Dear All,
Today in the newspaper, we saw an EPFO circular dated 30-11-2012. I don't know if it has been approved yet, but I would like to discuss it with professionals who have a better understanding of PF.
1. Any idea when this may come into action? They mention that PF should not be calculated in Basic; it should be Basic + all allowances. This change could significantly reduce the take-home amount, which may have serious repercussions for junior staff.
2. Is it possible for employees who are currently part of PF and have had their salary increased to a basic of 6600/- to opt out of PF within the same organization? Please check and respond.
I need help from all the professionals as this may impact most of us.
Best Regards,
Monika Marwah
From United States, Duluth
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10Today in the newspaper, we saw an EPFO circular dated 30-11-2012. I don't know if it has been approved yet, but I would like to discuss it with professionals who have a better understanding of PF.
1. Any idea when this may come into action? They mention that PF should not be calculated in Basic; it should be Basic + all allowances. This change could significantly reduce the take-home amount, which may have serious repercussions for junior staff.
2. Is it possible for employees who are currently part of PF and have had their salary increased to a basic of 6600/- to opt out of PF within the same organization? Please check and respond.
I need help from all the professionals as this may impact most of us.
Best Regards,
Monika Marwah
From United States, Duluth
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Attached is the document for your reference. Thanks - Monika
From United States, Duluth
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From United States, Duluth
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Hi Monika No it doesn’t mean as employee shall be exempted from Contributions. For calculation of PF now we should calculate Basic+DA, Conveyance, HRA & other allowances too.
From India, Bangalore
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From India, Bangalore
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Dear Jeevarathnam,
I agree with the calculation, but setting aside this news, could we offer this option to employees who are not interested in taking home less pay and prefer more statutory benefits? Is it possible to exempt them from PF deductions if their basic salary is Rs. 6600/-?
Please advise! I am currently encountering an issue with my packers who are taking home Rs. 6000 after all deductions. We only deduct PF from the basic salary. If we adjust the calculation based on the entire salary, their take-home pay would reduce to around Rs. 4500/-, which could make it extremely challenging for them to continue working with us or any other company at a similar level. This issue would impact all our employees.
I need urgent assistance!
Thanks,
Monika Marwah
From United States, Duluth
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I agree with the calculation, but setting aside this news, could we offer this option to employees who are not interested in taking home less pay and prefer more statutory benefits? Is it possible to exempt them from PF deductions if their basic salary is Rs. 6600/-?
Please advise! I am currently encountering an issue with my packers who are taking home Rs. 6000 after all deductions. We only deduct PF from the basic salary. If we adjust the calculation based on the entire salary, their take-home pay would reduce to around Rs. 4500/-, which could make it extremely challenging for them to continue working with us or any other company at a similar level. This issue would impact all our employees.
I need urgent assistance!
Thanks,
Monika Marwah
From United States, Duluth
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Dear All,
I actually had a conversation with the PF Authority, and they are saying that except for HRA, all other allowances + Basic should have 12% deducted for PF, with a ceiling limit of Rs. 6500. Employers may choose to contribute more than Rs. 6500 if they wish.
Thank you.
From India, Chennai
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I actually had a conversation with the PF Authority, and they are saying that except for HRA, all other allowances + Basic should have 12% deducted for PF, with a ceiling limit of Rs. 6500. Employers may choose to contribute more than Rs. 6500 if they wish.
Thank you.
From India, Chennai
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Hi, Ms. Monika.
I do understand the situation. But we have no other option. This impact will not be limited to a particular industry; it will affect all manufacturing and service industries, except for a few IT/ITES industries. Even for them, there will be a slight impression as well.
From India, Bangalore
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I do understand the situation. But we have no other option. This impact will not be limited to a particular industry; it will affect all manufacturing and service industries, except for a few IT/ITES industries. Even for them, there will be a slight impression as well.
From India, Bangalore
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Dear Mahalakshmi,
Thank you so much; I really appreciate your response. If an employee has a basic salary of more than Rs. 6500/-, can the employer submit PF or not? That's okay, but what about the employee? Is it compulsory for him, or is it discretionary?
My major concern is if someone is submitting regular PF every month (e.g., till Dec '12) and from Jan '13, we stop submitting the PF by stating that we are not doing so as his salary is already above Rs. 6500 basic and he is already exempted, will that create any issues?
Also, does anyone have a written document from the PF authority for further clarification?
Thanks,
Monika
From United States, Duluth
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Thank you so much; I really appreciate your response. If an employee has a basic salary of more than Rs. 6500/-, can the employer submit PF or not? That's okay, but what about the employee? Is it compulsory for him, or is it discretionary?
My major concern is if someone is submitting regular PF every month (e.g., till Dec '12) and from Jan '13, we stop submitting the PF by stating that we are not doing so as his salary is already above Rs. 6500 basic and he is already exempted, will that create any issues?
Also, does anyone have a written document from the PF authority for further clarification?
Thanks,
Monika
From United States, Duluth
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Hi Mahalakshmi,
Earlier, there was an exemption for HRA, but now even HRA is included. Shortly, they might update the same. The reason for telling so is that earlier there was some declaration from the Madras High Court stating that except HRA, all the components should be considered. However, this circular is different from that.
From India, Bangalore
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Earlier, there was an exemption for HRA, but now even HRA is included. Shortly, they might update the same. The reason for telling so is that earlier there was some declaration from the Madras High Court stating that except HRA, all the components should be considered. However, this circular is different from that.
From India, Bangalore
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Okay. You cannot stop deducting EPF even if his basic salary goes beyond 6500, so don't do it.
Regarding the written document about it, read the EPF scheme Sec 26; this will clarify the point. There is Sec 27 about exemption of an employee from EPF, but for that, you have to prove to the EPFO that he is receiving better benefits from other Industrial Acts. So don't even get into it.
Now about the notification about the inclusion of all allowances, it has no use until the act is amended. If not, then it will be challenged in the court of law and will be withdrawn, as it has happened before.
Stay Cool,
Atom.
From India, Phagwara
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Regarding the written document about it, read the EPF scheme Sec 26; this will clarify the point. There is Sec 27 about exemption of an employee from EPF, but for that, you have to prove to the EPFO that he is receiving better benefits from other Industrial Acts. So don't even get into it.
Now about the notification about the inclusion of all allowances, it has no use until the act is amended. If not, then it will be challenged in the court of law and will be withdrawn, as it has happened before.
Stay Cool,
Atom.
From India, Phagwara
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