Namaskara Professionals,
1. If an employee's basic salary (excluding HRA) is 50k, can the employer deduct the employer's contribution to EPS based on a wage limit of only 15k? In tis case is it possible to deduct EPS for an employee whose joining date is 30.07.2024.
2. Also can Employer deduct EPS on Wage limit of 15k and EPF on basic of 50k??
Please clarify. Thank you in advance.
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From India, Chennai
1. If an employee's basic salary (excluding HRA) is 50k, can the employer deduct the employer's contribution to EPS based on a wage limit of only 15k? In tis case is it possible to deduct EPS for an employee whose joining date is 30.07.2024.
2. Also can Employer deduct EPS on Wage limit of 15k and EPF on basic of 50k??
Please clarify. Thank you in advance.
---
From India, Chennai
If the employee is already a member of EPF, you should also cover him under EPF even if the salary exceeds Rs 15000. But if he is a fresher or he was no covered by EPF in the past, then you can either exclude him from PF or cover him under PF for EPF only. Again, if you are showing Rs 15000 as basic salary as against Rs 50000, then you can even contribute to his Pension Fund also. But under both EPF and Pension Fund the gross salary should be Rs 15000. You should not show Rs 50000 as Salary under EPF and Rs 15000 as salary under PS.
From India, Kannur
4252From India, Kannur
I do agree on the following 2 points advised by Madhu
If already employee is covered under EPF & EPS then it is mandate to cover under EPF & EPS
If first time member to EPF& if salary is above Rs. 15,000/- then the employee may be considered as excluded employee
But I would like to defer from Madhu on the following point.
If employee is first time member to EPF and if wages is above Rs. 15,000/-, Even though EPF is restricted to the ceiling limit of Rs. 15,000/- EPS is not applicable. If the same is contributed then employee will face challenges in transfer/claims.
From India, Bangalore
If already employee is covered under EPF & EPS then it is mandate to cover under EPF & EPS
If first time member to EPF& if salary is above Rs. 15,000/- then the employee may be considered as excluded employee
But I would like to defer from Madhu on the following point.
If employee is first time member to EPF and if wages is above Rs. 15,000/-, Even though EPF is restricted to the ceiling limit of Rs. 15,000/- EPS is not applicable. If the same is contributed then employee will face challenges in transfer/claims.
From India, Bangalore
True but whether the EPF Organisation has any power to see what the employee's total salary is? NO. They can only see whether an employee is covered or not, and if not covered why is he not covered. They are only concerned with the PF qualifying salary and not the gross salary. The EPF & MP Act being a social security enactment for the benefit of the employees, I don't think that EPFO can interfere and question why the employee whose gross salary is more than Rs 15000 is given coverage.
It is true that the EPFO is putting the members a lot of troubles and make them miserable to transfer or claim amounts from PF. But if you fight properly, this will come to an end. Even though the Kerala High Court decision that 2014 amendment was unconstitutional was not approved by the Apex Court, the controversies have not ended. I know companies which restrict PF payments on Rs 15000 contributing to EPS also. The members have managed to get their accounts transferred also. But if the employer shows the actual gross under the Gross salary for EPF and Rs 15000 under EPS in the ECR, then the system will reject it. Otherwise, it will accept, I understand.
From India, Kannur
It is true that the EPFO is putting the members a lot of troubles and make them miserable to transfer or claim amounts from PF. But if you fight properly, this will come to an end. Even though the Kerala High Court decision that 2014 amendment was unconstitutional was not approved by the Apex Court, the controversies have not ended. I know companies which restrict PF payments on Rs 15000 contributing to EPS also. The members have managed to get their accounts transferred also. But if the employer shows the actual gross under the Gross salary for EPF and Rs 15000 under EPS in the ECR, then the system will reject it. Otherwise, it will accept, I understand.
From India, Kannur
At the time of inspection they have rights to check the wages. Any how while generating/Linking UAN in the organisation we need to mention the gross wages & even at the time of monthly returns we need to mention the gross wages. In the gross wages we can't declare wages as Rs. 15,000/-, but yes in EPF & EPS wages we can restrict to Rs. 15,000/-
From India, Bangalore
From India, Bangalore
As part of EPF monthly returns we need to mention gross wages as well along with the EPF, EPS & EDLI wages.
From India, Bangalore
From India, Bangalore
Dear Professionals,
Thank you so much for your guidance. You have been incredibly helpful, and I don't know who else I would have asked.
Let me elaborate my query some more. Here are the details:
1. Employee's Past Employment (2017 at a large MNC):
- Basic Salary: ₹50,000
- Employee's EPF Contribution: ₹6,000 (12% of gross wage of ₹50,000)
- Employer's EPS Contribution: ₹1,250 (considering EPF wage of ₹15,000- This is mentioned in employer EPS contribution sheet)
- Employer's EPF Contribution: ₹4,750 (unclear on the wage amount considered)
According to Madhu sir, if we cannot have two wage limits for EPS and EPF, did the company deduct EPF at a higher percentage rate to match the employer's total contribution (EPF and EPS) with the employee's total EPF contribution?
Cant ask the old company for any details as they have left the company very long back.
3. As asked by Madhu sir:
- When applying for UAN, they ask for EPF wages, not gross salary.
- However, when calculating EPF returns for the month, both gross salary and EPF and EPS wages are required.
4. Director's UAN Issue:
The Director had a UAN number which he surrendered. Now, in his own company, he is eligible for PF registration as the employee count has exceeded 20.
When his Aadhaar number is entered, no UAN number is visible during registration. We are certain he had an old UAN number which is now not visible.
Should we create a fresh UAN number for him, and should we deduct EPS if his gross salary exceeds ₹15,000? EPS was getting deducted in his old company.
5. Coverage Under EPS and EPF:
- How can I determine whether employees in any previous office were covered under both EPS and EPF or only under EPF? They have left their old company long back and can't contact
their old company for these details.
Thank you for your assistance.
From India, Chennai
Thank you so much for your guidance. You have been incredibly helpful, and I don't know who else I would have asked.
Let me elaborate my query some more. Here are the details:
1. Employee's Past Employment (2017 at a large MNC):
- Basic Salary: ₹50,000
- Employee's EPF Contribution: ₹6,000 (12% of gross wage of ₹50,000)
- Employer's EPS Contribution: ₹1,250 (considering EPF wage of ₹15,000- This is mentioned in employer EPS contribution sheet)
- Employer's EPF Contribution: ₹4,750 (unclear on the wage amount considered)
According to Madhu sir, if we cannot have two wage limits for EPS and EPF, did the company deduct EPF at a higher percentage rate to match the employer's total contribution (EPF and EPS) with the employee's total EPF contribution?
Cant ask the old company for any details as they have left the company very long back.
3. As asked by Madhu sir:
- When applying for UAN, they ask for EPF wages, not gross salary.
- However, when calculating EPF returns for the month, both gross salary and EPF and EPS wages are required.
4. Director's UAN Issue:
The Director had a UAN number which he surrendered. Now, in his own company, he is eligible for PF registration as the employee count has exceeded 20.
When his Aadhaar number is entered, no UAN number is visible during registration. We are certain he had an old UAN number which is now not visible.
Should we create a fresh UAN number for him, and should we deduct EPS if his gross salary exceeds ₹15,000? EPS was getting deducted in his old company.
5. Coverage Under EPS and EPF:
- How can I determine whether employees in any previous office were covered under both EPS and EPF or only under EPF? They have left their old company long back and can't contact
their old company for these details.
Thank you for your assistance.
From India, Chennai
As per you, the employee concerned had worked in another organisation prior to joining your establishment. You have mentioned 2017; is this his date of joining that company or was he already a member of EPS having joined the EPF prior to Sept 2014? If he was a member of EPF prior to 2014, the contribution made by the Company is perfect. If he was not a member prior to 2017 (or even prior to Sept 2014) the employer should not have contributed Rs 1250 (8.33% of Rs 15000) to EPS but should have contributed the entire 12% of Rs 50000, ie, Rs 6000 to EPF alone. Now, if the ECR was filed showing Gross salary for EPF as Rs 50000 and EPF salary for PF for Rs 50000 and PS salary as Rs 15000, and the same was accepted, it should only be understood that he was already a member of EPS. If not, that company could not have succeeded in filing ECR by showing Rs 50000 as gross salary.
We can certainly have two Gross salary for EPF and EPS, because only EPS is restricted to Rs 15000, and PF can be contributed on higher salary. But in respect of employees who joined later than Sept 2014, if the gross salary shown is higher than Rs 15000, say, Rs 50000, then you cannot put an amount in the Pension Fund. This is how the software should be designed as per the EPF & MP Act. If so, naturally, in respect a person who joins now, with a gross salary of Rs 50000, the employer will not be able to contribute to Pension Fund. For chance, if the system accepts contribution to Pension Fund, then it should be a system error for which the EPFO is solely responsible.
Your question 3, I understand that there is no Gross salary for coverage but for generating UAN what is required is only PF salary. But for ECR we need both gross salary as well as PF salary. If the Gross salary is Rs 15000, and out of 15000 if Rs 2000 is HRA, obviously, the PF salary would be Rs 13000 only. At the same time, if the Gross salary is more than Rs 15000 but the employer will only consider the statutory threshold salary for EPF matters, then for all purposes relating to PF the salary should be Rs 15000 only, right? That is why I suggested that if pension fund is to be contributed, you can show Rs 15000 as Gross salary against PF also.
4. The employee had surrendered the UAN. I don't know how is it possible to surrender UAN. I presume he would have withdrawn the amounts available in the account when he left the company. He should have left the Pension Fund untouched. You can either get the PF passbook and verify what is the status. Sometimes his UAN would not have been linked to adhar and that may be another reason why the same is not shown as active. In the new member registration page, if you put the UAN, it may accept. Please try that.
If you generate a new UAN for him, you can proceed with the steps first above mentioned to make contributions. If you put 50000 as Gross salary, you cannot contribute to Pension Fund because the date of generation of UAN is today's. At the same time, if you show it as Rs 15000, you can contribute to both PF and PS.
5. You can find out whether the employee was covered by PS by verifying the member passbook. You can generate password by using forgot password filed available and getting OTP from the employee.
From India, Kannur
We can certainly have two Gross salary for EPF and EPS, because only EPS is restricted to Rs 15000, and PF can be contributed on higher salary. But in respect of employees who joined later than Sept 2014, if the gross salary shown is higher than Rs 15000, say, Rs 50000, then you cannot put an amount in the Pension Fund. This is how the software should be designed as per the EPF & MP Act. If so, naturally, in respect a person who joins now, with a gross salary of Rs 50000, the employer will not be able to contribute to Pension Fund. For chance, if the system accepts contribution to Pension Fund, then it should be a system error for which the EPFO is solely responsible.
Your question 3, I understand that there is no Gross salary for coverage but for generating UAN what is required is only PF salary. But for ECR we need both gross salary as well as PF salary. If the Gross salary is Rs 15000, and out of 15000 if Rs 2000 is HRA, obviously, the PF salary would be Rs 13000 only. At the same time, if the Gross salary is more than Rs 15000 but the employer will only consider the statutory threshold salary for EPF matters, then for all purposes relating to PF the salary should be Rs 15000 only, right? That is why I suggested that if pension fund is to be contributed, you can show Rs 15000 as Gross salary against PF also.
4. The employee had surrendered the UAN. I don't know how is it possible to surrender UAN. I presume he would have withdrawn the amounts available in the account when he left the company. He should have left the Pension Fund untouched. You can either get the PF passbook and verify what is the status. Sometimes his UAN would not have been linked to adhar and that may be another reason why the same is not shown as active. In the new member registration page, if you put the UAN, it may accept. Please try that.
If you generate a new UAN for him, you can proceed with the steps first above mentioned to make contributions. If you put 50000 as Gross salary, you cannot contribute to Pension Fund because the date of generation of UAN is today's. At the same time, if you show it as Rs 15000, you can contribute to both PF and PS.
5. You can find out whether the employee was covered by PS by verifying the member passbook. You can generate password by using forgot password filed available and getting OTP from the employee.
From India, Kannur
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EPS-Explanation on full salary for Pension-Gist of SC judgment on KeralaHC.docx
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