Hi,
I have some questions related to the provident fund.
Q1) We are planning to enroll our company with EPFO next month. Can we deduct the provident fund from this month onwards for all employees?
Q2) Is it possible to deduct the provident fund contribution in two ways for employees: (a) 12% of Rs 6500, i.e., Rs 780 for employees whose basic pay is above Rs 6500, and (b) if someone's basic salary is less than Rs 6500, can 12% be calculated on the lower basic pay?
Please let me know.
Thanks,
Naveen.
From India, Hyderabad
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3I have some questions related to the provident fund.
Q1) We are planning to enroll our company with EPFO next month. Can we deduct the provident fund from this month onwards for all employees?
Q2) Is it possible to deduct the provident fund contribution in two ways for employees: (a) 12% of Rs 6500, i.e., Rs 780 for employees whose basic pay is above Rs 6500, and (b) if someone's basic salary is less than Rs 6500, can 12% be calculated on the lower basic pay?
Please let me know.
Thanks,
Naveen.
From India, Hyderabad
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Q-1 You cannot deduct before getting your establishment registered under EPF. After registration, you can deduct the employee's contribution of the previous month with the permission of PF authorities.
Q-2 Yes, you can.
From India, Thiruvananthapuram
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Q-2 Yes, you can.
From India, Thiruvananthapuram
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Dear Varghese ji, Your answer to Q1 is absolutely right without any doubt. However, your answer to Q2, I have a question. If basic less than 6500 is below MW rate, then what?
From India, Mumbai
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From India, Mumbai
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If the basic salary is below the minimum wage (MW), then I do not think that the Employees' Provident Fund (EPF) Act gives any power to PF authorities to take action against the employer. They have issued a circular stating that the basic salary should not be less than the MW fixed by state governments. I doubt the legality of that. Can a circular from an executive override legislation? If wages paid are less than the MW, then the state labor department is to take action. In the case of an establishment engaging in employment for which the MW is not fixed, how will EPF authorities decide the MW?
Varghese Mathew
09961266966
From India, Thiruvananthapuram
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Varghese Mathew
09961266966
From India, Thiruvananthapuram
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First of all you have to take coverage from the PF Authorities before deducting the PF contribution. The PF deduction will be 12% on the salary subject to ceiling salary of Rs.6500.
From India, Hyderabad
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From India, Hyderabad
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Both Keshav Korgaonkar and Verghese Mathew are correct in their respective contentions. An employer cannot pay less than minimum wages, while P.F Authorities cannot dictate to the employer how much the quantum of wages payable to the employees should be, especially in view of the circular that was put on hold following the Surya Roshini case. Hope this clarifies the position.
B. Saikumar
In-House HR & IR Advisor
From India, Mumbai
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B. Saikumar
In-House HR & IR Advisor
From India, Mumbai
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Dear Naveen,
Answer for your questions.
1. If you have not registered under EPF and your strength is above 20 employees, then you have to start deduction of money from the date of employee's joining. When you apply for registration, you accumulate all the deducted amounts at 12% from employees, and you have to add the employer contribution along with EDLI and other charges at 13.61%. You have to purchase the DD for this amount in favor of EPF commissioner and submit this along with your registration form. Also, attach a list of employees along with PF contribution details.
Once you get the registration code, you have to show the previously deducted amount as Surplus or Arrears amount and have to contribute, but PF deduction is compulsory if your organization's strength is more than 20.
2. PF deduction has to be made on Basic and DA.
It's up to the management whether you pay PF on the full basic amount even if it is more than Rs. 6500 or you can fix the ceiling at Rs. 6500. But ensure that the PF wage (Basic + DA) is equal to or more than the minimum wages. Furthermore, if your minimum wages are more than Rs. 6500, then you fix the PF wage ceiling at Rs. 6500.
Please refer to the concerned state's PF rules for further clarifications.
Please correct me if I'm wrong in any of the above statements.
With Best Regards,
Shreyas
Ph: +91 9164110020
From India, Bangalore
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Answer for your questions.
1. If you have not registered under EPF and your strength is above 20 employees, then you have to start deduction of money from the date of employee's joining. When you apply for registration, you accumulate all the deducted amounts at 12% from employees, and you have to add the employer contribution along with EDLI and other charges at 13.61%. You have to purchase the DD for this amount in favor of EPF commissioner and submit this along with your registration form. Also, attach a list of employees along with PF contribution details.
Once you get the registration code, you have to show the previously deducted amount as Surplus or Arrears amount and have to contribute, but PF deduction is compulsory if your organization's strength is more than 20.
2. PF deduction has to be made on Basic and DA.
It's up to the management whether you pay PF on the full basic amount even if it is more than Rs. 6500 or you can fix the ceiling at Rs. 6500. But ensure that the PF wage (Basic + DA) is equal to or more than the minimum wages. Furthermore, if your minimum wages are more than Rs. 6500, then you fix the PF wage ceiling at Rs. 6500.
Please refer to the concerned state's PF rules for further clarifications.
Please correct me if I'm wrong in any of the above statements.
With Best Regards,
Shreyas
Ph: +91 9164110020
From India, Bangalore
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Mr. Varghese Mathew, M so sorry, got confused....but no state has its own Rules as per as EPF Act is concern. Regards Shreyas
From India, Bangalore
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From India, Bangalore
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Dear Naveen,
I would like to share my views with you on your query. First of all, you need a minimum of 20 employees to enroll with EPFO. If you have 20 employees, then you are liable to deduct EPF amount at 12% because even if you apply late, you will still be liable from the first day when the number of employees reaches 20.
From India, New Delhi
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I would like to share my views with you on your query. First of all, you need a minimum of 20 employees to enroll with EPFO. If you have 20 employees, then you are liable to deduct EPF amount at 12% because even if you apply late, you will still be liable from the first day when the number of employees reaches 20.
From India, New Delhi
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Dear friends,
Here is the latest circular from the CPFC reg. restricting the salary for PF contribution @ 12% to Rs.6,500/-.
"Companies CAP Provident Fund (PF) contribution to Rs. 6500"
The Provident Fund Office has allowed companies to cap their per-month Provident contribution to employees at Rs. 6,500. At present, companies contribute an amount equal to at least 12 per cent of an employee’s basic salary towards his/her PF. Now When an employer is deducting and depositing Employees’ Provident Fund contributions upon more than the prescribed salary, he can reduce it to Rs. 6,500 per month and in that event, section 12 of the Employees’ Provident Funds & Miscellaneous Provisions Act providing bar for not to reduce wages will not be attracted.
Full Text of the Circular is as follows:-
EMPLOYEES PROVIDENT FUND ORGANISATION
MINISTRY OF LABOUR AND EMPLOYMENT, GOVERNMENT OF INDIA, DELHI
Ref. No. LC(637)2009/Vol.I/203- Dated: 27.05.2014
Subject: Filing of Review Petition against judgement of Hon’ble Supreme Court of India in SIP No. 1205/2009 in the matter of Marathwada Gramin Bank Employees Union Vs. Management of Marathwada Gramin Bank – regarding.
Reference: This office letter No. LC-2(637)2009/MH/12780 dated 08.10.2013
Please refer to the above Cited letter wherein views on the issue of filing Review Petition/implementation of the order dated 09.09.2011 of the Hon’ble Supreme Court of India in SLP No. 1205/2009 in the matter of Marathwada Gramin Bank Karamchari Sangathan & Ors. Vs. Management of Marathwada Gramin Bank, were called for.
2. The views expressed by the Zonal Addl. Central Provident Fund Commissioners as to whether review petition need to be filed or not has been examined at Head Office. Having analysing the pros and cons of the issue, Competent Authority felt that there is no point in going for review against the said judgement of Hon’ble Supreme Court of India.
3. All the Regional Provident Fund Commissioners-In-charge of Regional /Sub-Regional Offices are, therefore, directed not to force employers to contribute over and above the statutory wage ceiling in respect of their employees. However, option is available for the employees to contribute beyond the statutory wage ceiling if they so desire subject to the conditions enumerated under para 26(6) of the Employees’ Provident Funds Scheme, 1952.
Yours faithfully,
(P.K.UDGATA)
Addl. Central Provident Fund Commissioner (Compliance)..
----------------- read from -
Companies CAP Provident Fund (PF) contribution to Rs. 6500
-------------------------
From India, Bangalore
Acknowledge(0)Amend(0)
Here is the latest circular from the CPFC reg. restricting the salary for PF contribution @ 12% to Rs.6,500/-.
"Companies CAP Provident Fund (PF) contribution to Rs. 6500"
The Provident Fund Office has allowed companies to cap their per-month Provident contribution to employees at Rs. 6,500. At present, companies contribute an amount equal to at least 12 per cent of an employee’s basic salary towards his/her PF. Now When an employer is deducting and depositing Employees’ Provident Fund contributions upon more than the prescribed salary, he can reduce it to Rs. 6,500 per month and in that event, section 12 of the Employees’ Provident Funds & Miscellaneous Provisions Act providing bar for not to reduce wages will not be attracted.
Full Text of the Circular is as follows:-
EMPLOYEES PROVIDENT FUND ORGANISATION
MINISTRY OF LABOUR AND EMPLOYMENT, GOVERNMENT OF INDIA, DELHI
Ref. No. LC(637)2009/Vol.I/203- Dated: 27.05.2014
Subject: Filing of Review Petition against judgement of Hon’ble Supreme Court of India in SIP No. 1205/2009 in the matter of Marathwada Gramin Bank Employees Union Vs. Management of Marathwada Gramin Bank – regarding.
Reference: This office letter No. LC-2(637)2009/MH/12780 dated 08.10.2013
Please refer to the above Cited letter wherein views on the issue of filing Review Petition/implementation of the order dated 09.09.2011 of the Hon’ble Supreme Court of India in SLP No. 1205/2009 in the matter of Marathwada Gramin Bank Karamchari Sangathan & Ors. Vs. Management of Marathwada Gramin Bank, were called for.
2. The views expressed by the Zonal Addl. Central Provident Fund Commissioners as to whether review petition need to be filed or not has been examined at Head Office. Having analysing the pros and cons of the issue, Competent Authority felt that there is no point in going for review against the said judgement of Hon’ble Supreme Court of India.
3. All the Regional Provident Fund Commissioners-In-charge of Regional /Sub-Regional Offices are, therefore, directed not to force employers to contribute over and above the statutory wage ceiling in respect of their employees. However, option is available for the employees to contribute beyond the statutory wage ceiling if they so desire subject to the conditions enumerated under para 26(6) of the Employees’ Provident Funds Scheme, 1952.
Yours faithfully,
(P.K.UDGATA)
Addl. Central Provident Fund Commissioner (Compliance)..
----------------- read from -
Companies CAP Provident Fund (PF) contribution to Rs. 6500
-------------------------
From India, Bangalore
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