Hello,I'm an employee of a private limited company working with it since February 2017. It regularly deducts and contributes my EPF, calculated on my actual basic salary, to my PF account. My Basic salary is more than Rs.15,000/-. I learn that in case basic salary is higher than Rs.15,000, basic salary can be restricted to Rs.15,000 for EPF calculations.Now, since in my case an EPF presently is being deducted & contributed on my actual basic salary higher than the maximum ceiling of Rs.15,000, I want to opt for an option of calculating & deducting it on Rs.15,000. I already have spoken to my employer to restrict my salary to Rs.15,000 for deduction of PF who however rejected my request stating that PF office does not advise to do so. And this has also been confirmed by PF office when I had raised my grievance in this regard.Reason behind restriction of the deduction, is I need more in hand salary to fulfill my financial objectives which I think is a reasonable demand of me.Kindly, guide me in this regard.Regards,Vivek
Asked 4 years ago in Labour
you are required to compute PF contributions only on the maximum salary limit of Rs.15,000 per month. So even if your salary is higher then Rs.15,000 per month, PF will be computed on Rs.15,000 per month.
2)The ceiling is to calculate the PF contribution only. i.e. If one of your staff Basic+DA is Rs.25000/- you have calculate the PF @12% on Rs.15000/- which comes to Rs.1800/- as employees contribution and equal contribution from your company too.
There is a court ruling to that effect. You can challenge.the same in writ petition.
Under EPF rules, an employer has to contribute 12 percent of the basic salary of an employee into EPF. Out of this amount, 8.33 percent goes into EPS. The current salary cap on EPF is Rs 15,000 a month. So, the maximum contribution to EPS is Rs 1,250 a month. A 1996 amendment in the EPS Act gives employees the option to raise pension contribution to 8.33 percent of the actual salary (basic + DA). To hike the contribution to EPS, one has to apply to the EPFO along with a consent letter from the employer. Supreme Court, through a ruling in 2016, made it mandatory for EPFO to allow higher contribution to EPS. Even retired employees can opt for this. After a few years, EPFO even stopped accepting requests for raising the contribution to EPS.
Several private EPF trustees and employees approached EPFO with the demand to remove the ceiling on their EPS contributions and raise it to their total salary. The EPFO rejected the demand claiming that their response should have come within six months of 1996 amendment. In October 2016, Supreme Court ruled in favour of employees' right to raise their contributions to the pension fund without imposing any cut-off date for eligibility.
With effect from September 1, 2014, EPFO asked the existing members who were contributing on full salary to furnish a fresh option within 6-12 months. The circular dated January 22, 2019 has also withdrawn the following:
"For those employees who were contributing on higher salary prior to [deleted], in such cases as well, joint option need not to be insisted for. From September 1, 2014, members of EPS who were already contributing to the Pension Scheme on actual salary to submit the fresh option, within prescribed limit to continue to contribute on actual salary. It also specifies that such members shall have to deposit an additional contribution into the pension fund at the rate of 1.16 per cent of salary exceeding Rs 15,000, from and out of the contributions payable by the employees for each month. However, for the period prior to September 1, 2014, there is no such provision in EPS, 1995 which requires the employees who opt to deposit contribution at actual salary to deposit any additional contribution.
For the PF deduction, the maximum limit of salary of the employee is Rs 15,000 per month. This means that even if the employee's salary is above Rs 15,000, the employer is liable to contribute only on Rs 15,000 that is Rs 1,800.
Both employer and EPFO are at fault. Complain to Labour commissioner.
Please move a complaint in this regard to the ombudsman, your employer is wrong.
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Once a person is covered under the PF act and has PF account, he is required to continue to be a member of PF and it is necessary that both the employee and employers contribution must be paid each month. The rule however, is that you are required to compute PF contributions only on the maximum salary limit of Rs.15,000 per month. So even if his salary is higher then Rs.15,000 per month, PF will be computed on Rs.15,000 per month.
Thecontributionpaid by the employer is 12% of basicwagesplus dearness allowance plus retaining allowance. An equalcontributionis payable by the employee also. ... If the basicpayis less than Rs 15000 then 8.33% of that full amount will go into EPS.
For the PF deduction, the maximum limit of salary of the employee is Rs15,000per month. This means that even if the employee's salary is above Rs15,000, the employer is liable to contribute only on Rs15,000that is Rs 1,800. The statutory compliance for PF contribution has some less known facts associated with it.
The statutory compliance for PF contribution has some less known facts associated with it. The PF is divided into EPF and EPS (Employee pension Scheme) contributions. The employees’ contribution goes straight to EPF whereas from employer’s contribution, the 8.33% goes to EPS subject to Rs 1,250 a month and the rest goes to EPF
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Those earning basic wages more than15000per month,EPFcontribution is not mandatory. Also, the employer can choose tolimitits contribution towardsEPFto 12 per cent of Rs15,000(Rs 1,800) under Section 26A ofEPF actfor those employees earning more than Rs15,000per month as basic wages.
This is the law
If the EPF department is not complying with the same then approach the court of law
Advocate, New Delhi
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