Hello everyone,
In this article, they have mentioned that we need to consider all the components for the calculation of PF. My query is, do we need to keep the limit of Rs. 6500/- (6500*12% = Rs. 780/-) as a minimum, or do we need to consider the actual amount of all components? If it is required to consider all components without any minimum limitation (Rs. 6500), then from which date do we have to apply this law? Can anyone kindly clarify this issue?
Thanks & Regards, Sheela
From India, Coimbatore
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7In this article, they have mentioned that we need to consider all the components for the calculation of PF. My query is, do we need to keep the limit of Rs. 6500/- (6500*12% = Rs. 780/-) as a minimum, or do we need to consider the actual amount of all components? If it is required to consider all components without any minimum limitation (Rs. 6500), then from which date do we have to apply this law? Can anyone kindly clarify this issue?
Thanks & Regards, Sheela
From India, Coimbatore
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Dear Sir, As per my view EPF limit is 6500 if any one contributing more than this.it is not bound to pay as per this notification. regards Nishant
From India, Ranchi
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From India, Ranchi
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Hi all This will come as an amendment and then we have start implementing the same, this is not very clear. Regards Gopal
From India, Mumbai
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From India, Mumbai
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In my view, we should not go by the headings of newspapers. There is no obligation for either employers or employees to contribute PF on more than Rs. 6,500. If the salary of an employee on which PF contributions are made is Rs. 6,500 or more, the employer can limit the contribution to Rs. 6,500 or more, and similarly for the employee.
This circular will affect low-paid employees whose basic salary (for the purpose of PF contribution) after bifurcation was less than Rs. 6,500. If their salary is Rs. 6,500 or more, they have to contribute at least Rs. 6,500. On the flip side, this will benefit these employees by saving more for the future in a continuously rising inflation scenario. Companies will not be significantly affected as they pay employees on a CTC basis and can manage the situation by restricting contributions to no more than Rs. 6,500.
Regards,
SK
From India, Delhi
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This circular will affect low-paid employees whose basic salary (for the purpose of PF contribution) after bifurcation was less than Rs. 6,500. If their salary is Rs. 6,500 or more, they have to contribute at least Rs. 6,500. On the flip side, this will benefit these employees by saving more for the future in a continuously rising inflation scenario. Companies will not be significantly affected as they pay employees on a CTC basis and can manage the situation by restricting contributions to no more than Rs. 6,500.
Regards,
SK
From India, Delhi
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Dear Friends, Please go through the attachment of Different Concept of Minimum Wages. Regards, Arihant
From India, Surat
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From India, Surat
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In many organizations, EPF is calculated not against the amount of Rs. 6,500 but against the higher pay (salary plus DA). The article does mention that in such cases:
"Proviso to paragraph 26A of the PF Scheme allows PF contributions by the employee as well as the employers on a maximum notional level of Rs 6,500 per month, instead of the entire salary (including various allowances). The rate remains the same at 12% each for the employer and employee contributions respectively. Not many employers have opted for this route, as PF is part of the employee's cost to the company and it also gives a tax shield to the employees. Now, if the employer organization suddenly wishes to exercise this option and compute PF contributions only against Rs 6,500 per month (instead of the higher salary amount earlier), it is not clear whether the PF authorities will oblige."
Member SK12 rightly said, "If their salary is Rs. 6500 or more, they have to contribute at least Rs. 6,500. However, if they have contributed against a higher sum in the past, the issue is whether the PF authorities will now accept contributions against a sum of Rs. 6,500."
From India, Mumbai
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"Proviso to paragraph 26A of the PF Scheme allows PF contributions by the employee as well as the employers on a maximum notional level of Rs 6,500 per month, instead of the entire salary (including various allowances). The rate remains the same at 12% each for the employer and employee contributions respectively. Not many employers have opted for this route, as PF is part of the employee's cost to the company and it also gives a tax shield to the employees. Now, if the employer organization suddenly wishes to exercise this option and compute PF contributions only against Rs 6,500 per month (instead of the higher salary amount earlier), it is not clear whether the PF authorities will oblige."
Member SK12 rightly said, "If their salary is Rs. 6500 or more, they have to contribute at least Rs. 6,500. However, if they have contributed against a higher sum in the past, the issue is whether the PF authorities will now accept contributions against a sum of Rs. 6,500."
From India, Mumbai
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Dear all,
Certainly, it is going to affect the employees who are receiving lower salaries. However, I believe that HRA (House Rent Allowance) is excluded from the impact.
Could you please provide further clarification on what is included and what is excluded?
Thank you all in advance.
From India, Kolhapur
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Certainly, it is going to affect the employees who are receiving lower salaries. However, I believe that HRA (House Rent Allowance) is excluded from the impact.
Could you please provide further clarification on what is included and what is excluded?
Thank you all in advance.
From India, Kolhapur
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Shrinisar: The definition of basic wages under the PF Act specifically excludes HRA. It is useful to read all earlier judicial decisions to determine what allowances can be added back to the basic wages on the grounds that wages were split up to lower PF contribution. The problem is also acute for companies which kept basic wages lower than the sum total of various other allowances and where the PF was not computed against the minimum of Rs. 6500.
From India, Mumbai
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From India, Mumbai
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I am continuing with the above post.
The PF office is not clarifying whether for an employee where EPF was earlier not computed against Rs. 6500, but a much higher sum of salary, they can now request that EPF be computed against Rs. 6500 only.
Let's consider a salary range: Basic salary is Rs. 50,000, and allowances are Rs. 40,000. The employee is fine with EPF against Rs. 50,000 but not Rs. 90,000.
Can the employer organization now calculate EPF against Rs. 6,500? Apart from a consent letter from the employee, is there any form to fill in?
I will provide an update after the meeting with the EPF office.
From India, Mumbai
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The PF office is not clarifying whether for an employee where EPF was earlier not computed against Rs. 6500, but a much higher sum of salary, they can now request that EPF be computed against Rs. 6500 only.
Let's consider a salary range: Basic salary is Rs. 50,000, and allowances are Rs. 40,000. The employee is fine with EPF against Rs. 50,000 but not Rs. 90,000.
Can the employer organization now calculate EPF against Rs. 6,500? Apart from a consent letter from the employee, is there any form to fill in?
I will provide an update after the meeting with the EPF office.
From India, Mumbai
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There is good news. The circular of November 30 has been kept in abeyance according to Labour Law Reporter.
PROVIDENT FUND CIRCULAR KEPT IN ABEYANCE: LABOUR MINISTER
Union Labour and Employment Minister Mallikarjun Kharge on December 13, 2012, said that the Circular dated November 30, 2012, pertaining to Guidelines for Quasi-judicial proceedings under Section 7A of the EPF & MP Act, 1952, issued by the EPFO on the inclusion of certain allowances, etc., for calculating Provident Fund contributions is to be kept in abeyance. Therefore, the status quo will continue.
Editor
LABOUR LAW REPORTER
From India, Mumbai
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PROVIDENT FUND CIRCULAR KEPT IN ABEYANCE: LABOUR MINISTER
Union Labour and Employment Minister Mallikarjun Kharge on December 13, 2012, said that the Circular dated November 30, 2012, pertaining to Guidelines for Quasi-judicial proceedings under Section 7A of the EPF & MP Act, 1952, issued by the EPFO on the inclusion of certain allowances, etc., for calculating Provident Fund contributions is to be kept in abeyance. Therefore, the status quo will continue.
Editor
LABOUR LAW REPORTER
From India, Mumbai
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