Hi all,
Can anyone tell me if there are any provisions whereby an employee can contribute only 780 (i.e., if the basic is 6500), even though the basic is more than 6500? Or is it compulsory that he should contribute 12% of his basic + DA?
Cheers,
Divya
From India, Ahmadabad
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Can anyone tell me if there are any provisions whereby an employee can contribute only 780 (i.e., if the basic is 6500), even though the basic is more than 6500? Or is it compulsory that he should contribute 12% of his basic + DA?
Cheers,
Divya
From India, Ahmadabad
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As per the latest laws in effect, an employee needs to contribute 12% of his PF Basic as PF contribution. The employer needs to contribute 12% of the PF Basic to the employee's account. The rate is generally published by the government. 12% is mandatory.
Thanks,
Nivya
From India, Madras
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Thanks,
Nivya
From India, Madras
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Dear Divya,
PF is not calculated with the Gross salary. It is calculated with the Basic component of the salary, i.e., a salary consists of Basic, HRA, other allowances, Conveyance, etc., as components. In this, the Basic alone is taken, and 12% of that is calculated as PF.
In your friend's case, Rs. 12,500 should be his gross salary out of which Rs. 6,500 should be his Basic. From this, 12% would be Rs. 780, which is deducted as Employee PF.
Thanks,
Nivya
From India, Madras
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PF is not calculated with the Gross salary. It is calculated with the Basic component of the salary, i.e., a salary consists of Basic, HRA, other allowances, Conveyance, etc., as components. In this, the Basic alone is taken, and 12% of that is calculated as PF.
In your friend's case, Rs. 12,500 should be his gross salary out of which Rs. 6,500 should be his Basic. From this, 12% would be Rs. 780, which is deducted as Employee PF.
Thanks,
Nivya
From India, Madras
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Dear Divya,
As per policy, the compulsory contribution is 12% of 6500/-. After that, it's voluntary contribution, so many organizations only deposit the compulsory contribution, i.e., 780/- only. So there is no issue if your friend's PF deduction is only 780/-.
Regards,
Shilpi
From India, New Delhi
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5As per policy, the compulsory contribution is 12% of 6500/-. After that, it's voluntary contribution, so many organizations only deposit the compulsory contribution, i.e., 780/- only. So there is no issue if your friend's PF deduction is only 780/-.
Regards,
Shilpi
From India, New Delhi
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Hi,
As per the rules, the employee should contribute 12% on the actual Basic + DA drawn, not on 6500. As you asked about 780, i.e., 12% of 6500, this is an option left to the employer; he can or need not, but if he is contributing, he should contribute a minimum of 780, i.e., 12% of B+DA. However, 1.61% administration charges are on the actual basic + DA contributed from the employer.
From India, Bangalore
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As per the rules, the employee should contribute 12% on the actual Basic + DA drawn, not on 6500. As you asked about 780, i.e., 12% of 6500, this is an option left to the employer; he can or need not, but if he is contributing, he should contribute a minimum of 780, i.e., 12% of B+DA. However, 1.61% administration charges are on the actual basic + DA contributed from the employer.
From India, Bangalore
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Hi,
Thanks, all. My friend's basic + DA is 12500 and not the gross. Everyone has posted different replies. Can anyone please tell me what is as per the law? Is it as per the law that if the employer wishes, he can choose to deduct only the minimum required amount (780) no matter what the actual basic is???
Cheers,
Divya
From India, Ahmadabad
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Thanks, all. My friend's basic + DA is 12500 and not the gross. Everyone has posted different replies. Can anyone please tell me what is as per the law? Is it as per the law that if the employer wishes, he can choose to deduct only the minimum required amount (780) no matter what the actual basic is???
Cheers,
Divya
From India, Ahmadabad
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Divya, Minimum limit is 780 but its upto the employee if he want to opt for more than 780 (i.e on actuals), that can be done upto any value.
From India, New Delhi
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From India, New Delhi
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Hi Divya,
The PF Act states that you have to deduct 12% of basic + DA if the same is less than 6500. If it is equal to or more than 6500, we have to deposit 780 as PF.
Furthermore, can anybody advise me on the amount of voluntary contribution that an employee can make to their own PF account? Is there any limit to this?
Regards,
Manjali
From India, Delhi
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The PF Act states that you have to deduct 12% of basic + DA if the same is less than 6500. If it is equal to or more than 6500, we have to deposit 780 as PF.
Furthermore, can anybody advise me on the amount of voluntary contribution that an employee can make to their own PF account? Is there any limit to this?
Regards,
Manjali
From India, Delhi
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Hi,
This is regarding the renewal of the labor license under the central government act (ours is the Aviation industry). Initially, when we applied for the license, the total number of employees was 65, all of whom were engineers and managers. However, currently, the total number of employees is only 15. The license renewal date is in December. Please advise if we still need to proceed with the renewal of the license?
Regards,
Sivaprasad M
From India, Hyderabad
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This is regarding the renewal of the labor license under the central government act (ours is the Aviation industry). Initially, when we applied for the license, the total number of employees was 65, all of whom were engineers and managers. However, currently, the total number of employees is only 15. The license renewal date is in December. Please advise if we still need to proceed with the renewal of the license?
Regards,
Sivaprasad M
From India, Hyderabad
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Hi Divya,
The PF contribution is 12% of Basic pay if their basic is less than 6500. If the employees cross 6500 (any increment), the contribution can be limited to 12% of 6500 (whatever the basic pay may be), i.e., 780. But if the employee wishes, he can contribute more.
Hope you got the solution.
Sathish
From India, Mumbai
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The PF contribution is 12% of Basic pay if their basic is less than 6500. If the employees cross 6500 (any increment), the contribution can be limited to 12% of 6500 (whatever the basic pay may be), i.e., 780. But if the employee wishes, he can contribute more.
Hope you got the solution.
Sathish
From India, Mumbai
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Dear Divya
As per Employee Provident Fund & Miscelleneous Provision Act 1952 If the employee’s emoluments exceed Rs. 6,500/- per month, he has the option to join the Scheme(s) with the consent of employer.
So it depends upon company's policy whether to deduct on limit of 6500/- or on Total Basic + DA.
But it will not depend upon employee to employee in same organisation i.e one company will deduct Pf @ 12% on Rs 6500/- and for another employee PF @ 12% on Rs 10000.00.
So it is clear that though employee Basic is high company has to on compulsory basis deduct the PF @ 12% on 6500/- and if low than on that basic.
Now I think is it clear to you. If you have more query on this topic than you can call me on 9909001742
Regards
Abhijeet Sawant
From India, Ahmadabad
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As per Employee Provident Fund & Miscelleneous Provision Act 1952 If the employee’s emoluments exceed Rs. 6,500/- per month, he has the option to join the Scheme(s) with the consent of employer.
So it depends upon company's policy whether to deduct on limit of 6500/- or on Total Basic + DA.
But it will not depend upon employee to employee in same organisation i.e one company will deduct Pf @ 12% on Rs 6500/- and for another employee PF @ 12% on Rs 10000.00.
So it is clear that though employee Basic is high company has to on compulsory basis deduct the PF @ 12% on 6500/- and if low than on that basic.
Now I think is it clear to you. If you have more query on this topic than you can call me on 9909001742
Regards
Abhijeet Sawant
From India, Ahmadabad
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Hi , Shilpi is right, whenever your basic salary will increase but you can give on 6500/-. but if your comp. want to give more than it’s ok BR, Mahesh
From India, Mumbai
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From India, Mumbai
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Hi Divya/Manjali,
It is correct that PF should be on Basic + DA. This is as per the amendment dated 22.09.1997 in the Act. Both the employees and employers contribute to the fund at the rate of 12%. Additionally, from the employer, 1.61% is allocated as additional Administration charges.
However, if the limit exceeds Rs. 6500/- (i.e., 780/-), then if the employee desires to contribute more than that amount, a member, upon request, is allowed to contribute beyond the specified rate. This is subject to the condition that the employer is not obligated to pay any contribution exceeding the amount payable under the provisions of the Act.
I hope this clarifies any doubts.
SLG (Satish)
From India, Belgaum
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It is correct that PF should be on Basic + DA. This is as per the amendment dated 22.09.1997 in the Act. Both the employees and employers contribute to the fund at the rate of 12%. Additionally, from the employer, 1.61% is allocated as additional Administration charges.
However, if the limit exceeds Rs. 6500/- (i.e., 780/-), then if the employee desires to contribute more than that amount, a member, upon request, is allowed to contribute beyond the specified rate. This is subject to the condition that the employer is not obligated to pay any contribution exceeding the amount payable under the provisions of the Act.
I hope this clarifies any doubts.
SLG (Satish)
From India, Belgaum
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Dear Divya,
There are different clauses in the PF Act. In your friend's case, the employer has all the rights to continue the contribution or not as your friend's basic is more than 6,500. So, it depends on the employer. If the employer would like to contribute under the consideration of his budget, he can contribute only based on the consideration of basic @ 6,500.
Hope I made it clear. If you have any more doubts, please read the PF Act or reach me at
From India, Warangal
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There are different clauses in the PF Act. In your friend's case, the employer has all the rights to continue the contribution or not as your friend's basic is more than 6,500. So, it depends on the employer. If the employer would like to contribute under the consideration of his budget, he can contribute only based on the consideration of basic @ 6,500.
Hope I made it clear. If you have any more doubts, please read the PF Act or reach me at
From India, Warangal
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Hello,
If they can provide you with written acceptance of Rs 6500/- as the ceiling for PF deduction, then you can proceed; otherwise, you cannot. We have a similar policy implemented at our organization.
Naraayan HRD, Third Eye Group Of Companies.
From India, Mumbai
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If they can provide you with written acceptance of Rs 6500/- as the ceiling for PF deduction, then you can proceed; otherwise, you cannot. We have a similar policy implemented at our organization.
Naraayan HRD, Third Eye Group Of Companies.
From India, Mumbai
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Hi Divya,
Thanks to all. My friend's basic DA is 12500 and not the gross. Everyone has posted different replies. Can anyone please tell me what is as per the law? Is it as per the law that if the employer wishes, he can choose to deduct only the minimum required amount (780) no matter what the actual basic is???
Cheers,
Divya
Hi Divya, there are two PF shares. One is the employee PF, and the other is the employer PF share. The employee share (12%) of the basic goes to PF. In the employer share, 8.33% goes to Pension, and 3.67 goes to PF.
The basic for the Employee PF share has no limit. But the minimum basic should be equal to or more than minimum wages. Now, for the pension share, we cannot calculate 8.33% of basic if it is more than 6500. For this, the basic is a maximum of 6500.
For example, if a basic is Rs. 12500, his Employee PF is Rs. 1500, and the Employer PF is Rs. (8.33% of 6500) = 542, with the other share being 1500-542 = 958. The PF share is 2458, and the Pension share is 542, while the basic is 12500. But if the basic is less or equal to Rs. 6500, then 8.33% is calculated on the actual basic.
Hope this information helps you.
Prem Chand
From India, New Delhi
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Thanks to all. My friend's basic DA is 12500 and not the gross. Everyone has posted different replies. Can anyone please tell me what is as per the law? Is it as per the law that if the employer wishes, he can choose to deduct only the minimum required amount (780) no matter what the actual basic is???
Cheers,
Divya
Hi Divya, there are two PF shares. One is the employee PF, and the other is the employer PF share. The employee share (12%) of the basic goes to PF. In the employer share, 8.33% goes to Pension, and 3.67 goes to PF.
The basic for the Employee PF share has no limit. But the minimum basic should be equal to or more than minimum wages. Now, for the pension share, we cannot calculate 8.33% of basic if it is more than 6500. For this, the basic is a maximum of 6500.
For example, if a basic is Rs. 12500, his Employee PF is Rs. 1500, and the Employer PF is Rs. (8.33% of 6500) = 542, with the other share being 1500-542 = 958. The PF share is 2458, and the Pension share is 542, while the basic is 12500. But if the basic is less or equal to Rs. 6500, then 8.33% is calculated on the actual basic.
Hope this information helps you.
Prem Chand
From India, New Delhi
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Dear,
As per the PF Act, the mandatory salary for which the employer is bound to contribute to PF is up to 6500/- (Basic + DA). Hence, most of the companies follow this method, and for all those whose Basic + DA exceeds 6500/-, PF is deducted 780/- only, i.e., 12% of 6500/-, and both the employee and employer contribute 780/- each towards PF. In certain cases, the company agrees to contribute 12% of the actual basic & DA, but in those companies, the individuals getting such Basic & DA can be counted on fingers.
Statutorily, the employer has to contribute a maximum of up to 780/- per employee towards PF.
Hope your query is clear now.
From India, Vadodara
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As per the PF Act, the mandatory salary for which the employer is bound to contribute to PF is up to 6500/- (Basic + DA). Hence, most of the companies follow this method, and for all those whose Basic + DA exceeds 6500/-, PF is deducted 780/- only, i.e., 12% of 6500/-, and both the employee and employer contribute 780/- each towards PF. In certain cases, the company agrees to contribute 12% of the actual basic & DA, but in those companies, the individuals getting such Basic & DA can be counted on fingers.
Statutorily, the employer has to contribute a maximum of up to 780/- per employee towards PF.
Hope your query is clear now.
From India, Vadodara
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Hi All,
In the case of PF contribution, the employer liability is limited up to Rs 6500. Generally, they deduct the same from the employee's contribution. However, if an employee wants to contribute more to PF, he/she can always make a request to deduct his PF up to whatever level he wants, max up to basic salary.
Secondly, an employee also has the right to have his PF deducted at more than 12%. However, in all cases, an employee cannot ask the employer to increase the employer's contribution. It is at the employer's discretion whether to increase their contribution; the liability is up to Rs 6500.
If any employee is receiving a basic salary of more than Rs 6500 per month, then employers are not liable to contribute to PF. This means if the salary is up to Rs 6500, then the employer is liable for PF (as per the act). In any case where the salary is more than Rs 6500, it is entirely at the discretion of management whether to contribute to PF or not.
I hope this information will be helpful.
Regards,
Sant
From India
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In the case of PF contribution, the employer liability is limited up to Rs 6500. Generally, they deduct the same from the employee's contribution. However, if an employee wants to contribute more to PF, he/she can always make a request to deduct his PF up to whatever level he wants, max up to basic salary.
Secondly, an employee also has the right to have his PF deducted at more than 12%. However, in all cases, an employee cannot ask the employer to increase the employer's contribution. It is at the employer's discretion whether to increase their contribution; the liability is up to Rs 6500.
If any employee is receiving a basic salary of more than Rs 6500 per month, then employers are not liable to contribute to PF. This means if the salary is up to Rs 6500, then the employer is liable for PF (as per the act). In any case where the salary is more than Rs 6500, it is entirely at the discretion of management whether to contribute to PF or not.
I hope this information will be helpful.
Regards,
Sant
From India
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Hi,
PF amount can be deducted from the salary/wages which are more than Rs. 6500, but this deduction requires mutual consent from the employer. There is no limit for voluntary contributions exceeding the prescribed amount by the employee as per the current PF rules.
The maximum limit for PF deduction as per the act is based on a salary/wage of Rs. 6500 (Basic + DA). Employees who are PF members before exceeding this limit can continue their contributions; however, the contributions will only apply to the Rs. 6500 limit (Basic + DA).
For employees joining with a Basic + DA exceeding Rs. 6500, the employer has the right to refrain from deducting any PF contributions or paying their share of PF contributions.
Mohan Rao Manager HR
From India, Visakhapatnam
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PF amount can be deducted from the salary/wages which are more than Rs. 6500, but this deduction requires mutual consent from the employer. There is no limit for voluntary contributions exceeding the prescribed amount by the employee as per the current PF rules.
The maximum limit for PF deduction as per the act is based on a salary/wage of Rs. 6500 (Basic + DA). Employees who are PF members before exceeding this limit can continue their contributions; however, the contributions will only apply to the Rs. 6500 limit (Basic + DA).
For employees joining with a Basic + DA exceeding Rs. 6500, the employer has the right to refrain from deducting any PF contributions or paying their share of PF contributions.
Mohan Rao Manager HR
From India, Visakhapatnam
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Hi Divya,
In response to your query regarding the deduction of PF contribution from individuals earning more than Rs 6,500 (Basic + DA), it is clarified that, as per paragraph 2(1) of the EPF Scheme 1952, an employee whose pay, at the time he is otherwise entitled to be a member of the fund, exceeds allowances, retaining allowance, and cash for food, etc., is considered an excluded employee.
Prashant Kulkarni
From India, Mumbai
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In response to your query regarding the deduction of PF contribution from individuals earning more than Rs 6,500 (Basic + DA), it is clarified that, as per paragraph 2(1) of the EPF Scheme 1952, an employee whose pay, at the time he is otherwise entitled to be a member of the fund, exceeds allowances, retaining allowance, and cash for food, etc., is considered an excluded employee.
Prashant Kulkarni
From India, Mumbai
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Hi Friends,
Even my friend worked with an IT firm where they had no PF deductions from the salary regardless of the amount earned. Does every company have to separate their salary components? What if the employees are given a consolidated salary above 6500/-? Please help.
Regards,
Swati
HR
From India, Pune
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Even my friend worked with an IT firm where they had no PF deductions from the salary regardless of the amount earned. Does every company have to separate their salary components? What if the employees are given a consolidated salary above 6500/-? Please help.
Regards,
Swati
HR
From India, Pune
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Minimum 20 employees are required to take PF registration. There are some industries where fewer than 20 employees are also covered. It's very surprising to read that people are getting their PF deducted even after having their basic above Rs. 6,500. Many times employees do not want to be a part of the PF scheme.
We have over 40 employees who are earning above Rs. 10,500, and they have voluntarily signed the Form nos. 11 (Revised) to declare that they do not want to be included in the PF scheme. They are also not covered under ESIC.
We have only given PF to employees like the office boys where we pay the employee and employer contribution since their salary is minimum, and we want them to benefit in one way or another. The above steps were taken after consulting the respective Enforcement officers. PF deduction is not compulsory if the employee is earning a basic of Rs. 6,500 and above.
From India, Mumbai
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We have over 40 employees who are earning above Rs. 10,500, and they have voluntarily signed the Form nos. 11 (Revised) to declare that they do not want to be included in the PF scheme. They are also not covered under ESIC.
We have only given PF to employees like the office boys where we pay the employee and employer contribution since their salary is minimum, and we want them to benefit in one way or another. The above steps were taken after consulting the respective Enforcement officers. PF deduction is not compulsory if the employee is earning a basic of Rs. 6,500 and above.
From India, Mumbai
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Hi Divya,
As per The Employees' Provident Funds Scheme, 1952, Chapter V, Section 29(2), the employer is not bound to deduct more than 12% of wages on a Basic+DA wage of Rs 6,500. However, many employers pay based on the actual Basic+DA of the employee, even if it exceeds Rs 6,500, to provide additional benefits to the employees.
In your case, the employer wishes to limit their contribution to Rs 780, which is permissible under the law. I hope this clarifies your concerns.
Sunil
From India, Mumbai
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As per The Employees' Provident Funds Scheme, 1952, Chapter V, Section 29(2), the employer is not bound to deduct more than 12% of wages on a Basic+DA wage of Rs 6,500. However, many employers pay based on the actual Basic+DA of the employee, even if it exceeds Rs 6,500, to provide additional benefits to the employees.
In your case, the employer wishes to limit their contribution to Rs 780, which is permissible under the law. I hope this clarifies your concerns.
Sunil
From India, Mumbai
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Hi Divya,
As per present laws, it's 12%, but it should consider the laws and acts of the company when it established. The amount of PF deduction will be mentioned there by the employer in its act. If you have doubts, refer to Reliance Fresh or any company policy. Due to this, some companies will deduct a lesser amount, while others will deduct more.
From India, Hyderabad
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As per present laws, it's 12%, but it should consider the laws and acts of the company when it established. The amount of PF deduction will be mentioned there by the employer in its act. If you have doubts, refer to Reliance Fresh or any company policy. Due to this, some companies will deduct a lesser amount, while others will deduct more.
From India, Hyderabad
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Dear All,
Rs.6500/- is the wage specified under para 2(f) of the PF scheme, 1952, which can be increased by issuing a notification (the proposed limit is going to be raised by Rs.15000/-). Therefore, the employer's obligation is to deduct 12% of PF from Basic wages up to Rs.6500/- per month (mandatory). If the basic wage exceeds Rs.6500/-, then it is an option for both the employer and the employee whether to restrict the contribution on the basic up to Rs.6500/- or to pay on the full basic amount. In some cases, employees choose to contribute PF on the full basic while the employer restricts their share of PF to the basic amount of Rs.6500/-. This practice is legal.
From India, Mumbai
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Rs.6500/- is the wage specified under para 2(f) of the PF scheme, 1952, which can be increased by issuing a notification (the proposed limit is going to be raised by Rs.15000/-). Therefore, the employer's obligation is to deduct 12% of PF from Basic wages up to Rs.6500/- per month (mandatory). If the basic wage exceeds Rs.6500/-, then it is an option for both the employer and the employee whether to restrict the contribution on the basic up to Rs.6500/- or to pay on the full basic amount. In some cases, employees choose to contribute PF on the full basic while the employer restricts their share of PF to the basic amount of Rs.6500/-. This practice is legal.
From India, Mumbai
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hi all, if an employee basic is 10000/- and his pf contribution is 1200/-(12%) my question is that how much contibution of employer 1200/- or 780/-(of 6500/- basic) regard navi
From India, Delhi
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From India, Delhi
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Dear All,
Most of the friends are given a positive response on PF. Mr. Pathak ji is correct. For further clarification the following information may useful for you all.:
Clarification about Contribution
After revision in wage ceiling from Rs.5000 to Rs.6500 w.e.f. 1.6.2001 per month, the government will continue to contribute 1.16% upto the actual wage of maximum Rs.6500 per month towards Employees’ Pension Scheme. The employer’s share in the Pension Scheme will be Rs.541 w.e.f. 1.6.2001.
Under Employees’ Deposit-Linked Insurance Scheme the contribution @ 0.50% is required to be paid upto a maximum limit of Rs.6500.
The employer also will pay administrative charges @ 0.01% on maximum limit of Rs.6500 whereas an exempted establishment will pay inspection charges @ 0.005% on the total wages paid.
Notes:
The above clarification is given by taking wages upto a maximum of Rs.6500 towards wage (basic+DA).
Since an excluded employee i.e. drawing wages more than Rs.6500 can also become member of the Fund and the Schemes on joint request and if, for instance, such an employee is getting Rs.10,000 per month, his share towards provident fund contribution will be Rs.1200 e.g. 12% and employer’s share towards provident fund contributioin will be Rs.659 and Rs.541 towards Employees’ Pension Fund.
Regards,
PBS KUMAR
From India, Kakinada
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Most of the friends are given a positive response on PF. Mr. Pathak ji is correct. For further clarification the following information may useful for you all.:
Clarification about Contribution
After revision in wage ceiling from Rs.5000 to Rs.6500 w.e.f. 1.6.2001 per month, the government will continue to contribute 1.16% upto the actual wage of maximum Rs.6500 per month towards Employees’ Pension Scheme. The employer’s share in the Pension Scheme will be Rs.541 w.e.f. 1.6.2001.
Under Employees’ Deposit-Linked Insurance Scheme the contribution @ 0.50% is required to be paid upto a maximum limit of Rs.6500.
The employer also will pay administrative charges @ 0.01% on maximum limit of Rs.6500 whereas an exempted establishment will pay inspection charges @ 0.005% on the total wages paid.
Notes:
The above clarification is given by taking wages upto a maximum of Rs.6500 towards wage (basic+DA).
Since an excluded employee i.e. drawing wages more than Rs.6500 can also become member of the Fund and the Schemes on joint request and if, for instance, such an employee is getting Rs.10,000 per month, his share towards provident fund contribution will be Rs.1200 e.g. 12% and employer’s share towards provident fund contributioin will be Rs.659 and Rs.541 towards Employees’ Pension Fund.
Regards,
PBS KUMAR
From India, Kakinada
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It is correct and necessary that PF is on Basic + DA. Deduction is of 12%, but as some companies take only basic and some take Basic & DA and not any other allowances, with the limit of 6500/-. If they deduct more, it is the companies' policies, but the minimum should be 12%.
Satish
From India, Belgaum
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Satish
From India, Belgaum
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Hi Ms. Divya,
PF has given an option to limit the PF deduction to ₹6,500 and remit only 12% for ₹6,500. Whatever may be his basic, ₹12,500 or ₹25,000, that does not matter. The PF deduction can be limited to ₹6,500 and remit only ₹780 from the employee and employer too. Hope you are clear now.
Regards,
From India, Bangalore
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PF has given an option to limit the PF deduction to ₹6,500 and remit only 12% for ₹6,500. Whatever may be his basic, ₹12,500 or ₹25,000, that does not matter. The PF deduction can be limited to ₹6,500 and remit only ₹780 from the employee and employer too. Hope you are clear now.
Regards,
From India, Bangalore
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Provident Fund - Excluded Employee - Definition.pdf