PF deduction for employees is mandatory if the number of employees in the organization is more than 20 and if salary (basic) is up to Rs. 6,500. If the salary is above this limit, contribution is not mandatory. However, a lot of companies do this voluntarily in order to enhance the employee's social security which also help in employee retention. Read similar EPF queries in www.epfindia.com - Top 10 EPF FAQs Part 1 - Investing It!
From India, Hyderabad
From India, Hyderabad
Dear Anuradha Shankar
As per EPF Act Sec 2 (f), definition for Employee, means any person who is employed for wages in any kind of work, manual or otherwise, in or in connection with the work and gets his wages directly or indirectly from the employer, and includes,
1, employed by or through a contractor in or in connection with the work of the establishment.
2, engaged as an apprentice (other than apprentice engaged under the Apprentices Act)
As per definition of excluded employee under the EPF Scheme,
Sec 2 (f) Excluded employee means,
(i) An employee who, having been the member of the fund, withdrew the full amount of his accumulations in the Fund under clause 69 of the scheme.
(ii) an employee whose pay at the time he is otherwise entitled to become a member of the fund, exceeds Rs.6500/- per month;
Explanation:- Pay includes basic wages with (dearness allowance, retaining allowance (if any)), and cash value of food concession admissible.)
Secondly, you can exclude the employees who are drawing Rs. 6,500/- as basic, you have to get Form 11 filled by the employees employed at local Office
The existing employees whom already covered under EPF have to be in the coverable list till they are working with you.
Regarding the new joiners, if they are offered Rs.6500 above as basic they can be treated as excluded employees , provided they should not be a member of the EPF. ie even if they covered elsewhere, and withdrawn the entire EPF/EPS amount before joining with you. You can get Form 11 filled up for these employees.
There are few things to be kept in mind in this situation:
1. If the employee is currently a member of PF, he cannot be detained with the PF benefits ie. he cannot be treated as excluded employee even if the basic salary crosses 6500/-
But in addition I would like to tell that the resolution has already been presented in the parliament, but not yet notified by the house and hence currently the limit is still 6500/-, hopefully in coming parliament session, it may be increased to 10000/-)
2. Now, if he is already a member of the PF then there is an option with you that you can contribute maximum Rs. 780 p.m. (12% of 6500), but in this case this rule should be followed for other employees as well.
3. if presently any other employee of yours is getting more than 6500 and you are contributing equal amount (eg: his basic is 10000 and you are making PF contribution 1200 in his case) then you have to make equal contribution for this employee as well. you cannot treat different employees differently.
4. Now, there is one other option with you, suppose any other employee is getting basic 10000 and you are making contribution 1200 for him, then you can pass a board resolution, and make contribution Rs. 780 p.m. for each employee (passing resolution is applicable in case of limited company).
From India, Kolkata
161As per EPF Act Sec 2 (f), definition for Employee, means any person who is employed for wages in any kind of work, manual or otherwise, in or in connection with the work and gets his wages directly or indirectly from the employer, and includes,
1, employed by or through a contractor in or in connection with the work of the establishment.
2, engaged as an apprentice (other than apprentice engaged under the Apprentices Act)
As per definition of excluded employee under the EPF Scheme,
Sec 2 (f) Excluded employee means,
(i) An employee who, having been the member of the fund, withdrew the full amount of his accumulations in the Fund under clause 69 of the scheme.
(ii) an employee whose pay at the time he is otherwise entitled to become a member of the fund, exceeds Rs.6500/- per month;
Explanation:- Pay includes basic wages with (dearness allowance, retaining allowance (if any)), and cash value of food concession admissible.)
Secondly, you can exclude the employees who are drawing Rs. 6,500/- as basic, you have to get Form 11 filled by the employees employed at local Office
The existing employees whom already covered under EPF have to be in the coverable list till they are working with you.
Regarding the new joiners, if they are offered Rs.6500 above as basic they can be treated as excluded employees , provided they should not be a member of the EPF. ie even if they covered elsewhere, and withdrawn the entire EPF/EPS amount before joining with you. You can get Form 11 filled up for these employees.
There are few things to be kept in mind in this situation:
1. If the employee is currently a member of PF, he cannot be detained with the PF benefits ie. he cannot be treated as excluded employee even if the basic salary crosses 6500/-
But in addition I would like to tell that the resolution has already been presented in the parliament, but not yet notified by the house and hence currently the limit is still 6500/-, hopefully in coming parliament session, it may be increased to 10000/-)
2. Now, if he is already a member of the PF then there is an option with you that you can contribute maximum Rs. 780 p.m. (12% of 6500), but in this case this rule should be followed for other employees as well.
3. if presently any other employee of yours is getting more than 6500 and you are contributing equal amount (eg: his basic is 10000 and you are making PF contribution 1200 in his case) then you have to make equal contribution for this employee as well. you cannot treat different employees differently.
4. Now, there is one other option with you, suppose any other employee is getting basic 10000 and you are making contribution 1200 for him, then you can pass a board resolution, and make contribution Rs. 780 p.m. for each employee (passing resolution is applicable in case of limited company).
From India, Kolkata
Dear Sir,
P.F. deduction is welfare measure, it is beneficial to the employees. Therefore it is always better to the employer also to deduct P.F. by restricting the PF contribution to Rs.6500/-. Please follow in the interest of Employer and Employee well being.
D.Gurumurthy
HR & IR Consultant
Hyderabad.
From India, Hyderabad
P.F. deduction is welfare measure, it is beneficial to the employees. Therefore it is always better to the employer also to deduct P.F. by restricting the PF contribution to Rs.6500/-. Please follow in the interest of Employer and Employee well being.
D.Gurumurthy
HR & IR Consultant
Hyderabad.
From India, Hyderabad
Dear Friends,
Irrespective of other things Viz. 20 employees and Basic....
There is no definition for Basic and DA in PF & MP Act. It is very clear that Rs. 6,500/- is the upper limit and above to that employer need not cover the employee for PF.
It is simple to understand the Act and how differs from one State to other.(See Below)
Say in Arunachal Pradesh Minimum Wage per day is Rs. 100/- and the total Wages will be (for 30 Days) Rs. 3000/- Therefore PF will be on Rs. 3000/-@12%.
In Andhra Pradesh MW will be per day Rs. 200/- and Total wages will be Rs. 6000/- Therefore PF will be on 6000/- @12%
In Mumbai City (if) MW is Rs. 300 per day and the Total Wages will be Rs. 9000/- but PF will be on Rs. 6500/- @12%
I can say in PF Act, State MW Act will play vital Role but not the Basic, DA HRA etc.
hrkpati
Sr. Manager (HR & Legal)
From India, Guwahati
Irrespective of other things Viz. 20 employees and Basic....
There is no definition for Basic and DA in PF & MP Act. It is very clear that Rs. 6,500/- is the upper limit and above to that employer need not cover the employee for PF.
It is simple to understand the Act and how differs from one State to other.(See Below)
Say in Arunachal Pradesh Minimum Wage per day is Rs. 100/- and the total Wages will be (for 30 Days) Rs. 3000/- Therefore PF will be on Rs. 3000/-@12%.
In Andhra Pradesh MW will be per day Rs. 200/- and Total wages will be Rs. 6000/- Therefore PF will be on 6000/- @12%
In Mumbai City (if) MW is Rs. 300 per day and the Total Wages will be Rs. 9000/- but PF will be on Rs. 6500/- @12%
I can say in PF Act, State MW Act will play vital Role but not the Basic, DA HRA etc.
hrkpati
Sr. Manager (HR & Legal)
From India, Guwahati
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