Dear Members,
Hope you all are doing good. I do keep reading a lot about Provident Fund (PF) and my basic understanding is as follow:
Employee's Contribution: 12%
Employer's Contribution: 12%
Employer's contribution is further divided into 8.33% for pension scheme and 3.87% for PF. Now my question is that can an employer choose to contribute to PF more?
I was going through a lot of posts but it was really confusing for me. The clarification would really be appreciated.
Regards,
Adhip
From India, Bangalore
1Hope you all are doing good. I do keep reading a lot about Provident Fund (PF) and my basic understanding is as follow:
Employee's Contribution: 12%
Employer's Contribution: 12%
Employer's contribution is further divided into 8.33% for pension scheme and 3.87% for PF. Now my question is that can an employer choose to contribute to PF more?
I was going through a lot of posts but it was really confusing for me. The clarification would really be appreciated.
Regards,
Adhip
From India, Bangalore
One can opt for contributing more, but the employer has to also approve for the increased contribution.
From India, Vadodara
From India, Vadodara
The legal provision in this regard is contained in Para 29 or the EPF Scheme. It is as follows:
" Para 29. Contributions
(1) The contributions payable by the employer under the Scheme shall be
at the rate of [ten per cent] of the [basic wages, dearness allowance
(including the cash value of any food concession) and retaining allowance (if
any)] payable to each employee to whom the Scheme applies:
Provided that the above rate of contribution shall be [twelve] per cent in
respect of any establishment or class of establishments which the Central
Government may specify in the Official Gazette from time to time under the
first proviso to sub-section (1) of section 6 of the Act.
(2) The contribution payable by the employee under the Scheme, shall be
equal to the contribution payable by the employer in respect of such
employee:
Provided that in respect of any employee to whom the Scheme applies, the
contribution payable by him may, if he so desires, be an amount exceeding
[ten per cent] or [twelve per cent], as the case may be, of his basic wages,
dearness allowance and retaining allowance (if any) subject to the condition
that the employer shall not be under an obligation to pay any contribution
over and above his contribution payable under the Act; "
From the above it is clear that only the Employer Share (ER) Iis fixed by the law. The Employee Share (EE) will be equal to ER. Now in the case mentioned by you if the ER wants to contribute more the EE also must be willing to do so. Otherwise the Employer himself has to bear the difference. For example, if the ER wants to contribute 20% instead of the statutory rate of 12%, the EE also should be willing to do so. Otherwise, the ER has to bear the difference of 20 - 12 = 8%. He will in effect be paying 20 + 8 = 28%. The employee will be contributing onlt 12%.
From India, Madras
" Para 29. Contributions
(1) The contributions payable by the employer under the Scheme shall be
at the rate of [ten per cent] of the [basic wages, dearness allowance
(including the cash value of any food concession) and retaining allowance (if
any)] payable to each employee to whom the Scheme applies:
Provided that the above rate of contribution shall be [twelve] per cent in
respect of any establishment or class of establishments which the Central
Government may specify in the Official Gazette from time to time under the
first proviso to sub-section (1) of section 6 of the Act.
(2) The contribution payable by the employee under the Scheme, shall be
equal to the contribution payable by the employer in respect of such
employee:
Provided that in respect of any employee to whom the Scheme applies, the
contribution payable by him may, if he so desires, be an amount exceeding
[ten per cent] or [twelve per cent], as the case may be, of his basic wages,
dearness allowance and retaining allowance (if any) subject to the condition
that the employer shall not be under an obligation to pay any contribution
over and above his contribution payable under the Act; "
From the above it is clear that only the Employer Share (ER) Iis fixed by the law. The Employee Share (EE) will be equal to ER. Now in the case mentioned by you if the ER wants to contribute more the EE also must be willing to do so. Otherwise the Employer himself has to bear the difference. For example, if the ER wants to contribute 20% instead of the statutory rate of 12%, the EE also should be willing to do so. Otherwise, the ER has to bear the difference of 20 - 12 = 8%. He will in effect be paying 20 + 8 = 28%. The employee will be contributing onlt 12%.
From India, Madras
Hi,
Thanks for the information. This will be really helpful in my understanding in details.
I had one more doubt that if employee wants to increase share of contribution what is the maximum limit for that and what form does he/she need to fill?
Regards,
Adhip
From India, Bangalore
Thanks for the information. This will be really helpful in my understanding in details.
I had one more doubt that if employee wants to increase share of contribution what is the maximum limit for that and what form does he/she need to fill?
Regards,
Adhip
From India, Bangalore
There is no ceiling for increasing the EE contribution. I am not aware of any prescribed form for intimating the increased contribution. I presume a simple intimation to the Employer may be enough. However, if someone wants to make contribution above the wage limit of Rs. 6500/- then a joint declaration is required as there will be an obligation on the part of the Employer to pay the administrative charges above the wage limit of Rs. 6500/-.
UNDER EPF
The contributions are payable on maximum wage ceiling of Rs 6500/- by employee and
employer.
The employee can pay at a higher rate and in such case employer is not under any
obligation to pay at such higher rate.
To pay contribution on higher wages, a joint request from Employee and employer is
required [Para 26(6) of EPF Scheme]. In such case employer has to pay administrative
charges on the higher wages (wages above 6500/-)
For an International Worker, wage ceiling of 6500/- is not applicable.
From India, Madras
UNDER EPF
The contributions are payable on maximum wage ceiling of Rs 6500/- by employee and
employer.
The employee can pay at a higher rate and in such case employer is not under any
obligation to pay at such higher rate.
To pay contribution on higher wages, a joint request from Employee and employer is
required [Para 26(6) of EPF Scheme]. In such case employer has to pay administrative
charges on the higher wages (wages above 6500/-)
For an International Worker, wage ceiling of 6500/- is not applicable.
From India, Madras
Hi,
Hi,
As per my knowledge there are some PF conditions
1. EE-0 ER-0
2. EE-Ceiling ER- Ceiling
3. EE-Actual ER-Ceiling
4. EE- Actual ER- Actual
most of the companies will follow 2nd option in that whatever the Basic is there but they should deduct only 780/- Rs and Employer Contribution will be on ceiling, if Basic is less than 6500 then it will be calculate on Actual for Ex; Basic-3500 then 3500*12%.from both EE and ER
If more then 6500 then only 780 from EE and ER.
in 3rd condition; if EE is paying on his actual like Basic is 20000 then it will be 20000*12% but ER will contribute on Ceiling Ex; 6500*12%
But almost companies will follow the 2nd option.
Hope its your concept cleared
attribution https://www.citehr.com/494698-pf-ded...#ixzz32c6vMQqe
From India, Mumbai
Hi,
As per my knowledge there are some PF conditions
1. EE-0 ER-0
2. EE-Ceiling ER- Ceiling
3. EE-Actual ER-Ceiling
4. EE- Actual ER- Actual
most of the companies will follow 2nd option in that whatever the Basic is there but they should deduct only 780/- Rs and Employer Contribution will be on ceiling, if Basic is less than 6500 then it will be calculate on Actual for Ex; Basic-3500 then 3500*12%.from both EE and ER
If more then 6500 then only 780 from EE and ER.
in 3rd condition; if EE is paying on his actual like Basic is 20000 then it will be 20000*12% but ER will contribute on Ceiling Ex; 6500*12%
But almost companies will follow the 2nd option.
Hope its your concept cleared
attribution https://www.citehr.com/494698-pf-ded...#ixzz32c6vMQqe
From India, Mumbai
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