Hi,
Please help me clarify whether there is any ceiling for PF. In an interview, they asked whether the PF contribution for a person with a basic salary of 7000 and another with 25000 is the same or not. Could you provide me with details about PF and ESI? Is there a website that offers all the necessary information?
Thanks,
Pradeepa
From India, Bangalore
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3Please help me clarify whether there is any ceiling for PF. In an interview, they asked whether the PF contribution for a person with a basic salary of 7000 and another with 25000 is the same or not. Could you provide me with details about PF and ESI? Is there a website that offers all the necessary information?
Thanks,
Pradeepa
From India, Bangalore
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Dear Pradeepa we will reply you and clear your concept but like to have your view first on both the issues. pkjain
From India, Delhi
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From India, Delhi
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Dear friend,
Please use these attachments. Candidates appearing for HR posts are expected to know at least a few basic pieces of information on several labor laws. I would advise you to buy cheap editions like BARE Acts of important Acts such as PF, ESI, Gratuity, Payment of Wages Act, Bonus Act, etc., to enrich your knowledge.
All the best,
Kumar S.
From India, Bangalore
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Please use these attachments. Candidates appearing for HR posts are expected to know at least a few basic pieces of information on several labor laws. I would advise you to buy cheap editions like BARE Acts of important Acts such as PF, ESI, Gratuity, Payment of Wages Act, Bonus Act, etc., to enrich your knowledge.
All the best,
Kumar S.
From India, Bangalore
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Dear Pradeepa,
I am appending below an extract of the Act. I hope it answers your question. A member, if he so desires, may contribute an amount exceeding 12 percent, as the case may be, but the employer shall not be under an obligation to pay a contribution over and above his contribution payable under the Act. {Para 29}
Good luck.
Colonel Gahlot
'TRURECRUIT'
From India, Delhi
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I am appending below an extract of the Act. I hope it answers your question. A member, if he so desires, may contribute an amount exceeding 12 percent, as the case may be, but the employer shall not be under an obligation to pay a contribution over and above his contribution payable under the Act. {Para 29}
Good luck.
Colonel Gahlot
'TRURECRUIT'
From India, Delhi
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Coverage for CPF
Employees drawing basic salary upto Rs 6500/- have to compulsory contribute to the Provident fund and employees drawing above Rs 6501/- have an option to become member of the Provident Fund .The Employee contributes 12% of his /her Basic Salary & the same amount is contributed by the Employer.
Coverage for ESI
Employees drawing wages upto Rs.10000/- per month engaged either directly or thrugh contractor.
To be deemed as wages for ESI Contributions
Basic pay
Dearness allowance
House rent allowance
City compensatory allowance
Overtime wages (but not to be taken into account for determining the coverage of an employee)
Payment for day of rest
Production incentive
Bonus other than statutory bonus
Night shift allowance
Heat, Gas & Dust allowance
Payment for unsubstituted holidays
Meal/food allowance
Suspension allowance
Lay off compensation
Children education allowance (not being reimbursement for actual tuition fee)
From India, Delhi
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Employees drawing basic salary upto Rs 6500/- have to compulsory contribute to the Provident fund and employees drawing above Rs 6501/- have an option to become member of the Provident Fund .The Employee contributes 12% of his /her Basic Salary & the same amount is contributed by the Employer.
Coverage for ESI
Employees drawing wages upto Rs.10000/- per month engaged either directly or thrugh contractor.
To be deemed as wages for ESI Contributions
Basic pay
Dearness allowance
House rent allowance
City compensatory allowance
Overtime wages (but not to be taken into account for determining the coverage of an employee)
Payment for day of rest
Production incentive
Bonus other than statutory bonus
Night shift allowance
Heat, Gas & Dust allowance
Payment for unsubstituted holidays
Meal/food allowance
Suspension allowance
Lay off compensation
Children education allowance (not being reimbursement for actual tuition fee)
From India, Delhi
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Dear Pradeepa
Please note the following
1. The PF Act is applicable to an establishment employing 20 or more persons.
2. Any person employed first time in an establishment up to a salary of Rs. 6500/- will be an eligible member (compulsory member).
3. Any person employed first time in an establishment above Rs. 6500/- will have an option to join the fund or not. If opted he/she will be an Optional Member.
4. Any person who is already a member of the PF Fund, will be covered under the Scheme even if he/she is employed on a salary above Rs. 6500/-
5. The employer is bound to pay contribution only up to Rs. 6500/- as per the provisions of the Act/Scheme. But the Act does not bound the employer not to pay contribution above Rs. 6500/-
There are many employer/ establishment who are paying contribution to the Fund on actual basis without any limit. In such cases if the wages (Basic +DA) is deducted/paid on actual basis.
Even if the wage is above Rs.6500/-
Now coming to your query
There are two members ones Basic wage is 7000/- and others is 25000/-
Now if the employer is, as a policy matter of the establishment, is paying contribution only up to Rs. 6500/- in such a situation the contribution will be restricted only up to that amount of Rs. 6500/- and will be same for both the employees.(6500/-@12%= 780/-)
- If the employer is paying contribution on actual basis it will vary as explained hereinabove
and for the employee getting Rs. 7000/- it will be 840/- and for the employee getting Rs. 25000/- it will be Rs. 3000/- @12%.
For the coverage of ESI the mandatory upper limit is Rs. 15000/- as such the first employee will be covered under the Act and the other one will be outside the coverage of the ESI Act. Please note the definition of wages in PF Act and ESI Act is entirely different. To fixed Conveyance Allowance, HRA etc will be taken into consideration while calculating the Total Wage in ESI Act while in PF Act It will not be taken into consideration.
PKjain
From India, Delhi
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Please note the following
1. The PF Act is applicable to an establishment employing 20 or more persons.
2. Any person employed first time in an establishment up to a salary of Rs. 6500/- will be an eligible member (compulsory member).
3. Any person employed first time in an establishment above Rs. 6500/- will have an option to join the fund or not. If opted he/she will be an Optional Member.
4. Any person who is already a member of the PF Fund, will be covered under the Scheme even if he/she is employed on a salary above Rs. 6500/-
5. The employer is bound to pay contribution only up to Rs. 6500/- as per the provisions of the Act/Scheme. But the Act does not bound the employer not to pay contribution above Rs. 6500/-
There are many employer/ establishment who are paying contribution to the Fund on actual basis without any limit. In such cases if the wages (Basic +DA) is deducted/paid on actual basis.
Even if the wage is above Rs.6500/-
Now coming to your query
There are two members ones Basic wage is 7000/- and others is 25000/-
Now if the employer is, as a policy matter of the establishment, is paying contribution only up to Rs. 6500/- in such a situation the contribution will be restricted only up to that amount of Rs. 6500/- and will be same for both the employees.(6500/-@12%= 780/-)
- If the employer is paying contribution on actual basis it will vary as explained hereinabove
and for the employee getting Rs. 7000/- it will be 840/- and for the employee getting Rs. 25000/- it will be Rs. 3000/- @12%.
For the coverage of ESI the mandatory upper limit is Rs. 15000/- as such the first employee will be covered under the Act and the other one will be outside the coverage of the ESI Act. Please note the definition of wages in PF Act and ESI Act is entirely different. To fixed Conveyance Allowance, HRA etc will be taken into consideration while calculating the Total Wage in ESI Act while in PF Act It will not be taken into consideration.
PKjain
From India, Delhi
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No upper ceiling but the I.T.exemption is available for max. 1L and the contribution beyond this limit is taxable. Pon
From India, Lucknow
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From India, Lucknow
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[QUOTE=pkjain62;1983362]
Dear Pon ji,
Kindly provide me with some more information regarding the exemption up to the limit of 1L if you have.
Thanks & Regards,
pkjain
Under sec 80 C only.
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Pon
From India, Lucknow
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Dear Pon ji,
Kindly provide me with some more information regarding the exemption up to the limit of 1L if you have.
Thanks & Regards,
pkjain
Under sec 80 C only.
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Pon
From India, Lucknow
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Mr. Pon
As per my understanding under Sec. 80 C of the Income Tax Act one can seek deduction only up to 1 L (which is the maximum Limit) and under the section EPF, PPF, LIC Premium deposit amount etc qualify under this section. But in no case if the contribution is above Rs.1L in the EPF liable to Income Tax as advised by you
pkjain
From India, Delhi
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As per my understanding under Sec. 80 C of the Income Tax Act one can seek deduction only up to 1 L (which is the maximum Limit) and under the section EPF, PPF, LIC Premium deposit amount etc qualify under this section. But in no case if the contribution is above Rs.1L in the EPF liable to Income Tax as advised by you
pkjain
From India, Delhi
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