There is a statutory ceiling set by the PF Department that mandates the maximum limit for PF calculation to be Rs 6,500. This means that an employer is required to deposit PF contributions up to 12% of Rs 6,500. Beyond this amount, the employer has the discretion to contribute further.
For example, if an employee's basic salary is Rs 5,000, the PF contribution would be Rs 5,000 * 12% which is compulsory. In this case, the employer cannot exempt the employee from this contribution regardless of the employee's preference.
However, if an employee's basic salary is Rs 8,000, the employer can limit the contribution to 12% of Rs 6,500. If the employee wishes, they can seek exemption from the PF contribution.
Moreover, if an employer opts to pay based on the actual basic salary, there is no limit to the contribution.
Shyamal, you mentioned you read about a maximum limit for PF deduction. It is indeed correct that the maximum limit for PF deduction is 12% of Rs 6,500. I hope this clarifies your query.
Thank you in advance.
From India, Mumbai
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15For example, if an employee's basic salary is Rs 5,000, the PF contribution would be Rs 5,000 * 12% which is compulsory. In this case, the employer cannot exempt the employee from this contribution regardless of the employee's preference.
However, if an employee's basic salary is Rs 8,000, the employer can limit the contribution to 12% of Rs 6,500. If the employee wishes, they can seek exemption from the PF contribution.
Moreover, if an employer opts to pay based on the actual basic salary, there is no limit to the contribution.
Shyamal, you mentioned you read about a maximum limit for PF deduction. It is indeed correct that the maximum limit for PF deduction is 12% of Rs 6,500. I hope this clarifies your query.
Thank you in advance.
From India, Mumbai
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PF salab limit.pdf