Hi,
PF is deducted at 12% of Basic+DA/Basic only if DA is not included. The contribution comes from both sides, i.e., employees and employers.
Out of the 12% contributed by the employer, 8.33% goes to the Pension fund, while the remaining 3.67% goes to the PF fund itself. This means that 24 - 8.33% = 15.67% goes to PF.
The maximum ceiling for PF deduction is 6500/- basic. If it exceeds this amount, the employee can still be a member, but their maximum contribution to the fund will remain constant at 12% of 6500/- only.
I hope this clarifies things for you.
Regards,
Amit Seth
From India, Ahmadabad
Acknowledge(0)
Amend(0)
508PF is deducted at 12% of Basic+DA/Basic only if DA is not included. The contribution comes from both sides, i.e., employees and employers.
Out of the 12% contributed by the employer, 8.33% goes to the Pension fund, while the remaining 3.67% goes to the PF fund itself. This means that 24 - 8.33% = 15.67% goes to PF.
The maximum ceiling for PF deduction is 6500/- basic. If it exceeds this amount, the employee can still be a member, but their maximum contribution to the fund will remain constant at 12% of 6500/- only.
I hope this clarifies things for you.
Regards,
Amit Seth
From India, Ahmadabad
Acknowledge(0)Amend(0)
Dear Amit,
I want to add one thing that, according to PF law, there are two options:
1.) The maximum ceiling for PF deduction is Rs. 6,500/- basic. If it exceeds this amount, the employee can continue to be a member, and his maximum contribution to the fund would remain constant, i.e., 12% of Rs. 6,500/- only.
2.) Or define the PF according to the basic (12% of basic, whatever salary is increased).
Deepika
From India, New Delhi
Acknowledge(0)Amend(0)
I want to add one thing that, according to PF law, there are two options:
1.) The maximum ceiling for PF deduction is Rs. 6,500/- basic. If it exceeds this amount, the employee can continue to be a member, and his maximum contribution to the fund would remain constant, i.e., 12% of Rs. 6,500/- only.
2.) Or define the PF according to the basic (12% of basic, whatever salary is increased).
Deepika
From India, New Delhi
Acknowledge(0)Amend(0)
Hi Deepika, I am not getting what exactly you want to say.. Please clarify more.. Regards, Amit Seth.
From India, Ahmadabad
Acknowledge(0)Amend(0)
From India, Ahmadabad
Acknowledge(0)Amend(0)
Amit,
Well, actually, I spoke to a few of my colleagues about this, and according to them, their companies are only providing PF based on ₹6500, even if the basic salary is higher. The same policy applies in our company. The reason they all mentioned is the ₹6500 ceiling limit, which is not mandatory but is an option provided by the PF. You may choose to continue contributing based on the actual basic salary or limit it to ₹6500.
Deepika
From India, New Delhi
Acknowledge(0)Amend(0)
Well, actually, I spoke to a few of my colleagues about this, and according to them, their companies are only providing PF based on ₹6500, even if the basic salary is higher. The same policy applies in our company. The reason they all mentioned is the ₹6500 ceiling limit, which is not mandatory but is an option provided by the PF. You may choose to continue contributing based on the actual basic salary or limit it to ₹6500.
Deepika
From India, New Delhi
Acknowledge(0)Amend(0)
Hi Smita,
PF is the social security scheme, wherein both the employer and the employee must contribute an equal amount of share (i.e., 12% each). From the employer's share, 8.33% goes to the Pension fund of the employee, and 3.67% goes to the employee's provident fund. The salary limit for PF deduction is Rs. 6,500/-, but since PF is a security for all employees, irrespective of the salary limit, it covers all employees under PF and deducts.
The maximum amount for Pension deduction is Rs. 541, which needs to be added over and above the employer's share. Please do not worry about limitations and ceilings; just cover all employees under PF. This approach can motivate and promote monthly savings for the employees.
If you have further doubts, feel free to ask. You can also contact me at my personal email ID: deva_1970@rediffmail.com.
Regards,
R. Devarajan
From India, Madras
Acknowledge(0)Amend(0)
PF is the social security scheme, wherein both the employer and the employee must contribute an equal amount of share (i.e., 12% each). From the employer's share, 8.33% goes to the Pension fund of the employee, and 3.67% goes to the employee's provident fund. The salary limit for PF deduction is Rs. 6,500/-, but since PF is a security for all employees, irrespective of the salary limit, it covers all employees under PF and deducts.
The maximum amount for Pension deduction is Rs. 541, which needs to be added over and above the employer's share. Please do not worry about limitations and ceilings; just cover all employees under PF. This approach can motivate and promote monthly savings for the employees.
If you have further doubts, feel free to ask. You can also contact me at my personal email ID: deva_1970@rediffmail.com.
Regards,
R. Devarajan
From India, Madras
Acknowledge(0)Amend(0)
Dear Smitha,
Regarding PF Contribution - Employer should pay 12% of Basic salary, in which 8.33% will go to the Pension Scheme, and the remaining 3.67% will go to PF. While calculating the Pension Scheme, the employer should pay 8.33% of the basic salary (limited up to Rs. 6500, i.e., Rs. 541), not more than that; the rest will go to PF.
For example, if the employee's Basic salary is Rs. 8000, Rs. 541 (8.33%) will go to the pension scheme, and Rs. 419 will go to PF. However, the employer has to contribute 12% of the basic salary, regardless of the amount.
Regarding Employee Contribution of 12% from the basic salary, it is unavoidable as per the PF act. Please refer to the ppt for more details.
Regards,
Mohan
Zen HR
From India, Madras
Acknowledge(0)Amend(0)
Regarding PF Contribution - Employer should pay 12% of Basic salary, in which 8.33% will go to the Pension Scheme, and the remaining 3.67% will go to PF. While calculating the Pension Scheme, the employer should pay 8.33% of the basic salary (limited up to Rs. 6500, i.e., Rs. 541), not more than that; the rest will go to PF.
For example, if the employee's Basic salary is Rs. 8000, Rs. 541 (8.33%) will go to the pension scheme, and Rs. 419 will go to PF. However, the employer has to contribute 12% of the basic salary, regardless of the amount.
Regarding Employee Contribution of 12% from the basic salary, it is unavoidable as per the PF act. Please refer to the ppt for more details.
Regards,
Mohan
Zen HR
From India, Madras
Acknowledge(0)Amend(0)
Hi, I am Hasamukh Gami currently looking for a core HR job. I have completed a Master of Human Resource Management at Gujarat Vidyapith, Ahmedabad. I have good knowledge of the Recruitment-Selection process, Training-Development system, HR Administration, Performance management system, and safety and welfare facilities. I am also familiar with labor laws. I completed my graduation at North Gujarat University, Patan. I am seeking a job with your kind reference. Thank you.
From India, Pune
Acknowledge(0)Amend(0)
From India, Pune
Acknowledge(0)Amend(0)CiteHR is an AI-augmented HR knowledge and collaboration platform, enabling HR professionals to solve real-world challenges, validate decisions, and stay ahead through collective intelligence and machine-enhanced guidance. Join Our Platform.
PF Pension fund contribution beyond 58 years of age.pdf