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Employer can cap PF contribution limit to Rs 6500 Basic Salary – New EPFO Notification & Supreme court ruling

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As per New Notification issued by EPFO & Supreme court ruling, Employer can cap PF contribution limit to Rs 6500 Basic Salary.

On May 27, 2014, the Employee Provident Fund Office issued a circular permitting Companies to limit its PF contributions against the required salary ceiling limit of INR 6,500 per month. Earlier, such PF contributions was calculated as 12% of Basic Salary.

Under Provident Fund (PF) regulations, PF is computed at 12% (for both the employer and employee contributions) against ‘basic wages’. The minimum statutory limit against which such PF is to be computed is Rs 6,500 per month. The employer and employees have an option to make PF contributions on salary payments in excess of Rs 6,500 per month.

In those cases where contributions were made in excess of the statutory limit, the issue was whether an option is available to revert to lower levels of contributions (i.e.: a contribution computed against the statutory limit of Rs 6,500). The EPFO has now clarified on this issue.

In June 2014 – As per another notification – EPFO has increase the minimum threshold from Rs 6500 to Rs 15000.  Read News

How does this notification impacts the employee’s Salary

If the new notification is implemented by your employer, your monthly take home salary may increase. See the calculation below.

However, the balance in your PF account will be reduced and you will have less PF balance on retirement.

As per the calculation above, if the PF amount is calculated on Rs 6500 and not on full Basic salary, then your Take home salary will increase. The employer will give more amount in allowances rather than putting that into PF. At the same time, your PF contribution will also be reduced.

 

In the case of Marathwada Gramin Bank Karamchari & others, the Supreme court had held: Where the employer makes contributions towards the PF on pay in excess of the statutory ceiling limit, these may be discontinued at any time.  The SC had also held that an employer cannot be compelled to contribute on pay in excess of the statutory ceiling limit under the PF Law. The provisions of the PF law, which does not allow the employer to reduce an employee’s PF benefits will only operate as a bar when there is an agreement with the employee to make contributions on full monthly pay.

EY points out that the Supreme Court ruling and the PF circular do not apply to ‘international workers’ (expatriate workers from India who are contributing to PF) as there is no statutory ceiling for them under the PF law.

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)

Tei.: 011-26172672

 

Also read other posts

August 2014 –  EPFO re-initate process to club allowances with basic pay, ordered inspection

http://wealth18.com/epfo-re-initate-process-to-club-allowances-with-basic-pay-ordered-inspection/

June 2014 – EPF threshold raised from Rs 6500 to Rs 15000 – New EPFO Notification

http://wealth18.com/epf-threshold-raised-from-rs-6500-to-rs-15000/

May 27 2014 – Employer can cap PF contribution limit to Rs 6500 Basic Salary – New EPFO Notification & Supreme court ruling

http://wealth18.com/employer-can-cap-pf-contribution-limit-to-rs-6500-basic-salary-new-epfo-notification/

Nov 2012 – New PF contribution rule may reduce your take home salary

http://wealth18.com/new-pf-contribution-rule-may-reduce-your-take-home-salary/

 

If you have any queries related to this article or any other personal finance query ( Investment, Taxation etc), please comment below

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About wealth18

The author is a Chartered Accountant and loves to write about Personal Finance, Wealth Management, Taxation etc. Disclaimer - The articles on this website is for informational and knowledge purposes and should not be treated as financial advice, Please consult your financial advisor before taking any investment decision.

130 comments

  1. Can a employer switch over contribution to pf from 12% of basic salary to 780 (minimum )

  2. Are there any provision for the employer to fix pf contribution on Rs.6500/- per month on salary of employees to-day onwards.

    • Yes based on this new notification (followed by SC ruling) , employer can cap the PF contribution to Rs 6500 salary. Rest amount in CTC can be given as Special Allowance etc.

  3. I think there’s an error in the calcs shown above. 780 cannot be the annual PF deduction after new PF notification. Its monthly only while the rest of the figures are annual figures. Soooo…..final in hand cash calculated amount will reduce by Rs. 8580 annually. Monthly in hand will still be higher, but not so much higher. Just an insight.

  4. i have one doubt present i get Rs 8500/- salary per month with out pf cutting. with the new pf contribution any changes of getting of my salary. pf amount is deducted in my salary yes/not. pls explain.

    • Hi Sagar, If you basic salary is above Rs 6500, then PF is compulsory.
      If your Basic salary is less than Rs 6500, then PF is not compulsory.

      • i have received Rs.9000/- salary for the month of aug-2014 without pf cutting. for this month i received Rs.8568 salary with pf cutting. when i asking about pf they told 40% of gross salary is basic salary, based on that we less Rs.432. but they didn’t given my pf no. then i’m asking to you is in which time they provide my pf no. i’m working in my org from may-2012 to still now.

        • Hi Sagar, If PF is deducted from your salary, they should give you a PF number
          Normally within 1 month you should check with your HR to get PF number.

          • my friend is also working with me, they already in pf slab. but first 6 months & last 6 months pf is not appeared in recent epf statement. when they asking about that they told first 6 months pf is not credited to account & we already submit ur pf amount to ur account, pf department is not updated in online for last 6 months.”first 6 months pf is not credited to our account” is it correct? till now some existing employees didn’t get their pf amount when they exit 1 year back in our org.when i didn’t get my pf no within 1/2 months what i have to do?

          • If PF is deducted from your salary in first 6 months, it should be credited to your PF account. If you do not get PF number in 1-2 months, chase your HR again.

      • PF is compulsory up to a basic salary of Rs 6500. Now this ceiling has been increased to Rs 15,000/-
        This is in the interest of the employee. Due to the mandatory pF deduction, the employer also has to contribute an equal amount of 12% to the employees PF account.

        Now the other component is the total PF that can be contributed by the employee per month. This has also been increased from 6500 to Rs 15000/= That is up to a basic salary of approx Rs 54,000/- After that the employer is not required to make a matching contribution employees PF account.

        Please understand both components correctly.

        Please do not stop deduction of PF after mandatory basic salary of 6500/- as this deduction is your retirement saving and company’s matching contribution is additional saving income for you.

        • Hi,

          you rightly mentioned that now the PF ceiling is increased to Rs 15,000/- from 6500. This means two things
          1) all employee who is earning upto Rs 15000 basic, compulsory PF need to be deducted.
          and
          2) If the employee basic is more than Rs 15000, the company can restrict the PF contribution on Rs 15000 as Basic.

    • if 13000 salary how much deduct pf. according new pf rules

  5. Lot of ambiguity in PF ,

    • On May 2011, EPFO release a notification in which splitting of minimum wages for PF contribution is not permissible as a result many company stop splitting minimum wages into Basic salary and HRA and start contributing PF on minimum wages.

      After Few Month in Dec 2011 again EPFO release a notification in which above notification kept in abeyance,means till next notification company can split minimum wages into basic and allowances.above circular kept in abeyance because of ambiguity in the defination of basic salary under EPF act and minimum wages under MW-act as per Punjab and Haryana High Court decision.

      After that again recently EPFO release a notification in which they define basic salary ,in which they include all allowance paid to employee as part of basic salary and PF need to be deducted on gross salary.But again this notification kept in abeyance.

      Now what is need to be done?

      Can we split minimum wages into basic + HRA as per MW-Act and deduct PF only on basic or keep minimum wages equal to Basic salary and deduct PF on minimum wages.

      How other company are doing this thing…..

      Again

      • Hi Suneet, iu agree that there are lots of changes announced and then stopped.

        As fas as i understand the companies are currently just deducting / contributing the PF on Basic Salary ( which can be above or equal to minimum wages)

  6. Again on 06.08.2014 EPFO release a notification on splitting of minimum wages,in which EPFO will do inspection of all those establishment where PF contribution has been deducted on 50% or less of total wages.Does it mean that company who are splitting minimum wages into Basic+HRA in 60 :40 ratio or keeping basic salary more then 50% of total wages and deducting PF only on Basic salary which is 60% or more of minimum wages is doing the correct thing.

    Please Reply…..

    • Hi Suneet,

      I think the EPFO intention is to make sure that PF is deducted on atleast the minimum threshold ( Rs 6500 or Rs 15000 not yet notified).
      In this new action, EPFO is trying to identify the companies which are not deducting PF on atleast 50% of total wages.

      So, If you a corporate employee having Basic of Rs 20000 and other allowances of Rs 30000 = total salary Rs 50000. EPFO may not have any problem in deducting PF on Rs 20K (even if it is less than 50% of wages) because it is above threshold limit.

      In the recent EPFO notification & SC decision, the companies can restrict the PF deduction only to the threshold limit.

      • Hi,Vivek what you said is correct in those cases where PF deducted is on threshold limit i.e.Rs 6500.But i am asking suppose Minimum wages is equal to Rs.7000,which has been split into 70:30 ratio into Basic+DA (Basic=4900 and DA=2100),here in this case if PF is deducted on Rs.4900 which is equal to Rs.588(as DA is not included under new PF circular). So here is it correct or not?

        Why EPFO create confusion by giving minimum wages defination for PF contribution ,firstly they include all allowances then they exclude them from basic salary,does after every notification company changes their structure and contribution;why not EPFO release such notification where it should make mandatory deduct PF on whole salary(whatever is basic or allowance) as ESI corporation is doing,even EPFO can reduce the %age contribution rate.

        • Hi Suneet, I agree that changing rules every now and then is creating confusion for employers.

          I think as of now employer can deduct PF on Basic wages even if it is less than 6500. So in your example, it should be OK even if it is deducted on 4900.

          But if you represent a corporate, it is better to get legal advise from a PF advisor.

  7. Hi ,

    Q1) Now as EPF wage ceiling raised from Rs.6500 to Rs.15000,so still Supreme Court Judgement on Employer contribution on Rs.6500 will be applicable or Employer contribution will be on Rs.15000?

    Q2) Before Supreme Court judgement of capping Employer contribution Rs.6500,an employer was paying Rs.1200 as PF contribution(If Basic=10000) and after above judgement(Rs.6500 Capping) employer reduce its contribution from Rs.1200 to Rs.780 and paying Rs.420 as special allowance so that ctc remain same.

    Now as capping for EPF is Rs.15000(if answer of Q1 is Employer contribution is on Rs.15000) so it means that in above example that employer contribution will be Rs.1200,not Rs.780 so now shell the amount which we have start paying under special allowance can be withdrawal?

    By asking Q2 i mean that can company can change their CTC component and hence allowance at any point of time whenever it desire?

    Thanks

    Suneet

    • Hi Suneet,

      1) SC Judgement on Employer contribution will now be as per Rs 15000
      2) As employer may need to pay higher PF, they may reduce the special allowance to maintain the CTC component.

  8. Sir,

    I Have one doubt if basic salary Rs.15,000/- then Pf is compulsory or Not in New EPFO Notification

  9. Hello,

    My basic salary is bellow 15,000. As per new rule of EPFO i.e. PF is mandatory up to basic 15,000. My question is should PF will be calculated on Basic or may calculate on 6500?

  10. Dear Sir,

    On which basis you are suggesting to pay the special Allowance in the New CTC notification, is there any rule kindly advice…

    Mahesh NV

    • Hi Mahesh, There is no such requirement. The company can pay rest amount under any allowances. As the PF deduction amount wil be less, the balance money needs to be paid to employee as per contract. It can be under any head / component of CTC.

  11. Hello Sir,

    My basic salary is 7100/- and gross salary is 12800/- than how much PF amt will be deducted as per new rule of EPFO… 780/- (on 6500) or 852/- (on 7100) or 1536/- (on 12800)?

  12. Hello Sir,

    could you pls tell us what the employer has to pay as per the new wage ceiling limit 15000. We are paying 6500 as min contribution both employer and employee. eventhough employee basic is more than 6500 or less than 6500, we deducting and pay 780 to PF. please advise how much employer and employee has to pay from september.

    here is our salary structure for every one Basic 45% of gross, HRA 50% of Basic, remaining as special allowance for every one but we are cab to 6500 and do the deduction. now my question, how much we have deduct if the employee salary less than 15000
    Is it compalsory that employer has to pay 1800 to PF if the basic or salary is more than 15000

    Does this mean employer and employee has to pay PF 1800 per month compalsory? Is there any exception rule for employer?

    thanks
    Madhu

    • Hi Madhu,

      Employer has to pay minimum 12% of Basic (upto limit of Rs 15000)
      So, if the employee basic is Rs 15000 or more, he can pay minimum Rs 1800 ( 12% of 15000)
      So, if the employee basic is below Rs 15000, he can pay minimum 12% of basic.

      There is no restriction on paying more amount.

      • Hi Vivek Sir,

        Thank you for clarification, since our salary structure basic is 45% of gross, can we pay 12% of basic? eg. if the per sone drawing 10000 gross, his basic would be 4500 can we pay 540? or we have to pay PF for whole gross 1200? Please clarify.

        Thanks in advance for your time.

        • Hi Madhu, I think that in case the basic is below Rs 15000, you can deduct PF on actual basic salary. so in this case, you need to deduct 12% of 4500.

          That was the case before as well. The increasing of minimum ceiling limit is to bring those employees under PF deduction. Previously only employees drawing upto 6500 basic were undr PF net. Now employees drawing upto Rs 15000 basic will be under PF.

  13. Hi,

    My basic salary is 22590 and i’m pay 12% of basic and employer pays 780, what is the impact on new wage ceiling limit.

    • Hi Madhu,

      As per new ceiling, your employer have to pay 12% of Rs 15000 (minimum) which will be Rs 1800.
      So he would adjust this extra amount by reducing from other allowances paid to you.

      • Hi Vivek,

        Suppose an employee CTC(mention in the appointment letter) at the time of Joining was Rs.13000 which was bifurcated as below:-

        Basic=10000
        HRA=2000
        Conveyance All=1000
        So Gross salary = 13000(Gross monthly salary=Monthly CTC)

        Because here His basic was more then Rs.6500 and employee was not covered under EPF.

        Now as EPF limit is Rs.15000,means Rs 1200 will be employee share and Rs.1200 will be employer share so that total contribution become Rs.2400,So here I can change HRA from Rs.2000 to Rs.1000 and Conveyance all from Rs 1000 to Rs.800 so that ultimately CTC remain same as below:-

        Basic=10000
        HRA= 1000
        Con.All=800
        EPF Employer=1200

        Total CTC=Rs .13000.

        Can I do this ???

        • Hi Suneet, Yes you can do that as long as it is mentioned in employment letter that Employer can change the salary components within the overall CTC amount.

  14. How does increase in wage Ceiling under EPS affects Employer & Employee?

    • Hi Subhash, If the basic salary of employee was more than 6500 and employer was deducting PF only on 6500, then now they will have to deduct PF on 15000.
      which means that more amount will be deducted from employee. At the same time, the amount needs to be matched by employer. So employer can either contribute the increased amount from his own pocket or adjust the existing CTC of employee, which will further reduce the take home salary of employee.

  15. hello sir,
    My salary structure is ( Basic 8500 , DA – 2550 , HRA – 2550 , CA – 2000, Other – 1400 ) Total Gross Salary = 17000 then how much pf amt will be deducted as per new rule of epfo .

    • PF will be deducted on basic +DA ( 8500+2550) = 11050 X12% = 1326

      • HI I AM WORKING AS A CONTRACT EMPLOYE MY GROSS SALARY IS RS 13000/-( INCLUDING PF ESI ) AS PE NEW PF RULE EFECT FROM 01-09-14 SO MY PF WILL BE ( EMPLOYEE ) 1320 BUT MY EMPLOYER IS DEDICTING 780/- & CONTRIBUTION ALSO 780/- TILL MONTH IS IT RIGHT OR WRONG PLZ GAIDE ME PLZ

  16. Hi Vivek,
    Earlier there used to be one rule, if one’s BASIC salary per month is more than Rs 6,500, he has an option to opt out of EPF and not be part of it.
    So want to double confirm is this limit increased or any other ? Does that mean now if one’s BASIC salary per month is more than Rs 15,000, he has an option to opt out of EPF ? And if his BASIC is less than 15000 he will have to open a PF accout ?? Is it true ?
    Please confirm asap. Thanks!

    • Hi Mudit, yes your understanding is correct.

      Now, if the Basic salary is more than Rs 15000 , he can opt out of PF. If basic salary is less than Rs 15000, he have open a PF account.

  17. My current salary is Rs. 6500/- per month and p.f deducting Rs. 780/- per month. I want to know is it mandatory to increase salary from 6500/- to Rs. 15000/- per month as per current rule.I am working in a school.

    • Hi Ravi, It is not compulsory to increase salary. it is just that if an employee has Basic of 15000, he will now also be under PF net. Earlier only employees upto 6500 was under PF .

  18. Hello Sir,

    My Present Pay Scale is Basic – 5660, Grade Pay- 2400, D.A -2176, city Allowance- 240 and Medical Allowance – 100

    My Gross Salary = 11785/-

    How much P.F amount will be deducted as per new rule of epfo

  19. Earlier employer has cap for contribution is Rs 6500. Now as per new notification Employer contribution cap is Rs 15000/-.

    is it correct?

    or

    Rs 6500 is the same cap for Employer contribution as per new notification?

    Exactly what is employer contribution as per new notification?

    Please clarify me…..

    • It is not cap. Earlier only employee upto 6500 basic was compulsory under PF.
      Now even employee upto 15000 are under PF.

      Employe can contribute more even if the salary is more than 15000

      • Thanks for information. But my doubt didnt clarify.

        What is employer contribution as per new notification?

        Please reply…..

        • Employer contribution is 12% of basic. there is no cap.

          In case employee basic is 6500, employer contribution will be 12% of 6500
          In case employee basic is 10000, employer contribution will be 12% of 10000
          In case employee basic is 15000, employer contribution will be 12% of 15000
          In case employee basic is 25000, employer contribution can be 12% of 15000 or 12% of 25000

          • I understood.

            Earlier for liability purpose employers making contribution 12 % on Rs 6500 even if basic is more than Rs 6500. After new notification they must contribute upto Rs 15000 of basic.

            Correct me if wrong.

            Thank you

          • If the basic salary of employee is more than Rs 15000, employer must deduct & contribute PF on basic salary at a minimum of Rs 15000. They can contribute on higher amount if they wish so.

          • Dear Vivek ,

            I tell a Question from ou if i employer and i have run a company which 25 employee working at now. four employee such basic salary 35000 so please tell me if i deduct epf on 6500 i wrong ya correct according to new notification.

            According to new notification should on 15000 ya not.

            please reply on my email id sharmasuraj553@gmail.com any person reply on this email id

          • As per new notification, you need to deduct PF on minimum of Rs 15000 basic.

  20. thank u so much for your clarification.

    I had one more doubt regarding ESI

    ESI Covered employee is eligible for Sick Leaves. Actually employee will get money for SL in ESI.

    Is Employer liable to give SLs, even if covered by ESI?

    • Hi Maruti, Not sure if I understanding your question correctly.
      Any leave other than statutory holidays is upto employer to give or not.
      only Republic Day, Independence Day and Mahatma Gandhi’s Birthday are observed nationally & other holidays are regional.

  21. Sir

    I asked it so many persons, but didn’t get correct information.

    Let me explain with example….

    Emp Name : ABC
    Employee Type : Rolls (permanent)
    Salary : Rs 10,000/-
    ESI coverage : Yes

    Generally he will get CL, SL and EL (Based on last year working days)

    Suppose if he suffered from fever and not attended for duties for 5 days, Actually he went to ESI hospital and had treatment.

    Is employer liable to pay amount for this Sick leaves??? and
    Is he liable to get SLs, even if covered under ESI???

    If yes, where it is stated?
    If No, Where it Stated?

    Please clarify me on this case.

  22. Sir,
    My Basic Salary is 20000 + HRA 5000 + CONVEYANCE 3000 + OTHER 5000 = TOTAL 33000/-
    NO PF DEDUCT BEFORE 01.09.2014
    AFTER NEW PF LIMIT 15000/- , WHAT WILL BE NEW STATUS

  23. Hello,
    I am calculating like Those who are getting basic more than 15000,pf equals 12%15000.
    Those who are getting basic less than 15000, do their pf is 12% (basic and special allowance )?
    Before my calculation was like if CTC is 40000,
    Basic pay 16000
    Hra 6400
    Med 1250
    Convy 800
    Special allow 14770( taking pf 780)
    Take home =39220-780-200=38240

    Now from 1st sep2014 onwards, can I change this to,
    Basic 16000
    Hra 6400
    Med12500,covey 800
    Special allowance=13750(CHANGED)
    And take home 38200-1800-200=36200
    Can this be done?
    I heard employer contribution shouldn’t be deducted from the employee because employer need to take the difference.
    So do i need to keep previous gross (39220) like that itself?
    Please reply

  24. Hi,

    As per new PF rule can an employer decrease the basic salary of an existing employee.

  25. Hats off to you Vivek for clarifying every doubts and question so patiently

    Regards
    Ajit.

  26. Dear Sir

    if i got salary Basic + DA Rs 11000/- & Company pay Pf 780 on 6500/-. After the Notification Company can change salary structure as basic +DA 6500/- & Other Allowances is Rs 4500/ and they pay PF amount as same 780 on 6500/- is it possible or they pay on 11000/- itself

  27. Sir,

    My Basic Salary is Rs.6000/- and i got monthly more than Rs.13000/- Salary

    Now my PF contribution is Rs.780/- it will be same or may be change

  28. Hi vivek

    Is it compulsory to deduct PF , if the salary is below 6500.

    If yes, in that case If min wages is 5000 .
    Can we make it as 2500 ( basic) + 2500 ( other allowances ) and deduct PF on 2500 only.

    • The PF is applicable to all establishment who engage 10 or more employee’s with basic salary upto Rs 15000.

      However, you can split the wages into basic & other allowances. in that case, PF needs to be deducted on Basic Salary. In your case, PF needs to be deducted on 2500 (basic)

  29. Dear Vivek,
    Suppose a company had some employees having Basic salary above 6500/- before 01-09-2104 and the same were not covered under Pf.
    Now after the new notification, will these old employees come under PF compulsorily or will they remain exempt.

    Please refer to Sec 2(f)(ii) of EPF Scheme 1952.

    Please confirm.

  30. Hi Vivek,

    please share the basics,DA,HRA, percentage contribution. according to new pf slab ( Rs 6500-15000 )

  31. DEAR SIR

    PLEASE SEND ME THE
    NEW pf slab

    WITH regards
    huli

  32. If total salary is less than Rs. 6500/- then Pf deduction is must? For temporary workers i.e. 10 to 20 days work in a month then pf deduction compalsory. if yes then how it is possible kyc !

  33. Hello,

    I may be going off track from discussion, but would like to have your feedback on below query.

    As per new EPF Ammendment 2014, effective September 01, 2014, the new PF Account holder will not have pension fund.
    I have worked in X company for 3 years which is maintaining PF trust and had quit my job on Sep 02 and joined new Company.

    1.Since I joined after September 01 in new company, and whose PF is maintained in RPFC, If i do not transfer PF from my previous organization will pension fund be not applicable to me?

    2. Can I choose Employer not to contribute to Pension fund?

    3. Is there any Tax payable amount for EPS withdrawn before 5 years?

    Thanks,
    Avi

    • Hi Avi,

      1) If you transfer your PF to new employer, you will not be treated as New member and therefore you will be entitled to Pension

      2) There is no option for not contributing to Pension fund for old members.

      3) You cannot withdraw EPS. It goes into a pool and you will get pension at the time of retirement.

      • Thanks Vivek.

        However for point 1, what happens if I don’t transfer from Previous organization’s exempted trust and withdraw, will Pension fund be still applicable to me as I will be treated as new member in RPFC, and they don’t have my previous service details?

        3. AFAIK, when you have an employment gap of 2 months or more when switching organizations, we can withdraw EPF and EPS. Correct me if I am wrong. So, EPF withdrawn before 5 years will attract a tax. Hence, I would like to know, if it is applicable even to EPS?

        • 1. If you donot transfer , then you will be treated as new member as they donot have any details of your previous employment.

          3. If there is a gap of 2 months, you can withdraw your EPF balance. However, you get pension (EPS) only if you have completed 10 years of service.

  34. Hi Vivek,

    Just need to know, suppose my basic is 11000/ , is the employer eligible to cut my pf as 12% 15000.

    Or he is restricted to calculate on 12% of 11000.

    Looking forward for your response!

  35. Hi vivek,

    I have recently joined a new firm and they have offered me 19k monthly, but the there is no pf deduction and my take home salary is 18k. It possible, because when i asked to my finance department they told me that mine basic is 15K and as per government basic salary is half of your CTC.

    • There is no rules that basic should be half of CTC. If your basic is more than 15000, then company is not liable to deduct / contribute to PF.

  36. Sir, I am drawing salary 18000/- can i eligible for PF deduction under new Policy my HR told me there is no neccessary to pay PF pl clarify

  37. Dear sir,
    My salary details are as follows….
    Basic=6500
    HRA=2600
    special allowance=6267
    children allowance=200
    Transport allowance=800
    GROSS SALARY=16367
    Bonus =541
    Gratuity=312
    employer share to pf =780
    CTC=18000
    According to new pf rules what will be the deductions????

  38. Hi,

    Is PF is applicable to temporary workers???
    If No, Please say where it is given in EPF act???

  39. Hi,
    I have getting 13k per month and pf on 6500. Now new rule how should be my pf contribution.

  40. My Basic Salary is 11887. My Take home as of November 2014 is 31219.
    ( Rupees 780 have been taken from my salary as PF contribution from employee side till Nov2014)
    ( My take home Rs.31219 is after the PF reduction)

    How much amout for PF have to taken from my salary in the new PF amendment for my basic..?

    What should be my take home salary after the new PF act implementation…?

    Please clarify.

    • as per new ruels your PF deduction should be 12% of your basic 11887 = 1426

      • Thanks Vivek Jain……….

      • thank u Vivek Sir…..

        Is there any changes in ESI wages Limits???

        regards
        Preeti

        • Union Minister of State for Labour and Employment Kodikunnil Suresh said the Employee’s State Insurance Corporation (ESIC) board has decided to increase the income ceiling limit for employees, from the existing Rs.15,000 a month for coverage under the ESIC scheme to Rs.25,000 a month

  41. Can i open pf account without salary.

    I am salaried employed in small proprietor organation.

    They did not accept to provide pf accounts to working employes.
    So can i open pf account Individually without any relation from my working organization.

  42. My basic salary is 8000 My take home is 27510.00, Rs 780 has been taken from my salary as PF contribution from employee side till Nov 2014, My take home is 27510.00 after reduction.

    How much PF will be taken from my salary in the new PF act implementation.

  43. I checked with my organisation for setting cap on EPF contribution but as per them they have not received any communication from labor department for the same.
    Is setting cap on EPF contribution started or rule is not yet passed ?

    • Hi Ashok,

      It is not mandatory to cap the PF deduction. However, if the company wants, they can cap the PF deduction to the basic amount of Rs 15000 (revised from 6500).

  44. hi.
    in my payslip basic is 7500 and I m getting night shift allowance Rs1500.
    out of this Rs 902 are deducting as PF.
    when I checked in UAN,I noticed the following.
    employee share-Rs 902,
    employer share-Rs 276,
    pension contribution-Rs 626
    cud u pls tell weather employer contributing Rs 902 towards EPF?
    pls reply to my email thoufee26@gmail.com
    I can’t browse this site again pls mail me.

    • Hi, Out of employer contribution, 8.33% goes to EPS. However thisa 8.33% is calculated on basic salary of 6500.
      So out of employer contribution, Rs 541 should go to EPS and rest Rs 362 to EPF

  45. Hi Vivek thanks for your kind patience with all the question. I want to add one more dumb question. I want to increase the contrast with this question in order to understand the verbiage better.

    If an employee is currently making basic of say 2,00,000 and the company is paying 12% of that basic 2 Lakhs as PF can the company now reduce PF payment to 12% of 15,000? Of course the employee also reduces PF payment. Is this correct?

    Regards

  46. Chetan Dhacholia

    Hi Sir

    One query. Suppose an employee is getting a basic of 30000 pm. So employees contribution can be capped by an employer to 1800 pm and employers contribution to 1800 pm. Or they have to deduct 12% as employee contribution but employer can limit their own contribution to 1800 pm.

    Thanks

  47. If CTC is 8500 so PF is deducted or not $
    How much PF is deducted.

  48. I m senior citizen of 62 yrs and my employer has been deducting my EPF contribution on my basic for the last 4 years and now stop employer”s contribution from 1.4.2015 resulting loss of Rs 3400 PM and now this loss does add to my CTC saying that senior citizen above 60 will not covered in EPF policy , Pl clarify ,

    • There is no age bar for contributing to the Employees’ Provident Fund Scheme (EFF) 1952 and Employees’ Deposit Linked Insurance (EDLI) Scheme 1976 run by the EPFO. However, one cannot contribute to the Employees’ Pension Scheme(EPS-95), after the age of 60 years.

      How much is your basic? If your basic is more than Rs 15000 (earlier it was 6500), then the PF contribution is not compulsory.

  49. sir,
    i want to ask that my basic is 22500 and d. a. is 25425, H..R.A is 2252 , medical is 100 and sp. allow is 500 total salary i withdraw is 50877. so what will be the contribution of employer and employee

    • Hi Ashok, the PF contribution is on 12% of Basic +DA. But employer are also allowed to choose to deduct 12% on maximum Rs 15000.

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