Hi - I am looking for guidance from experienced people here on following query
Employee A gross salary is 2 L per month , basic is 50 K , currently he and his employer paying EPF on 50 K ( on higher wages however no joint declaration was submitted to EPF for last 3 - 4 years). Now after new wages code implementation his basic will be 1 L due to new wages definition that basic +da cannot be less than 50% of gross wages .
Q1 . Now do they need to pay PF on 1 L ?
Q2 . Can they restrict to statutory limit of 15 Now ? Is this allowed to reduce it like this?
Q3 . Can they continue deposit EPF on 50 K ?
From India, Delhi
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2Employee A gross salary is 2 L per month , basic is 50 K , currently he and his employer paying EPF on 50 K ( on higher wages however no joint declaration was submitted to EPF for last 3 - 4 years). Now after new wages code implementation his basic will be 1 L due to new wages definition that basic +da cannot be less than 50% of gross wages .
Q1 . Now do they need to pay PF on 1 L ?
Q2 . Can they restrict to statutory limit of 15 Now ? Is this allowed to reduce it like this?
Q3 . Can they continue deposit EPF on 50 K ?
From India, Delhi
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Based on the new wage code, the employer and employee are now expected to contribute towards EPF on the new basic wage which is 1 Lakh. This is as a result of changes in the wage structure where Basic+DA can't be less than 50% of gross wages.
Q1. Now do they need to pay PF on 1 L?
Yes, the PF contribution would now be on 1 Lakh. As per the new wage code, Basic+DA should be at least 50% of the gross salary. If the basic is less than 50%, then the shortfall needs to be added back to the basic for PF calculation.
Q2. Can they restrict to statutory limit of 15 Now? Is this allowed to reduce it like this?
Yes, the employer can restrict their contribution to the statutory limit of 12% if they choose to do so. The employee also has the option to increase their contribution above the statutory limit of 12%, up to 100% of Basic and DA but the employer is not obliged to match the enhanced contribution.
Q3. Can they continue deposit EPF on 50K?
No, as per the above explanation, the PF will now be on the revised basic pay of 1 Lakh. However, if the employer and employee mutually agree to restrict the PF contribution on 50K, they need to approach the EPFO with a joint application. But, this may not be advisable as it may potentially raise questions from the EPFO.
For more information, you may refer to the https://www.epfindia.gov.in site which has detailed information on PF contribution and new wage code.
From India, Gurugram
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Q1. Now do they need to pay PF on 1 L?
Yes, the PF contribution would now be on 1 Lakh. As per the new wage code, Basic+DA should be at least 50% of the gross salary. If the basic is less than 50%, then the shortfall needs to be added back to the basic for PF calculation.
Q2. Can they restrict to statutory limit of 15 Now? Is this allowed to reduce it like this?
Yes, the employer can restrict their contribution to the statutory limit of 12% if they choose to do so. The employee also has the option to increase their contribution above the statutory limit of 12%, up to 100% of Basic and DA but the employer is not obliged to match the enhanced contribution.
Q3. Can they continue deposit EPF on 50K?
No, as per the above explanation, the PF will now be on the revised basic pay of 1 Lakh. However, if the employer and employee mutually agree to restrict the PF contribution on 50K, they need to approach the EPFO with a joint application. But, this may not be advisable as it may potentially raise questions from the EPFO.
For more information, you may refer to the https://www.epfindia.gov.in site which has detailed information on PF contribution and new wage code.
From India, Gurugram
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EPF-Circular-da ted-23-May-2011 -Splitting-of-M inimum-Wages-fo r-the-Purpose-o f-PF-Contributi on-Not.pdf
EPF Higher Wages from Employer's end.xlsx
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