Dear Seniors, Greetings!! I have a doubt in my mind , Is it possible to deduct PF on any amount less than 6500 of basic salary Regards, Amit.
From India, Delhi
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3From India, Delhi
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Your question is not clear Please specify with some example please
From India, Chennai
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From India, Chennai
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Sir, what is the minimum salary amount on which a company can deduct PF? Regards, Amit
From India, Delhi
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From India, Delhi
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Hi All,
The same question was raised during the PF inspection. As per the PF inspector, those drawing a basic salary less than 6500/- should deduct the PF contribution on the differential basic amount. For example, if an employee is getting a gross salary of Rs. 20000/- but his basic is Rs. 3000/-, the PF Inspector states that this is incorrect. He mentions that the minimum basic should be Rs. 6500/- and now deduct the PF on the differential basic, i.e., Rs. 3500/- and deposit it to the PF office - IS THIS CORRECT? IS THERE ANY CIRCULAR STATING THAT THE BASIC SHOULD NOT BE LESS THAN RS. 6500/-?
From India, Mumbai
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The same question was raised during the PF inspection. As per the PF inspector, those drawing a basic salary less than 6500/- should deduct the PF contribution on the differential basic amount. For example, if an employee is getting a gross salary of Rs. 20000/- but his basic is Rs. 3000/-, the PF Inspector states that this is incorrect. He mentions that the minimum basic should be Rs. 6500/- and now deduct the PF on the differential basic, i.e., Rs. 3500/- and deposit it to the PF office - IS THIS CORRECT? IS THERE ANY CIRCULAR STATING THAT THE BASIC SHOULD NOT BE LESS THAN RS. 6500/-?
From India, Mumbai
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Dear Sanjay, Pf Inspector is wrong. No any circular release from PF organization.
From India
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From India
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discuss the issue with experts in this filed and they are in opinion that diff. amount should be paid. pf to be deducted on rs.6500/-
From India, Mumbai
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From India, Mumbai
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Dear Amith, PF Component will be deducted only if when the employee basic is 6500 or more than that it. Minimum basic is 6500. Regards: padmaja
From India
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From India
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If the basic wage is less than Rs. 6500/- that should basic wage for PF. If it is more than Rs. 6500/- and above, the maximum basis is Rs. 6500/- only.
From India, Nellore
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From India, Nellore
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Dear sambasivakamasani, sorry it is not clear regarding your posting can u please elaborate it
From India
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From India
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There is no minimum basic fixed for PF deduction. There was a circular of EPFO that the wages shown in PF should not be less than the MW fixed for that job by the State Govt. But it is not yet implemented.
Varghese Mathew
From India, Thiruvananthapuram
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Varghese Mathew
From India, Thiruvananthapuram
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So you all want to say that if basic is less than Rs. 6500 then also a company is entitle to deduct PF. Now I am totally Confused!!!!! Seniors pls give me relevant information. Regards, Amit
From India, Delhi
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From India, Delhi
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PF Office Circular No. Coord/4(6)2003/Clarification/13633 dated 6.6.2008 mentions: "Advised to ensure that PF contributions on at least Minimum Wages are remitted by the establishments. It is also directed to review all such cases disposed of under Section 7-A of the Act where determination of dues has taken place on wages lesser than the Minimum Wages."
From India, Daman
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From India, Daman
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In such a case, if the basic is less than Rs. 6,500/- and the company is deducting the contribution on a lower amount, the PF authority will take legal action under 7A. The case will be processed, and ultimately, we will have to pay the difference amount with a penalty.
From India, Mumbai
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From India, Mumbai
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please some body send the detail returns under epf act and ESI
From India, Jamshedpur
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From India, Jamshedpur
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PF can be deducted on Basic + DA even though the total amount is less than Rs. 6500, but the Basic and DA should not be less than the prescribed MW. If the MW of a skilled worker is Rs. 6600 per month and you show the Basic and DA as Rs. 3000, which is wrong, you have to pay the PF on the maximum cap of Rs. 6500.
From India, Ahmadabad
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From India, Ahmadabad
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Hello,
When deducting PF, the definition of salary given in sec. 2(b) of the act is to be read with Sec. 6. Accordingly, total salary is to be worked out (Basic + DA + retaining allowance if any), and the total amount, whether it is less than Rs. 6500/- or more, the deduction of PF should not exceed the prescribed percentage on the maximum ceiling amount of Rs. 6500/-
However, if any employee is on continuous service and exceeds the salary limit of Rs. 6500/-, the PF contribution over and above the limit of Rs. 6500/- depends upon the employer. However, payment of minimum wages as per the act is to be ensured; otherwise, Section 7A (recovery of the differential amount with penalty) will attract.
Hope this provides some clarity.
Eswararao Ivaturi.
From United States, Cupertino
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When deducting PF, the definition of salary given in sec. 2(b) of the act is to be read with Sec. 6. Accordingly, total salary is to be worked out (Basic + DA + retaining allowance if any), and the total amount, whether it is less than Rs. 6500/- or more, the deduction of PF should not exceed the prescribed percentage on the maximum ceiling amount of Rs. 6500/-
However, if any employee is on continuous service and exceeds the salary limit of Rs. 6500/-, the PF contribution over and above the limit of Rs. 6500/- depends upon the employer. However, payment of minimum wages as per the act is to be ensured; otherwise, Section 7A (recovery of the differential amount with penalty) will attract.
Hope this provides some clarity.
Eswararao Ivaturi.
From United States, Cupertino
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Dear Amit,
The PF is deductible on Minimum Wages (Basic plus DA); you cannot go lower than it. Whether the wages earned are for a day will attract PF provisions. I hope my response aligns with your query and serves your purpose.
Thanks & Regards,
Vinod
HR, Tarapur
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The PF is deductible on Minimum Wages (Basic plus DA); you cannot go lower than it. Whether the wages earned are for a day will attract PF provisions. I hope my response aligns with your query and serves your purpose.
Thanks & Regards,
Vinod
HR, Tarapur
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Dear all,
Please find the attachment to address your queries related to PF, including PF eligibility, PF deductions, employer responsibilities related to PF, and PF deduction criteria.
Thanks and Regards,
Mahendra Patole
From India, Mumbai
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Please find the attachment to address your queries related to PF, including PF eligibility, PF deductions, employer responsibilities related to PF, and PF deduction criteria.
Thanks and Regards,
Mahendra Patole
From India, Mumbai
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Hello Sanjay,
Under the PF Act, an organization is applicable when it has 20 or more employees. Once the company is covered under the PF Act (whenever it employs 20+ employees), the company continues to be covered under the PF Act even if the employment drops below 20 at any given time.
Similarly, an employee is eligible for PF contribution if at the time of joining (or introduction of such policy) the basic + DA of that employee is less than or equal to 6500.
This means that all employees whose basic is less than 6500 (irrespective of gross/CTC) are covered under the PF Act and the contributions would be:
- 12% of basic by the employee
- 12% + 1.61% of basic by the employer, which is distributed as:
a) 8.33% to the pension scheme
b) 3.67% to the PF fund
c) 1.1% PF and pension account handling charges
d) 0.5% EDIL plan
e) 0.01% EDIL account handling charges
So if the person's basic is 3000, PF contributions would be:
Employee - 12% of 3000 = 360
Employer:
- Pension: 250
- PF: 191
- PF and Pension a/c handling: 33
- EDIL: 15
- EDIL a/c handling: 0.30 (rounded off to the nearest currency possible)
Hope this clears your doubt.
Now, if at any point the employee's salary is revised upward, then the employee continues to remain covered under the PF Act and a bare minimum of 12% of 6500 ought to be contributed by both parties. In such cases, a bare minimum of 780 Rs is to be contributed by each party.
Secondly, ideally, a person who is getting 20,000 as monthly gross and getting just 3000 as Basic raises some concerns. Obviously, the basic amount will depend on the components to be given and other factors, yet it will raise concern as, according to normal practice, we find the basic close to 40% of gross.
Hope this was able to clear your doubts.
From India, Mumbai
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Under the PF Act, an organization is applicable when it has 20 or more employees. Once the company is covered under the PF Act (whenever it employs 20+ employees), the company continues to be covered under the PF Act even if the employment drops below 20 at any given time.
Similarly, an employee is eligible for PF contribution if at the time of joining (or introduction of such policy) the basic + DA of that employee is less than or equal to 6500.
This means that all employees whose basic is less than 6500 (irrespective of gross/CTC) are covered under the PF Act and the contributions would be:
- 12% of basic by the employee
- 12% + 1.61% of basic by the employer, which is distributed as:
a) 8.33% to the pension scheme
b) 3.67% to the PF fund
c) 1.1% PF and pension account handling charges
d) 0.5% EDIL plan
e) 0.01% EDIL account handling charges
So if the person's basic is 3000, PF contributions would be:
Employee - 12% of 3000 = 360
Employer:
- Pension: 250
- PF: 191
- PF and Pension a/c handling: 33
- EDIL: 15
- EDIL a/c handling: 0.30 (rounded off to the nearest currency possible)
Hope this clears your doubt.
Now, if at any point the employee's salary is revised upward, then the employee continues to remain covered under the PF Act and a bare minimum of 12% of 6500 ought to be contributed by both parties. In such cases, a bare minimum of 780 Rs is to be contributed by each party.
Secondly, ideally, a person who is getting 20,000 as monthly gross and getting just 3000 as Basic raises some concerns. Obviously, the basic amount will depend on the components to be given and other factors, yet it will raise concern as, according to normal practice, we find the basic close to 40% of gross.
Hope this was able to clear your doubts.
From India, Mumbai
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Please note that EPF is applicable to a factory or establishment if it employs 20 or more persons on wages, not when it has 20 or more employees. Understand the difference. An employee 'X' resigns from Company 'A'. He withdraws his PF amount 2 months after resignation. Later he joins a new company with a salary above Rs 6500/- per month. He cannot be excluded from EPF. Instead, if he had withdrawn the PF on superannuation or on migrating from India, he would have been an excluded employee.
Varghese Mathew
From India, Thiruvananthapuram
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Varghese Mathew
From India, Thiruvananthapuram
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Dear Amit,
It is advised to have a minimum wage (Basic+DA) of Rs. 6500 for PF calculation. As per the provisions of the Employees Provident Fund and Miscellaneous Provisions Act, 1952, known as the PF Act, which governs Provident Fund (PF) contribution, the PF contribution should be calculated as 12% of the basic wages plus DA plus cash value of food concession plus retaining allowance, if any, subject to a maximum of Rs. 6500 per month. If an employee earns more than Rs. 6500, they can opt for a higher PF deduction (greater than 12% of Rs. 6500) at the joint request of the employee and the employer.
Additionally, the PF department contends that the salary for the purpose of PF calculation cannot be less than the minimum wages mandated by the Minimum Wages Act.
Thanks,
Srinivasan
Resolve Business Services
From India, Bangalore
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It is advised to have a minimum wage (Basic+DA) of Rs. 6500 for PF calculation. As per the provisions of the Employees Provident Fund and Miscellaneous Provisions Act, 1952, known as the PF Act, which governs Provident Fund (PF) contribution, the PF contribution should be calculated as 12% of the basic wages plus DA plus cash value of food concession plus retaining allowance, if any, subject to a maximum of Rs. 6500 per month. If an employee earns more than Rs. 6500, they can opt for a higher PF deduction (greater than 12% of Rs. 6500) at the joint request of the employee and the employer.
Additionally, the PF department contends that the salary for the purpose of PF calculation cannot be less than the minimum wages mandated by the Minimum Wages Act.
Thanks,
Srinivasan
Resolve Business Services
From India, Bangalore
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After reading all the above information, I analyze that PF can be deducted in both cases:
1. When the basic salary is 6500.
2. Also in cases of less than 6500.
However, it is still a topic of debate as some professionals agree with the above points, while others completely disagree.
Regards,
Amit
From India, Delhi
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1. When the basic salary is 6500.
2. Also in cases of less than 6500.
However, it is still a topic of debate as some professionals agree with the above points, while others completely disagree.
Regards,
Amit
From India, Delhi
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Dear Amit,
As per EPFO MP Act 1952 Section 26 Para 2(b), 70% of your gross should be added as Basic for PF deduction and 30% HRA can be levied regardless of your pay component. However, if the employee's earnings are 6500 or below, then the entire gross amount should be deducted as basic for PF Deduction. Feel free to call me for any clarifications you may need on this matter at 9940126880. I have personally attended many PF meetings regarding this.
G Sathish
From India, Chennai
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As per EPFO MP Act 1952 Section 26 Para 2(b), 70% of your gross should be added as Basic for PF deduction and 30% HRA can be levied regardless of your pay component. However, if the employee's earnings are 6500 or below, then the entire gross amount should be deducted as basic for PF Deduction. Feel free to call me for any clarifications you may need on this matter at 9940126880. I have personally attended many PF meetings regarding this.
G Sathish
From India, Chennai
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PF Contribution on not less than Minimum Wage.pdf