Dear Professionals,
Happy Weekend !
We practice 12+12% PF contribution by both employee & employer side. Recently one employee joined in my company as an HR executive. In his previous company they only calculate PF on RS. 6500. If the person has basic 13000 they only will calculate PF on 6500 remaining 6500 will not be in calculation. Though I did not accept this new practice but I am surprized why company's have such policies???
Can any body help me to understand the benefitts/disadvantages?? Because I did not find any benefit in this. But he is still interesting???
Nimra
From India, Mumbai
Happy Weekend !
We practice 12+12% PF contribution by both employee & employer side. Recently one employee joined in my company as an HR executive. In his previous company they only calculate PF on RS. 6500. If the person has basic 13000 they only will calculate PF on 6500 remaining 6500 will not be in calculation. Though I did not accept this new practice but I am surprized why company's have such policies???
Can any body help me to understand the benefitts/disadvantages?? Because I did not find any benefit in this. But he is still interesting???
Nimra
From India, Mumbai
Dear Nimra,
You are Right PF has to be paid on whole amount but out of employers contri 8.33% of EPS is deducted upto 6500/- only (Limit is fixed for EPS) above 6500 it goes in EPF account of employee. Below mentioned is eg of calcualtion based on basic of Rs 13000/-
List To %age Max Limit Amount Final amount
Employee contri EPF 12 13000 1560
Employer contri EPS 8.33% 6500 541
Employer contri EPF 3.67% 6500 239
Employer contri EPF 12% 6500 780
Regards
SNB
From India, Bhopal
2You are Right PF has to be paid on whole amount but out of employers contri 8.33% of EPS is deducted upto 6500/- only (Limit is fixed for EPS) above 6500 it goes in EPF account of employee. Below mentioned is eg of calcualtion based on basic of Rs 13000/-
List To %age Max Limit Amount Final amount
Employee contri EPF 12 13000 1560
Employer contri EPS 8.33% 6500 541
Employer contri EPF 3.67% 6500 239
Employer contri EPF 12% 6500 780
Regards
SNB
From India, Bhopal
Hi
The ceiling limit for deduction of PF is 6500/- hence the employer deducts PF of his and employee contribution on Rs.6500.00 only. Over and above deduction of PF on the amount drawn more than Rs.6500.00 is employer discretion only and a law binding as per PF rules and ACt in force.
Mohan Rao
Manager HR
From India, Visakhapatnam
The ceiling limit for deduction of PF is 6500/- hence the employer deducts PF of his and employee contribution on Rs.6500.00 only. Over and above deduction of PF on the amount drawn more than Rs.6500.00 is employer discretion only and a law binding as per PF rules and ACt in force.
Mohan Rao
Manager HR
From India, Visakhapatnam
When a law is enacted, there is a min. limit which has to complied with letter & spirit. However, at the discretion of employer, no ceiling for the max. limit of PF contribution. However, the contribution of EPS is restricted only 8.33% of 6500/- and the balance goes to the EPF account.
From India, Lucknow
From India, Lucknow
Hi
To day the employer is looking at how best he can cut down the wage load on him, in order to minimize the over heads and build the wage load with a slow and study basis to keep the organisation strong for the long run to go ahead. So when the ceiling is available what makes him to go for higher deduction and pay from his pocket for no reason.
Mohan Rao
Manager HR
From India, Visakhapatnam
To day the employer is looking at how best he can cut down the wage load on him, in order to minimize the over heads and build the wage load with a slow and study basis to keep the organisation strong for the long run to go ahead. So when the ceiling is available what makes him to go for higher deduction and pay from his pocket for no reason.
Mohan Rao
Manager HR
From India, Visakhapatnam
Dear Sai Nandan Bohare sir,
What a nice example given for understanding PF and Pension contribution.
Thanks a lot. One doubt is I am joining Allahabad Bank on 20 Sep 2009 and will be governed by EPS 1995 as per joining instruction. Does the same formula will work there if I choose a pension option.
From India, Ludhiana
What a nice example given for understanding PF and Pension contribution.
Thanks a lot. One doubt is I am joining Allahabad Bank on 20 Sep 2009 and will be governed by EPS 1995 as per joining instruction. Does the same formula will work there if I choose a pension option.
From India, Ludhiana
Dear Friend
You are right.
In good, reputed, large, established companies which care for employee welfare, both employee and employer contribution is 12% without any limit to salary.
It is the smaller companies, which to cut down cost and employee's benefit; restrict their contribution up to a maximum of Rs. 6500 basic pay - which is the statutory compliance limit. Beyond this, company contribution is optional.
Since your company is doing it, means it is a good company to be proud of.
Regards.
From India, Delhi
You are right.
In good, reputed, large, established companies which care for employee welfare, both employee and employer contribution is 12% without any limit to salary.
It is the smaller companies, which to cut down cost and employee's benefit; restrict their contribution up to a maximum of Rs. 6500 basic pay - which is the statutory compliance limit. Beyond this, company contribution is optional.
Since your company is doing it, means it is a good company to be proud of.
Regards.
From India, Delhi
Dear All,
Though Law is there but it is depend on Employer's capacity to pay and willingness to pay.
Henece the employers who keeps the capacity to pay equal contribution of PF on at actual Basic salary/wages of the emploees then such genuine and broadminded employers contribute 12% at actual on employees basic pay (whatsoever).
However we cannot expect such decision from the typical orthodox Indian entrepreneur/employer i.e. unprofessional Seth though they keeps the capacity but not showing willingness.
Sanjeev
From India, Pune
Though Law is there but it is depend on Employer's capacity to pay and willingness to pay.
Henece the employers who keeps the capacity to pay equal contribution of PF on at actual Basic salary/wages of the emploees then such genuine and broadminded employers contribute 12% at actual on employees basic pay (whatsoever).
However we cannot expect such decision from the typical orthodox Indian entrepreneur/employer i.e. unprofessional Seth though they keeps the capacity but not showing willingness.
Sanjeev
From India, Pune
Dear Friend,
Yes, PF contribution is 12% of the basic amount but the ceiling is Rs. 6,500/-. Employer can pay on actual if exceeds Rs. 6,500 but liabilities also increased because employer has to pay equal amount of PF contribution + 1.61% Admin Charges also. To reduce the liabilities employer consider ceiling amount of Rs. 6,500/-.
This is not a wrong practice but prescribed by law.
Regards
Pankaj Chandan
From India, New delhi
Yes, PF contribution is 12% of the basic amount but the ceiling is Rs. 6,500/-. Employer can pay on actual if exceeds Rs. 6,500 but liabilities also increased because employer has to pay equal amount of PF contribution + 1.61% Admin Charges also. To reduce the liabilities employer consider ceiling amount of Rs. 6,500/-.
This is not a wrong practice but prescribed by law.
Regards
Pankaj Chandan
From India, New delhi
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