In all my previous employments, a 12% PF contribution was deducted for both the employee and the employer from the monthly salary. Here, regardless of your Basic salary, which is usually on the higher side, a minimum of Rs. 780/- is being deducted per month as employees' contribution.
I am unsure whether this deduction aligns with the compliance of the PF Act or if it is ethically questionable. Could you please provide guidance on this matter?
Regards,
Meenakshi
From India, Delhi
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I am unsure whether this deduction aligns with the compliance of the PF Act or if it is ethically questionable. Could you please provide guidance on this matter?
Regards,
Meenakshi
From India, Delhi
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PF Contribution Based on Basic Salary
As per the provisions of the PF Act, if the basic salary is Rs. 6,500/-, then PF is deducted at 12%, which amounts to Rs. 780/-. In a case where the basic salary exceeds Rs. 6,500/-, the salary considered for calculating the PF contribution is Rs. 6,500, and therefore the contribution amount remains Rs. 780.
Please verify your basic salary on the payslip.
From India, Pune
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3As per the provisions of the PF Act, if the basic salary is Rs. 6,500/-, then PF is deducted at 12%, which amounts to Rs. 780/-. In a case where the basic salary exceeds Rs. 6,500/-, the salary considered for calculating the PF contribution is Rs. 6,500, and therefore the contribution amount remains Rs. 780.
Please verify your basic salary on the payslip.
From India, Pune
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Thank you for the instant reply. My basic salary is close to 26K, and all employees are well above the Rs. 6500/- basic salary slab. However, our payroll partner, an outsourced company, deducts a standard Rs. 780/- per month irrespective of the actual basic salary.
From India, Delhi
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From India, Delhi
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There are many companies that follow the same rule as in your case for PF contribution, and it is statutorily correct. When the basic salary is more than ₹6,500 per month, then it is the company's discretion on which grounds PF contribution has to be made.
From India, Kollam
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From India, Kollam
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EPF and MP Act 1952: Contributions to be Within the Statutory Limit on Wages – EPFO HQ Reiterates
Ref: The Letter No. LC (637) 2009/Vol.I/203 dated 27.05.2014 of the EPFO HQ.
A copy of the letter from the EPFO HQ is reproduced below for the information of all members. Accordingly, any pressure to pay contributions over and above the statutory wage limit of Rs. 6500 shall be deferred by mills when insisted by EPFO officials during the course of their inspections by showing the EPFO HQ Circular. Accordingly, the EPFO Circular settles the issue that no employer should be forced to recover and remit subscription for any wage over and above Rs. 6500 per month.
Employees’ Provident Fund Organisation
Bhavishya Nidhi Bhawan, 14, Bhikaji Cama Place, New Delhi-110066
No. LC (637) 2009/Vol.I/203
Date: 27.05.2014
To,
All Addl. Central Provident Fund Commissioners (Zones)
Subject: Filing of Review Petition Against Judgment of Hon'ble Supreme Court of India in SLP No. 1205/2009 in the Matter of Marathwada Gramin Bank Employees Union vs. Management of Marathwada Gramin Bank - Regarding
Reference: This office letter No. LC-2(637)2009/MH/1278O dated 08.10.2013
Please refer to the above-cited letter wherein views on the issue of filing a review petition/implementation of the order dated 9.9.2011 of the Hon'ble Supreme Court of India in SLP No. 1205/2009 in the matter of Marathwada Gramin Bank Karamcharl Sangathan & Ors. vs. Management of Marathwada Gramin Bank, were called for.
The views expressed by the Zonal Addl. Central Provident Fund Commissioners as to whether a review petition needs to be filed or not have been examined at Head Office. After analyzing the pros and cons of the issue, the Competent Authority felt that there is no point in going for a review against the said judgment of the Hon'ble Supreme Court of India.
All the Regional Provident Fund Commissioners-In-charge of Regional/Sub-Regional Offices are, therefore, directed not to force employers to contribute over and above the statutory wage ceiling in respect of their employees. However, the option is available for the employees to contribute beyond the statutory wage ceiling if they so desire, subject to the conditions enumerated under Para 26(6) of the Employees' Provident Funds Scheme, 1952.
Yours faithfully,
(P.K. UDGATA)
Addl. Central Provident Fund Commissioner (Compliance)
From India, Salem
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Ref: The Letter No. LC (637) 2009/Vol.I/203 dated 27.05.2014 of the EPFO HQ.
A copy of the letter from the EPFO HQ is reproduced below for the information of all members. Accordingly, any pressure to pay contributions over and above the statutory wage limit of Rs. 6500 shall be deferred by mills when insisted by EPFO officials during the course of their inspections by showing the EPFO HQ Circular. Accordingly, the EPFO Circular settles the issue that no employer should be forced to recover and remit subscription for any wage over and above Rs. 6500 per month.
Employees’ Provident Fund Organisation
Bhavishya Nidhi Bhawan, 14, Bhikaji Cama Place, New Delhi-110066
No. LC (637) 2009/Vol.I/203
Date: 27.05.2014
To,
All Addl. Central Provident Fund Commissioners (Zones)
Subject: Filing of Review Petition Against Judgment of Hon'ble Supreme Court of India in SLP No. 1205/2009 in the Matter of Marathwada Gramin Bank Employees Union vs. Management of Marathwada Gramin Bank - Regarding
Reference: This office letter No. LC-2(637)2009/MH/1278O dated 08.10.2013
Please refer to the above-cited letter wherein views on the issue of filing a review petition/implementation of the order dated 9.9.2011 of the Hon'ble Supreme Court of India in SLP No. 1205/2009 in the matter of Marathwada Gramin Bank Karamcharl Sangathan & Ors. vs. Management of Marathwada Gramin Bank, were called for.
The views expressed by the Zonal Addl. Central Provident Fund Commissioners as to whether a review petition needs to be filed or not have been examined at Head Office. After analyzing the pros and cons of the issue, the Competent Authority felt that there is no point in going for a review against the said judgment of the Hon'ble Supreme Court of India.
All the Regional Provident Fund Commissioners-In-charge of Regional/Sub-Regional Offices are, therefore, directed not to force employers to contribute over and above the statutory wage ceiling in respect of their employees. However, the option is available for the employees to contribute beyond the statutory wage ceiling if they so desire, subject to the conditions enumerated under Para 26(6) of the Employees' Provident Funds Scheme, 1952.
Yours faithfully,
(P.K. UDGATA)
Addl. Central Provident Fund Commissioner (Compliance)
From India, Salem
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PF Contribution Obligation
There is no obligation for PF contribution from the employer when the basic salary of the entrant is more than Rs. 6500. This falls under exemption. Even if you want to deduct, the limit for deduction for both contributions is Rs. 6500 maximum.
From India, Salem
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There is no obligation for PF contribution from the employer when the basic salary of the entrant is more than Rs. 6500. This falls under exemption. Even if you want to deduct, the limit for deduction for both contributions is Rs. 6500 maximum.
From India, Salem
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Statutory Compliance of a Industrial or Commercial Unit.xls
Statutory-compl iance.pdf
SC Judgment-No obligation to excess contribution than Statutory Limit.docx