Dear All,
Whether it is mandatory for all employees to have deductions for provident fund, even if their wages are higher. Is there any salary limit for the same? What is the concept of Rs 6500? What are the employer obligations for paying PF? I would appreciate your detailed views on these questions.
Regards,
Ranjeet
From India, New Delhi
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12Whether it is mandatory for all employees to have deductions for provident fund, even if their wages are higher. Is there any salary limit for the same? What is the concept of Rs 6500? What are the employer obligations for paying PF? I would appreciate your detailed views on these questions.
Regards,
Ranjeet
From India, New Delhi
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Since the salary limit for the deduction of PF and Pension Scheme under PF is 6500, many employees drawing more than that are not interested in getting PF deducted, at least up to the limit of Rs. 6500. PF is one of the social security measures and indirect savings for an employee. They should keep in mind the benefits of PF contributions.
Though the employee is willing to contribute at a higher rate of PF deduction (as it is permissible), the employer may restrict the contribution to the extent of Rs. 6500 of salary/wages. The employer has to contribute their share as 8.33% towards the Family Pension Fund and the balance of 12% after the FPS contribution to the Provident fund contribution.
From India, Madras
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Though the employee is willing to contribute at a higher rate of PF deduction (as it is permissible), the employer may restrict the contribution to the extent of Rs. 6500 of salary/wages. The employer has to contribute their share as 8.33% towards the Family Pension Fund and the balance of 12% after the FPS contribution to the Provident fund contribution.
From India, Madras
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Dear Ranjit,
If an establishment is covered by EPF and is not exempted otherwise on account of better facilities being provided to the employees in respect of retirement benefits than what has been provided under the Employees Provident Fund and Miscellaneous Provisions Act and by the EPF organization, it is mandatory that contributions at the prescribed rates should be paid by the employer in respect of those employees who are already members of EPF and those whose salary (basic + dearness allowance) does not exceed Rs 6500.
Certainly, an employee whose salary exceeds Rs 6500 right at the time of his joining the establishment shall be excluded from coverage. It is not mandatory that he should be excluded but if both of them agree to be covered, he can also be included as a member.
An existing member employee will continue to be covered by EPF even if his salary exceeds Rs 6500. Similarly, a new employee who was earlier a member of the EPF when he was with some other employment which he left but has not withdrawn his then PF accumulations should also be considered as an 'existing member' and he should be covered in the new establishment even if his salary exceeds Rs 6500.
In respect of those member employees who are drawing more than Rs 6500, the employer can restrict his share of contribution to the prescribed rate of 12% + admin etc on Rs 6500. Here also, it is not mandatory to restrict so but if the employer wishes to contribute on the whole of qualifying salary he can do so.
Regards,
Madhu T.K
From India, Kannur
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If an establishment is covered by EPF and is not exempted otherwise on account of better facilities being provided to the employees in respect of retirement benefits than what has been provided under the Employees Provident Fund and Miscellaneous Provisions Act and by the EPF organization, it is mandatory that contributions at the prescribed rates should be paid by the employer in respect of those employees who are already members of EPF and those whose salary (basic + dearness allowance) does not exceed Rs 6500.
Certainly, an employee whose salary exceeds Rs 6500 right at the time of his joining the establishment shall be excluded from coverage. It is not mandatory that he should be excluded but if both of them agree to be covered, he can also be included as a member.
An existing member employee will continue to be covered by EPF even if his salary exceeds Rs 6500. Similarly, a new employee who was earlier a member of the EPF when he was with some other employment which he left but has not withdrawn his then PF accumulations should also be considered as an 'existing member' and he should be covered in the new establishment even if his salary exceeds Rs 6500.
In respect of those member employees who are drawing more than Rs 6500, the employer can restrict his share of contribution to the prescribed rate of 12% + admin etc on Rs 6500. Here also, it is not mandatory to restrict so but if the employer wishes to contribute on the whole of qualifying salary he can do so.
Regards,
Madhu T.K
From India, Kannur
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Whether it is mandatory for all civil construction workers to have a deduction for provident fund, even if their wages are higher than Rs. 6,500/- per month. Is there a salary limit for the same? What is the significance of Rs. 6,500? What are the employer's obligations for paying PF? Recently, many contractors in Kochi, Kerala, are facing pressure from PF authorities to include all workers under the PF rule. In practice, this is challenging because most workers are migrants and are unwilling to have any amount deducted from their wages. I would like to request your detailed views on these questions.
Regards, JK10
From India, Kochi
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Regards, JK10
From India, Kochi
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Dear Mr. Madhu,
Please educate me on where (in the EPF & MP Act) it states that the Employer's contribution is restricted to only Rs 6500 (12% of Rs 6500 = Rs 541) only in case the Basic + DA exceeds Rs 6500?
As far as I know, if an employee is receiving, let's say, Rs 10,000 as Basic + DA, he contributes Rs 1200 (12% of Basic + DA) while the Employer contributes Rs 1361 in the following heads:
- Pension Fund: Rs 541 (This is restricted to Rs 541, 8.33% of Rs 6500)
- Provident Fund: Rs 659 (The remaining 12% of the Basic + DA, Rs 10,000)
- Admin/EDLI/Ins: Rs 161 (1.61% of Rs 10,000).
Total Employer's Contribution: Rs 1361
Thank you!
Rajusiachen
From India, Coimbatore
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Please educate me on where (in the EPF & MP Act) it states that the Employer's contribution is restricted to only Rs 6500 (12% of Rs 6500 = Rs 541) only in case the Basic + DA exceeds Rs 6500?
As far as I know, if an employee is receiving, let's say, Rs 10,000 as Basic + DA, he contributes Rs 1200 (12% of Basic + DA) while the Employer contributes Rs 1361 in the following heads:
- Pension Fund: Rs 541 (This is restricted to Rs 541, 8.33% of Rs 6500)
- Provident Fund: Rs 659 (The remaining 12% of the Basic + DA, Rs 10,000)
- Admin/EDLI/Ins: Rs 161 (1.61% of Rs 10,000).
Total Employer's Contribution: Rs 1361
Thank you!
Rajusiachen
From India, Coimbatore
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The rates of contributions are not given in the Act but in the Schemes, viz, the Employees Provident Funds Scheme, 1952. In the Schemes, who are excluded employees are given in scheme 2(f)(ii) as one whose salary at the time of joining is more than Rs 6500. Similarly, contributions payable are given in scheme 26 also.
As already stated, it is not compulsory that the employer should restrict the contribution to Rs 6500 but he can contribute on any higher salary as is the case with almost all corporate business houses. There cannot be any exception for any civil workers. They are also workmen within the meaning of the Factories Act or Industrial Disputes Act. Then why should we have different treatment? They have to be covered. PF is not concerned about the migrating nature of labor, and they cannot hinder their mobility either.
Regards, Madhu.T.K
From India, Kannur
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As already stated, it is not compulsory that the employer should restrict the contribution to Rs 6500 but he can contribute on any higher salary as is the case with almost all corporate business houses. There cannot be any exception for any civil workers. They are also workmen within the meaning of the Factories Act or Industrial Disputes Act. Then why should we have different treatment? They have to be covered. PF is not concerned about the migrating nature of labor, and they cannot hinder their mobility either.
Regards, Madhu.T.K
From India, Kannur
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