFO does not request information on basic and DA in their ECR format. Instead, they require EPF wages for contribution calculation. It is important to accurately report EPF wages when filing the ECR.
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Employer Contribution Limits
The employer's maximum limit of contribution is 12% on 15k. Therefore, it is not mandatory for the employer to contribute beyond 15k. The employee, however, can choose to contribute at a higher rate above their Basic and DA. EDLI contribution is fixed at 0.5% on a 15k maximum.
Based on this, calculations can be made to determine how much contribution is to be made by the employer and employee.
It is also important to note that if both the employer and employee agree to pay contributions beyond the specified limits, a declaration must be submitted to the EPFO accordingly. In this case, the EDLI contribution maximum limit will still be 0.5% on 15k.
From India, Vadodara
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The employer's maximum limit of contribution is 12% on 15k. Therefore, it is not mandatory for the employer to contribute beyond 15k. The employee, however, can choose to contribute at a higher rate above their Basic and DA. EDLI contribution is fixed at 0.5% on a 15k maximum.
Based on this, calculations can be made to determine how much contribution is to be made by the employer and employee.
It is also important to note that if both the employer and employee agree to pay contributions beyond the specified limits, a declaration must be submitted to the EPFO accordingly. In this case, the EDLI contribution maximum limit will still be 0.5% on 15k.
From India, Vadodara
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EPFO Circular PF - Correction in Name.pdf
Legal Compliance Plan.xls