Respected Seniors/Friends,
The Government has approved the increase of PF wage to Rs. 15,000/- per month. Enclosed herewith is the most awaited Notification regarding the same published today itself:
The following may be the impact after the amendment:
1. The employees whose monthly basic wage is Rs. 15,000/- and above, and the companies currently paying PF limited to Rs. 6,500/- for such employees may have to increase the contribution limit to at least Rs. 15,000/-. (As per Section 6 of the PF Act, Equal Contribution to be provided by the employer).
2. The employees who have already opted out from PF coverage (whose basic is above Rs. 6,500) should be covered under the scheme in case their Basic Wages are up to Rs. 15,000/- per month.
3. The companies that are currently extending PF benefits only on Rs. 6,500/- irrespective of their wages may have to increase the PF wages to Rs. 15,000/- and need to pay the employer contribution of 13.61% on Rs. 15,000/-.
4. The pension amount maximum limit may also increase from Rs. 541/- to Rs. 1,000/-.
5. Employees whose current basic wage is less than Rs. 15,000/- may have to pay the contribution based on the actual basic payable.
From India, Jabalpur
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21The Government has approved the increase of PF wage to Rs. 15,000/- per month. Enclosed herewith is the most awaited Notification regarding the same published today itself:
The following may be the impact after the amendment:
1. The employees whose monthly basic wage is Rs. 15,000/- and above, and the companies currently paying PF limited to Rs. 6,500/- for such employees may have to increase the contribution limit to at least Rs. 15,000/-. (As per Section 6 of the PF Act, Equal Contribution to be provided by the employer).
2. The employees who have already opted out from PF coverage (whose basic is above Rs. 6,500) should be covered under the scheme in case their Basic Wages are up to Rs. 15,000/- per month.
3. The companies that are currently extending PF benefits only on Rs. 6,500/- irrespective of their wages may have to increase the PF wages to Rs. 15,000/- and need to pay the employer contribution of 13.61% on Rs. 15,000/-.
4. The pension amount maximum limit may also increase from Rs. 541/- to Rs. 1,000/-.
5. Employees whose current basic wage is less than Rs. 15,000/- may have to pay the contribution based on the actual basic payable.
From India, Jabalpur
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Dear sir,
Please understand this concept similar to the 6500/- limit for EPF deduction and the 15,000/- above salary, where individuals can get an exemption for PF deduction after filling up Form 11 (revised).
Nilesh Bhatt
From India, Vadodara
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Please understand this concept similar to the 6500/- limit for EPF deduction and the 15,000/- above salary, where individuals can get an exemption for PF deduction after filling up Form 11 (revised).
Nilesh Bhatt
From India, Vadodara
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Hi Nilesh, The concept and calculation shall remains same but the ceiling will be increased form Rs. 6500 to Rs.15000 w.e.f 1st September 2014.
From India, Jabalpur
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From India, Jabalpur
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Chaturvedi Sir,
I have a little confusion regarding sr. no. 4 where you mentioned that the maximum limit of the pension amount may increase from Rs.541/- to Rs.1000/-. I believe the calculation process remains the same, where the pension fund must be calculated based on the actual basic wage but not exceeding Rs.15000/-, i.e., a maximum of Rs.1250/-.
For example:
1. Basic Wage 7800
Employee share 936/-
Employer share EPF 286/-
EPS 650/-
2. Basic Wage 15000
Employee share 1800/-
Employer share EPF 550/-
EPS 1250/-
3. Basic Wage 18000
Employee Share 2160/-
Employer Share EPF 9
I believe the notification is referring to the pension amount rather than the pension fund share. Am I correct? If not, could you please explain with an example? I would be grateful for your clarification.
From India, Mumbai
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I have a little confusion regarding sr. no. 4 where you mentioned that the maximum limit of the pension amount may increase from Rs.541/- to Rs.1000/-. I believe the calculation process remains the same, where the pension fund must be calculated based on the actual basic wage but not exceeding Rs.15000/-, i.e., a maximum of Rs.1250/-.
For example:
1. Basic Wage 7800
Employee share 936/-
Employer share EPF 286/-
EPS 650/-
2. Basic Wage 15000
Employee share 1800/-
Employer share EPF 550/-
EPS 1250/-
3. Basic Wage 18000
Employee Share 2160/-
Employer Share EPF 9
I believe the notification is referring to the pension amount rather than the pension fund share. Am I correct? If not, could you please explain with an example? I would be grateful for your clarification.
From India, Mumbai
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Dear Chaturvedi Sir,
I have a little confusion regarding point number 4, where you mentioned that the maximum limit for the pension amount may increase from Rs. 541/- to Rs. 1000/-. I believe the calculation process remains the same, where the pension fund must be calculated based on the actual basic wage but not exceeding Rs. 15000/-, i.e., a maximum of Rs. 1250/-.
For example:
1. Basic Wage: 7800
- Employee share: 936/-
- Employer share EPF: 286/-
- EPS: 650/-
2. Basic Wage: 15000
- Employee share: 1800/-
- Employer share EPF: 550/-
- EPS: 1250/-
3. Basic Wage: 18000
- Employee Share: 2160/-
- Employer Share EPF: 910/-
- Employer Share EPS: 1250/-
The third case depends on the company's policy or the employer's preference regarding whether they want to contribute PF on amounts exceeding Rs. 15000/- or not. I believe the notification is referring to the pension amount and not the pension fund share. Please clarify my doubt and correct me if I am mistaken.
Thank you & Regards,
Shailza
From India, Mumbai
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I have a little confusion regarding point number 4, where you mentioned that the maximum limit for the pension amount may increase from Rs. 541/- to Rs. 1000/-. I believe the calculation process remains the same, where the pension fund must be calculated based on the actual basic wage but not exceeding Rs. 15000/-, i.e., a maximum of Rs. 1250/-.
For example:
1. Basic Wage: 7800
- Employee share: 936/-
- Employer share EPF: 286/-
- EPS: 650/-
2. Basic Wage: 15000
- Employee share: 1800/-
- Employer share EPF: 550/-
- EPS: 1250/-
3. Basic Wage: 18000
- Employee Share: 2160/-
- Employer Share EPF: 910/-
- Employer Share EPS: 1250/-
The third case depends on the company's policy or the employer's preference regarding whether they want to contribute PF on amounts exceeding Rs. 15000/- or not. I believe the notification is referring to the pension amount and not the pension fund share. Please clarify my doubt and correct me if I am mistaken.
Thank you & Regards,
Shailza
From India, Mumbai
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Hi Shailza,
Your understanding regarding pension is absolutely correct. Yes, the notification is about the pension amount, not about the EPS, which is 1250 on 15000/-. It was a typo, and I appreciate your observation of the same.
From India, Jabalpur
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Your understanding regarding pension is absolutely correct. Yes, the notification is about the pension amount, not about the EPS, which is 1250 on 15000/-. It was a typo, and I appreciate your observation of the same.
From India, Jabalpur
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Dear sir,
My organization currently follows a practice of a flat 12% PF deduction from employees. My organization is also compliant with minimum wage guidelines. I would appreciate your guidance to understand the impact and changes that I need to introduce in my organization following this notification.
Best wishes and regards
From India, Kolkata
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My organization currently follows a practice of a flat 12% PF deduction from employees. My organization is also compliant with minimum wage guidelines. I would appreciate your guidance to understand the impact and changes that I need to introduce in my organization following this notification.
Best wishes and regards
From India, Kolkata
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Dear Friends,
The notification has created a challenge for HR professionals. On one side, the employee has to increase their contribution, while on the other side, management also needs to increase its contribution. The take-home salary will decrease, leading to an increase in the HR costs of companies. While the objective of the notification is appreciable, the significant rise from 6500/- to 15000/- has put many companies in a difficult situation amidst this challenging economic scenario.
I would like to request senior members/professionals to suggest how companies can address this challenge in a way that minimizes the impact on both employees and employers.
Regards,
Bhavan
From India, Bangalore
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The notification has created a challenge for HR professionals. On one side, the employee has to increase their contribution, while on the other side, management also needs to increase its contribution. The take-home salary will decrease, leading to an increase in the HR costs of companies. While the objective of the notification is appreciable, the significant rise from 6500/- to 15000/- has put many companies in a difficult situation amidst this challenging economic scenario.
I would like to request senior members/professionals to suggest how companies can address this challenge in a way that minimizes the impact on both employees and employers.
Regards,
Bhavan
From India, Bangalore
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Dear Bhavan,
Just go through the message from Shailza, and you will get clarity. According to the recent PF pension fund notification, everything else will remain the same except for an increase in the contribution to the Provident Fund share. Ultimately, the government requires more funds from this PF pension fund. Employers and employees are not contributing more; rather, employees are diverting their PF savings to the pension fund.
I hope I have understood this correctly.
Regards,
Mathan
From India, Madras
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Just go through the message from Shailza, and you will get clarity. According to the recent PF pension fund notification, everything else will remain the same except for an increase in the contribution to the Provident Fund share. Ultimately, the government requires more funds from this PF pension fund. Employers and employees are not contributing more; rather, employees are diverting their PF savings to the pension fund.
I hope I have understood this correctly.
Regards,
Mathan
From India, Madras
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Hi Indrani, Plz assume 15000, instead of 6500 per month wrt PF.
From India, Jabalpur
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From India, Jabalpur
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How is an organization impacted if the organization operates in multiple states and is doing the following:
1. Is applying a flat 12% rate towards PF contribution as the employee's share.
2. Is also compliant with state-prescribed minimum wage limits.
Please guide, dear seniors.
Best wishes.
From India, Kolkata
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1. Is applying a flat 12% rate towards PF contribution as the employee's share.
2. Is also compliant with state-prescribed minimum wage limits.
Please guide, dear seniors.
Best wishes.
From India, Kolkata
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Dear Chaturvedi Sir,
Thank you for your valuable information. I have a doubt. Our company is deducting a flat Rs. 780/- from all employees who are earning more than Rs. 10,000/-. Is this ceiling in need of being increased? If so, what will be the new ceiling? Will the employer also have to increase their ceiling accordingly? Kindly clarify.
Thanks,
Ramachandran
From India, Chennai
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Thank you for your valuable information. I have a doubt. Our company is deducting a flat Rs. 780/- from all employees who are earning more than Rs. 10,000/-. Is this ceiling in need of being increased? If so, what will be the new ceiling? Will the employer also have to increase their ceiling accordingly? Kindly clarify.
Thanks,
Ramachandran
From India, Chennai
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Hi Mr. Amit,
Thank you for sharing such important information.
The notification has brought about another impact/addition in the EDLI benefit, which is now maximum up to 3.6 Lac, whereas earlier it was 1.56 Lac.
From India, Delhi
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Thank you for sharing such important information.
The notification has brought about another impact/addition in the EDLI benefit, which is now maximum up to 3.6 Lac, whereas earlier it was 1.56 Lac.
From India, Delhi
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Sir, I am getting a salary of Rs.20000/- while my basic salary is Rs. 9000/-. What would be my EPF and EPS calcualtions after 1.9.2014
From India, Calicut
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From India, Calicut
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Ramachandran Jee, The ceiling will be increased from 6500 (Basic+DA) to 15000 per month w.e.f 1st September 14.
From India, Jabalpur
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From India, Jabalpur
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Dear Mukund, If your basic+da is 9K than deduction would be 1080/month w.e.f 1st September as EPF and 750/month as EPS.
From India, Jabalpur
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From India, Jabalpur
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Yes Bisht Jee, Its all about how we welcome n accept this change.
From India, Jabalpur
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From India, Jabalpur
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Dear Indranil, Its applicable to whole in India Except J&K. Employer’s liability is only upto 15000/-.
From India, Jabalpur
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From India, Jabalpur
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Dear Chaturvedi Sir, Pls tell about EDLI benefits? is there any changes?
From India, Trichy
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From India, Trichy
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Dear Bisht Sir, As per your comment, EDLI benefits changes is sure or not? (from 1.56 lac to 3.6 lac).
From India, Trichy
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From India, Trichy
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Dear Chaturvedi Sir,
I have some doubts regarding PF calculation:
1. Which one is the correct calculation for PF - calculating from Basic or calculating from Basic + DA?
2. Which method is the legal procedure to calculate PF?
3. Are there any changes in EDLI benefits?
I would greatly appreciate your helpful reply.
From India, Trichy
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I have some doubts regarding PF calculation:
1. Which one is the correct calculation for PF - calculating from Basic or calculating from Basic + DA?
2. Which method is the legal procedure to calculate PF?
3. Are there any changes in EDLI benefits?
I would greatly appreciate your helpful reply.
From India, Trichy
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Dear Sirs, Could anyone clarify whether there is any particular percentage - the basic salary should be from Gross salary? Bcoz, it impacts on EPF reduction, minimum wages (Basic + DA), etc...
From India, Chennai
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From India, Chennai
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Dear Fellow community members...
One interesting feature has not been addressed by anyone in this forum. That is on getting 50% pension based on the last drawn wages. In this notification, it is touched upon as below: please confirm my understanding is on the right side of the EPS body. This is on the contribution made by the companies on the actual basic being drawn without limiting to the CAP of 15k. The notification gives 6 months' time to confirm by both the employer and employee.
Suppose one's basic is Rs. 20,000/-.
Employee Share: 20,000 X 12% = 2,400
Employer share: 20,000 X (8.33% + 3.67%) = 1,666 + 734
If Rs. 1,666/- is contributed to EPS, then such an employee can draw 50% of the last drawn average basic as his pension. But one wise amendment made by the EPS body is,
Last drawn Basic wage = average of the last 60 months basic prior to retirement.
It was earlier the last 12 months' basic prior to retirement. Now it is hiked to 60 months.
Under the above, one can expect the pension to be as good as Govt. employees. Suppose one retires in 2030. The average basic salary between 2026 to 2030 is 40k, then he can expect the pension of Rs. 20k per month.
Let us publicize this benefit to all! Seeks views from all learned members!!!
Rajan
From India, Alandur
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One interesting feature has not been addressed by anyone in this forum. That is on getting 50% pension based on the last drawn wages. In this notification, it is touched upon as below: please confirm my understanding is on the right side of the EPS body. This is on the contribution made by the companies on the actual basic being drawn without limiting to the CAP of 15k. The notification gives 6 months' time to confirm by both the employer and employee.
Suppose one's basic is Rs. 20,000/-.
Employee Share: 20,000 X 12% = 2,400
Employer share: 20,000 X (8.33% + 3.67%) = 1,666 + 734
If Rs. 1,666/- is contributed to EPS, then such an employee can draw 50% of the last drawn average basic as his pension. But one wise amendment made by the EPS body is,
Last drawn Basic wage = average of the last 60 months basic prior to retirement.
It was earlier the last 12 months' basic prior to retirement. Now it is hiked to 60 months.
Under the above, one can expect the pension to be as good as Govt. employees. Suppose one retires in 2030. The average basic salary between 2026 to 2030 is 40k, then he can expect the pension of Rs. 20k per month.
Let us publicize this benefit to all! Seeks views from all learned members!!!
Rajan
From India, Alandur
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Dear Experts,
Is the PF calculation correct?
Example-1 (Base Rs. 15000/-)
CTC Salary – Rs. 25000/-
Basic (60% of CTC) – Rs. 15000/-
Medical (Max.)- Rs. 1250/-
HRA (40% of Basic) – Rs. 6000/-
Conveyance (Max.)- Rs. 800/-
Sp. Allowance – Rs. 1950/-
Deduction:-
PF:- (Emp. Cont.)= Rs. 15000*12%= Rs. 1800
PF:- (Empr. Cont.)= Rs. 15000*13.61%= Rs.2041.50 -
Example- 2
CTC Salary – Rs. 25002/-
Basic (60% of CTC) – Rs. 15001.2/-
Medical (Max.)- Rs. 1250/-
HRA (40% of Basic) – Rs. 6000.48/-
Conveyance (Max.)- Rs. 800/-
Sp. Allowance – Rs. 1950.32/-
Deduction:-(as basic is above 15000, exempted)
PF:- (Emp. Cont.)= Rs. 0*12%= Rs. 0
PF:- (Empr. Cont.)= Rs. 0*13.61%= Rs.0
Example- 3:
CTC Salary – Rs. 10000/-
Basic (60% of CTC) – Rs. 6000/-
Medical (12 % of Basic.)- Rs.720/-
HRA (40% of Basic) – Rs. 2400/-
Conveyance (Max.)- Rs. 240/-
Sp. Allowance – Rs. 640/-
Deduction:-
PF:- (Emp. Cont.)= Rs. 6000*12%= Rs. 720
PF:- (Empr. Cont.)= Rs. 0*13.61%= Rs.816.6
From India, Mumbai
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Is the PF calculation correct?
Example-1 (Base Rs. 15000/-)
CTC Salary – Rs. 25000/-
Basic (60% of CTC) – Rs. 15000/-
Medical (Max.)- Rs. 1250/-
HRA (40% of Basic) – Rs. 6000/-
Conveyance (Max.)- Rs. 800/-
Sp. Allowance – Rs. 1950/-
Deduction:-
PF:- (Emp. Cont.)= Rs. 15000*12%= Rs. 1800
PF:- (Empr. Cont.)= Rs. 15000*13.61%= Rs.2041.50 -
Example- 2
CTC Salary – Rs. 25002/-
Basic (60% of CTC) – Rs. 15001.2/-
Medical (Max.)- Rs. 1250/-
HRA (40% of Basic) – Rs. 6000.48/-
Conveyance (Max.)- Rs. 800/-
Sp. Allowance – Rs. 1950.32/-
Deduction:-(as basic is above 15000, exempted)
PF:- (Emp. Cont.)= Rs. 0*12%= Rs. 0
PF:- (Empr. Cont.)= Rs. 0*13.61%= Rs.0
Example- 3:
CTC Salary – Rs. 10000/-
Basic (60% of CTC) – Rs. 6000/-
Medical (12 % of Basic.)- Rs.720/-
HRA (40% of Basic) – Rs. 2400/-
Conveyance (Max.)- Rs. 240/-
Sp. Allowance – Rs. 640/-
Deduction:-
PF:- (Emp. Cont.)= Rs. 6000*12%= Rs. 720
PF:- (Empr. Cont.)= Rs. 0*13.61%= Rs.816.6
From India, Mumbai
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Hi Tatkare Jee, Its all about Basic+DA only if you are not having DA component please consider Basic only for deduction.
From India, Jabalpur
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From India, Jabalpur
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Hi Dhiliban, If you have a separate DA component in your CTC/Gross fixation format, then add this amount to the basic for the calculation of PF wages. If you do not have a separate DA component, then consider only the basic.
The EDLI benefit has also increased to 3.6 Lakhs.
From India, Jabalpur
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The EDLI benefit has also increased to 3.6 Lakhs.
From India, Jabalpur
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Dear All,
Please take note of the following point in the Pension amendment.
Paragraph 4 states: "The existing members as of 1/9/14 who, at the option of the employer and employee, had been contributing on a salary exceeding 6500/- may, on a fresh option, continue to contribute on a salary exceeding 15000/-. Provided that the aforementioned members have to contribute @1.16% on a salary exceeding 15000/- as an additional contribution payable by employees for each month."
From what I understand about pensions, there was no option to contribute on a salary above the statutory limit. Previously, it was 6500/-, so the pension contribution of employees who were contributing above the statutory limit was 541/-, which was contributed by the employer. Now, in this scheme, it discusses contributions over and above the wage ceiling as well as additional contributions by those who are contributing over and above the wage ceiling.
This situation creates confusion about what the current structure of PF and Pension calculation will be.
Thank you.
From India, Ahmedabad
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Please take note of the following point in the Pension amendment.
Paragraph 4 states: "The existing members as of 1/9/14 who, at the option of the employer and employee, had been contributing on a salary exceeding 6500/- may, on a fresh option, continue to contribute on a salary exceeding 15000/-. Provided that the aforementioned members have to contribute @1.16% on a salary exceeding 15000/- as an additional contribution payable by employees for each month."
From what I understand about pensions, there was no option to contribute on a salary above the statutory limit. Previously, it was 6500/-, so the pension contribution of employees who were contributing above the statutory limit was 541/-, which was contributed by the employer. Now, in this scheme, it discusses contributions over and above the wage ceiling as well as additional contributions by those who are contributing over and above the wage ceiling.
This situation creates confusion about what the current structure of PF and Pension calculation will be.
Thank you.
From India, Ahmedabad
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Dear members,
It will take some time for the confusion to stop and to understand the full crux of the notification. In addition to the above, also be reminded about the following clause in the notification.
"Effective September 1, 2014, all new EPF members shall not become a member of EPS if their pay is more than INR 15,000 per month at the time of joining. In other words, no allocation towards the pension fund will be made for such new members, and the entire employee and employer contribution will go to the provident fund account. For existing subscribers drawing more than 15000/-, a 'fresh option' has to be exercised for willingness to contribute."
At the maximum, the employer may restrict to 15,000/- for EPS/EPS as usual. Many small size companies are unwilling to meet the extra contribution, and so are the employees on high deduction. Let's wait and see the course of action.
Regards, Chandru
From India, Madras
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It will take some time for the confusion to stop and to understand the full crux of the notification. In addition to the above, also be reminded about the following clause in the notification.
"Effective September 1, 2014, all new EPF members shall not become a member of EPS if their pay is more than INR 15,000 per month at the time of joining. In other words, no allocation towards the pension fund will be made for such new members, and the entire employee and employer contribution will go to the provident fund account. For existing subscribers drawing more than 15000/-, a 'fresh option' has to be exercised for willingness to contribute."
At the maximum, the employer may restrict to 15,000/- for EPS/EPS as usual. Many small size companies are unwilling to meet the extra contribution, and so are the employees on high deduction. Let's wait and see the course of action.
Regards, Chandru
From India, Madras
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Can anyone explain to me the below clause of the new notification by PF enhancing the limit from 6500 to 15000 wage ceiling?
"On salary exceeding six thousand and five hundred rupees per month, may, on a fresh option to be exercised jointly by the employer and employee, continue to contribute on salary exceeding fifteen thousand rupees per month:
Provided that the aforesaid members have to contribute at the rate of 1.16 percent on salary exceeding fifteen thousand rupees as an additional contribution from and out of the contributions payable by the employees for each month under the provisions of the Act or the rules made thereunder.
Looking forward to an early response.
Thanks,
Sajid"
From India, Delhi
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"On salary exceeding six thousand and five hundred rupees per month, may, on a fresh option to be exercised jointly by the employer and employee, continue to contribute on salary exceeding fifteen thousand rupees per month:
Provided that the aforesaid members have to contribute at the rate of 1.16 percent on salary exceeding fifteen thousand rupees as an additional contribution from and out of the contributions payable by the employees for each month under the provisions of the Act or the rules made thereunder.
Looking forward to an early response.
Thanks,
Sajid"
From India, Delhi
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Dear Jagriti Bhagat, CTC means cost to the company. so the management may deduct both the share from the employee. But the bigh question is, is it ethical?
From India, Mumbai
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From India, Mumbai
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Dear Mr. Tatkare,
The management can deduct the employer's share as well as the employee's share from CTC because all costs that incur due to recruiting an individual constitute a part of CTC. I hope you are well aware that all salary components are included in CTC.
It's like this: Basic Salary + Dearness Allowance + House Rent Allowance + Conveyance Allowance + Leave Travel Allowance + Medical Allowance + Other & Special Allowance + All employer contributions to deductions = Cost to the Company. Cost to the Company - All employer contributions to deductions = Gross Salary. Gross Salary - All employee contributions to deductions = Net Salary.
In these deductions are mostly EPF, ESI, PT, Loan, TDS, etc. So, it is not a question of ethics but rather a matter of individual perception.
From India, Chennai
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The management can deduct the employer's share as well as the employee's share from CTC because all costs that incur due to recruiting an individual constitute a part of CTC. I hope you are well aware that all salary components are included in CTC.
It's like this: Basic Salary + Dearness Allowance + House Rent Allowance + Conveyance Allowance + Leave Travel Allowance + Medical Allowance + Other & Special Allowance + All employer contributions to deductions = Cost to the Company. Cost to the Company - All employer contributions to deductions = Gross Salary. Gross Salary - All employee contributions to deductions = Net Salary.
In these deductions are mostly EPF, ESI, PT, Loan, TDS, etc. So, it is not a question of ethics but rather a matter of individual perception.
From India, Chennai
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Hi,
Except below effect, nothing will be changed; it remains the same. There is no reduction in net salary.
EDLI will be calculated at 0.5% on the Pension wage, currently Rs 6500. If it is increased to Rs 15000, we need to calculate 0.5% on Rs 15000, and even it is applicable for admin charges of EDLI at 0.01% on Rs 15000. (It costs the employer only).
Due to this, there will be an impact on employer EDLI contributions.
1. The difference amount would be added to the EPF amount of 3.67%, same as before.
If Basic is Rs 20000 (Greater than Rs 15000):
EPF Contribution from Employee: Rs 2400 (12% on Basic 20000)
EPS Contribution from Employer: Rs 1250 (8.33% on the maximum limit Rs 15000*)
EPF Contribution from Employer: Rs 1150 (3.67% on 20000 + the difference amount of 416)
2. If the Basic salary is less than Rs 15000, then the Pension Contribution would be 8.33% on Basic, and the PF Contribution from the employer would be 3.67% on Basic. There will not be any difference amount to add to the value of EPF (3.67%).
If Basic is 10000 (Less than Rs 15000):
EPF Contribution from Employee: Rs 1200 (12% on Basic 10000)
EPS Contribution from Employer: Rs 833 (8.33% on Basic 10000)
EPF Contribution from Employer: Rs 367 (3.67% on Basic 10000)
From India, Visakhapatnam
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Except below effect, nothing will be changed; it remains the same. There is no reduction in net salary.
EDLI will be calculated at 0.5% on the Pension wage, currently Rs 6500. If it is increased to Rs 15000, we need to calculate 0.5% on Rs 15000, and even it is applicable for admin charges of EDLI at 0.01% on Rs 15000. (It costs the employer only).
Due to this, there will be an impact on employer EDLI contributions.
1. The difference amount would be added to the EPF amount of 3.67%, same as before.
If Basic is Rs 20000 (Greater than Rs 15000):
EPF Contribution from Employee: Rs 2400 (12% on Basic 20000)
EPS Contribution from Employer: Rs 1250 (8.33% on the maximum limit Rs 15000*)
EPF Contribution from Employer: Rs 1150 (3.67% on 20000 + the difference amount of 416)
2. If the Basic salary is less than Rs 15000, then the Pension Contribution would be 8.33% on Basic, and the PF Contribution from the employer would be 3.67% on Basic. There will not be any difference amount to add to the value of EPF (3.67%).
If Basic is 10000 (Less than Rs 15000):
EPF Contribution from Employee: Rs 1200 (12% on Basic 10000)
EPS Contribution from Employer: Rs 833 (8.33% on Basic 10000)
EPF Contribution from Employer: Rs 367 (3.67% on Basic 10000)
From India, Visakhapatnam
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Subject: Need Urgent Reply
Hi All,
Please let me know what maximum companies are doing for PF (from 6500 - 1500 Basic) as per Gross base or CTC Base. If an existing employee (working more than 1 year) has 12000/- as Basic, what are the companies doing from this month (Sep 14)? Are they paying employer share or showing the total salary as CTC and deducting 2 parts from the employee?
From India, Hyderabad
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Hi All,
Please let me know what maximum companies are doing for PF (from 6500 - 1500 Basic) as per Gross base or CTC Base. If an existing employee (working more than 1 year) has 12000/- as Basic, what are the companies doing from this month (Sep 14)? Are they paying employer share or showing the total salary as CTC and deducting 2 parts from the employee?
From India, Hyderabad
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Dear Expert,
For the past two weeks, I have been facing a lot of pressure from both Management and Employees. Management states that any deductions of PF are to be subtracted from the CTC itself, which is indeed accurate. However, this results in employees receiving a significantly reduced amount in hand since both the employee and employer contributions are deducted from the employee's salary directly.
How are you all handling this situation?
From India, Mumbai
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For the past two weeks, I have been facing a lot of pressure from both Management and Employees. Management states that any deductions of PF are to be subtracted from the CTC itself, which is indeed accurate. However, this results in employees receiving a significantly reduced amount in hand since both the employee and employer contributions are deducted from the employee's salary directly.
How are you all handling this situation?
From India, Mumbai
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Hi,
Can anyone tell me what salary heads need to be considered for the calculation of PF according to these notifications? We have Basic, HRA, Conveyance, Medical Allowance, Special Allowance, and currently, we are calculating PF on Basic + Special Allowance. Please clarify my query.
Regards,
Gajendra
From India, Bangalore
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Can anyone tell me what salary heads need to be considered for the calculation of PF according to these notifications? We have Basic, HRA, Conveyance, Medical Allowance, Special Allowance, and currently, we are calculating PF on Basic + Special Allowance. Please clarify my query.
Regards,
Gajendra
From India, Bangalore
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if employees' total salary is Rs.10000/- and basic+ DA is Rs. 7500/-, then pf will be calculated on Rs. 10000/- or on Rs. 7500/-?
From India, Bangalore
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From India, Bangalore
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Hello!
Under the PF Act, following components of salary do not attract PF deduction;
i) House Rent Allowance
ii)Overtime Allowance
iii) Bonus
iv)Commission or any other similar allowance
As per judgments delivered by Gujarat, Madhya Pradesh & Madras High Courts, it has been held that all allowances ( i.e. Conveyance, Medical, Education, Attire, Special & other allowances etc. etc.), which are paid universally, necessarily & ordinarily to all employees, they will be treated as part & parcel of basic wages & that will attract the PF contribution. However, the appeals have been filed in the Supreme Court by M/s. Surya Roshini Ltd. & others, which are likely to be heared & decided in near future.
Also the Basic should be calculated @ not less than 55% of gross.
I hope this helps!!!!!
From India, Mumbai
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Under the PF Act, following components of salary do not attract PF deduction;
i) House Rent Allowance
ii)Overtime Allowance
iii) Bonus
iv)Commission or any other similar allowance
As per judgments delivered by Gujarat, Madhya Pradesh & Madras High Courts, it has been held that all allowances ( i.e. Conveyance, Medical, Education, Attire, Special & other allowances etc. etc.), which are paid universally, necessarily & ordinarily to all employees, they will be treated as part & parcel of basic wages & that will attract the PF contribution. However, the appeals have been filed in the Supreme Court by M/s. Surya Roshini Ltd. & others, which are likely to be heared & decided in near future.
Also the Basic should be calculated @ not less than 55% of gross.
I hope this helps!!!!!
From India, Mumbai
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Sir,
Kindly help me clarify these doubts. Whether an employee who joins PF on or after 1st September can become a member of the pension scheme, or would the whole 12% EMPLOYER CONTRIBUTION go to PF? If there is any change in rules (for employees joining on or after September 2014), then is it applicable for both categories, one with a salary under Rs. 15,000/- and the other exceeding Rs. 15,000/-?
From India, Ernakulam
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Kindly help me clarify these doubts. Whether an employee who joins PF on or after 1st September can become a member of the pension scheme, or would the whole 12% EMPLOYER CONTRIBUTION go to PF? If there is any change in rules (for employees joining on or after September 2014), then is it applicable for both categories, one with a salary under Rs. 15,000/- and the other exceeding Rs. 15,000/-?
From India, Ernakulam
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Hi all,
I heard about it. Is it correct? Due to the increasing of the pension wage limit from Rs 6500 to Rs 15000, is there any effect on International Workers' contributions? Will the entire contribution be deposited into the PF account instead of 8.33% in the pension account? If so, is it applicable to all international workers who were working before and after 1st September 2014?
From India, Visakhapatnam
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I heard about it. Is it correct? Due to the increasing of the pension wage limit from Rs 6500 to Rs 15000, is there any effect on International Workers' contributions? Will the entire contribution be deposited into the PF account instead of 8.33% in the pension account? If so, is it applicable to all international workers who were working before and after 1st September 2014?
From India, Visakhapatnam
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Dear Sir,
One of my clients has registered themselves under the PF Act w.e.f. Sep 2014. Now, we are going to generate the ECR for the months of Sep and Oct 2014. However, the issue is they have 21 employees for whom ECR needs to be processed, and out of these employees, the basic salary of 20 employees is above Rs. 15,000. Most of the employees do not want to have PF deductions from their salaries. What is required to be done in this case as we have not submitted any forms to the EPF office regarding the exemption of employees?
From India, Bhopal
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One of my clients has registered themselves under the PF Act w.e.f. Sep 2014. Now, we are going to generate the ECR for the months of Sep and Oct 2014. However, the issue is they have 21 employees for whom ECR needs to be processed, and out of these employees, the basic salary of 20 employees is above Rs. 15,000. Most of the employees do not want to have PF deductions from their salaries. What is required to be done in this case as we have not submitted any forms to the EPF office regarding the exemption of employees?
From India, Bhopal
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Hi,
I want to confirm how much basic salary we can keep as per government law. As per the new rule of PF (revision in wage ceiling), I have implemented 12% on every employee's basic salary. However, some employees have a salary less than 6500. Is that correct, or do I need to change the basic wages?
Waiting for your responses and suggestions.
Thanks & Regards,
Aashima
From India, Delhi
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I want to confirm how much basic salary we can keep as per government law. As per the new rule of PF (revision in wage ceiling), I have implemented 12% on every employee's basic salary. However, some employees have a salary less than 6500. Is that correct, or do I need to change the basic wages?
Waiting for your responses and suggestions.
Thanks & Regards,
Aashima
From India, Delhi
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Dear Sir,
I have one question: I am currently working directly as a contract employee in the Jharkhand government. My salary is 12000 per month, and I do not have a pension account provided by the Jharkhand government. Am I eligible for the Employee Pension Amendment 2014?
Thank you.
From India, Ranchi
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I have one question: I am currently working directly as a contract employee in the Jharkhand government. My salary is 12000 per month, and I do not have a pension account provided by the Jharkhand government. Am I eligible for the Employee Pension Amendment 2014?
Thank you.
From India, Ranchi
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That is alright about Rs. 6500 & Rs.15000.. Plz provide me the break up percentage of the employer contribution monthly in PF. Also the employee contribution in percentage....
From India, Mumbai
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From India, Mumbai
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Hi Sir,
I have a query. My basic salary is 10000/-, and I am applicable to have PF deducted. My firm is deducting both my share and the employer's share from my salary itself. Is this the right way? As far as I know, I am only supposed to pay the employee's share, and the employer's share should be paid by the company.
Please suggest me.
From India,
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I have a query. My basic salary is 10000/-, and I am applicable to have PF deducted. My firm is deducting both my share and the employer's share from my salary itself. Is this the right way? As far as I know, I am only supposed to pay the employee's share, and the employer's share should be paid by the company.
Please suggest me.
From India,
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Dear Chatuevedi does the rule still prevails Anticipating your valuable feedback
From India, Gurgaon
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From India, Gurgaon
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Up to September 2014, my contribution in PF was $1768, and the employer's contribution in PF was $1227, with an additional $541 in the pension fund. However, after receiving a notification in October 2014, there was a reversal in the employer's contribution. Since October 2014, the employer's contribution to PF has been $541, and towards the pension fund is $1227. I am having trouble understanding this change. Please help me out.
Regards.
From India, Bisrakh
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Regards.
From India, Bisrakh
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Dear KK2121,
Your ID on Cite HR is KK2121, I see it as a combination of pairs "K-K" and "21-21".
Like your ID, your basic pay is also forming a pair of "Employee-Employer" contributions.
Let's see.
Here, I assume your basic pay is Rs. 14,730.
PF Computation Till Sep-2014:
A. Employee's Contribution to EPF: Rs. 14,730 * 12% = Rs. 1,768.
B. Employer's Contribution to EPS: Rs. 14,730 * 8.33% = Rs. 1,227 (limited up to Rs. 541, which is Rs. 6,500 * 8.33%).
C. Employer's Contribution to EPF = A - B, i.e., Rs. 1,768 - 541 = Rs. 1,227.
PF Computation After Oct-2014:
A. Employee's Contribution to EPF: Rs. 14,730 * 12% = Rs. 1,768.
B. Employer's Contribution to EPS: Rs. 14,730 * 8.33% = Rs. 1,227 (less than the higher limit of Rs. 1,250, which is Rs. 15,000 * 8.33%).
C. Employer's Contribution to EPF = A - B, i.e., Rs. 1,768 - Rs. 1,227 = Rs. 541.
Thus, in your case, the amounts of the employer's contribution towards EPF and EPS are just reversed.
I hope the computation has clarified your doubts.
Besides the functional points, in mathematical terms, I will term Basic (approximately Rs. 14,730) as "Reversing Basic," which is forming a pair of reversing amounts of contribution.
From India, Mumbai
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Your ID on Cite HR is KK2121, I see it as a combination of pairs "K-K" and "21-21".
Like your ID, your basic pay is also forming a pair of "Employee-Employer" contributions.
Let's see.
Here, I assume your basic pay is Rs. 14,730.
PF Computation Till Sep-2014:
A. Employee's Contribution to EPF: Rs. 14,730 * 12% = Rs. 1,768.
B. Employer's Contribution to EPS: Rs. 14,730 * 8.33% = Rs. 1,227 (limited up to Rs. 541, which is Rs. 6,500 * 8.33%).
C. Employer's Contribution to EPF = A - B, i.e., Rs. 1,768 - 541 = Rs. 1,227.
PF Computation After Oct-2014:
A. Employee's Contribution to EPF: Rs. 14,730 * 12% = Rs. 1,768.
B. Employer's Contribution to EPS: Rs. 14,730 * 8.33% = Rs. 1,227 (less than the higher limit of Rs. 1,250, which is Rs. 15,000 * 8.33%).
C. Employer's Contribution to EPF = A - B, i.e., Rs. 1,768 - Rs. 1,227 = Rs. 541.
Thus, in your case, the amounts of the employer's contribution towards EPF and EPS are just reversed.
I hope the computation has clarified your doubts.
Besides the functional points, in mathematical terms, I will term Basic (approximately Rs. 14,730) as "Reversing Basic," which is forming a pair of reversing amounts of contribution.
From India, Mumbai
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Dear Members,
Please help me understand the EPS calculation logic. I would like to know if we can calculate EPS based on scenarios 2 and 3 (on a pro-rata basis), or if we can pay based on the number of days worked in a month, excluding absences, as shown in scenario 1?
Scenario 1
Actual Salary for July-2016
PF wages PF EPS Wages EPS Employer share
25000 3000 15000 1250 1750
Problem statement.
Scenario 2
Paid 25 days for July-2016 (absent 6 days)
PF wages PF EPS Wages EPS Employer share
20161 2419 12097 1008 1411
Problem statement.
Scenario 3
Paid 31 days for Salary Aug-2016 and also paid 6 days for July-2016 as arrears
PF wgs PF wgs Arr PF + Arr EPS Wgs EPS Wgs Arr EPS ES
25000 4839 3581 15000 2903 1491 2090
Regards,
Shanu
From India, New Delhi
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Please help me understand the EPS calculation logic. I would like to know if we can calculate EPS based on scenarios 2 and 3 (on a pro-rata basis), or if we can pay based on the number of days worked in a month, excluding absences, as shown in scenario 1?
Scenario 1
Actual Salary for July-2016
PF wages PF EPS Wages EPS Employer share
25000 3000 15000 1250 1750
Problem statement.
Scenario 2
Paid 25 days for July-2016 (absent 6 days)
PF wages PF EPS Wages EPS Employer share
20161 2419 12097 1008 1411
Problem statement.
Scenario 3
Paid 31 days for Salary Aug-2016 and also paid 6 days for July-2016 as arrears
PF wgs PF wgs Arr PF + Arr EPS Wgs EPS Wgs Arr EPS ES
25000 4839 3581 15000 2903 1491 2090
Regards,
Shanu
From India, New Delhi
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Hi,
Please see the attached notification. As per it, an international worker joining the establishment on or after 01.09.2014 should not be made a member of EPS. The entire 12% employer contribution should go to EPF.
From India, Bengaluru
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Please see the attached notification. As per it, an international worker joining the establishment on or after 01.09.2014 should not be made a member of EPS. The entire 12% employer contribution should go to EPF.
From India, Bengaluru
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Dear Experts,
Can an employer extend the options to one employee of PF contribution INR 1800 per month (each side) and also to another employee with 12% on actual basic (assuming basic is greater than INR 15,000 per month)?
I would be grateful if you could support your views with any government notification. Is it possible?
From India, Kota
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Can an employer extend the options to one employee of PF contribution INR 1800 per month (each side) and also to another employee with 12% on actual basic (assuming basic is greater than INR 15,000 per month)?
I would be grateful if you could support your views with any government notification. Is it possible?
From India, Kota
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Minimum Wages Revision - Notification.PD F