PF Contribution
This query is : Resolved
04 April 2017
My Employer is deducting PF (1800pm) from my salary for my portion of contribution and his portion of contribution.
is it right method of deduction.
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07 April 2017
comment on this
10 August 2024
No, it is not the correct method for PF contributions. Here’s a detailed explanation of how Provident Fund (PF) contributions should be handled:
### **Proper PF Contribution Breakdown:**
1. **Employee Contribution:**
- The employee is required to contribute 12% of their monthly basic salary (up to ₹15,000). For a salary of ₹15,000, this amounts to ₹1,800 per month.
2. **Employer Contribution:**
- The employer must also contribute 12% of the employee’s basic salary (up to ₹15,000), which also amounts to ₹1,800 per month.
### **What’s Wrong with Deducting ₹1,800 as Both Employee and Employer Contributions:**
- **Incorrect Deduction Method:** If your employer is deducting ₹1,800 from your salary and then also paying ₹1,800 as the employer’s contribution, it means you are effectively contributing the full ₹1,800 from your salary, and the employer is contributing an additional ₹1,800. This results in a total of ₹3,600 being deposited into your PF account, which is not correct because:
- **Employee Contribution:** Should be 12% of your basic salary, but if your total PF deduction is ₹1,800 and includes both employee and employer contributions, then you are contributing more than required.
- **Employer Contribution:** The employer's share should be equal to the employee’s contribution, but it should not be deducted from your salary.
### **Correct Method:**
1. **Employee PF Contribution:**
- **Deducted from Salary:** Your contribution of 12% of your basic salary (up to ₹15,000) should be deducted from your salary. For a salary of ₹15,000, this would be ₹1,800.
2. **Employer PF Contribution:**
- **Paid by Employer:** The employer must also contribute 12% of your basic salary, which should be ₹1,800 for a salary of ₹15,000. This amount is paid directly by the employer and should not be deducted from your salary.
### **Summary:**
- **Your Contribution:** ₹1,800 (if your basic salary is ₹15,000).
- **Employer Contribution:** ₹1,800 (paid by the employer, not deducted from your salary).
### **Action Steps:**
1. **Clarify with Employer:** Discuss with your employer or HR department to correct the contribution process. Ensure that your PF contributions are being handled according to the statutory requirements.
2. **Check PF Statements:** Regularly check your PF statements to ensure that the contributions are accurately reflected.
3. **File a Complaint:** If the issue is not resolved, you can file a grievance with the Employees' Provident Fund Organisation (EPFO) or seek legal advice if necessary.
This approach ensures compliance with the EPF Act and accurate management of your PF contributions.
### **Proper PF Contribution Breakdown:**
1. **Employee Contribution:**
- The employee is required to contribute 12% of their monthly basic salary (up to ₹15,000). For a salary of ₹15,000, this amounts to ₹1,800 per month.
2. **Employer Contribution:**
- The employer must also contribute 12% of the employee’s basic salary (up to ₹15,000), which also amounts to ₹1,800 per month.
### **What’s Wrong with Deducting ₹1,800 as Both Employee and Employer Contributions:**
- **Incorrect Deduction Method:** If your employer is deducting ₹1,800 from your salary and then also paying ₹1,800 as the employer’s contribution, it means you are effectively contributing the full ₹1,800 from your salary, and the employer is contributing an additional ₹1,800. This results in a total of ₹3,600 being deposited into your PF account, which is not correct because:
- **Employee Contribution:** Should be 12% of your basic salary, but if your total PF deduction is ₹1,800 and includes both employee and employer contributions, then you are contributing more than required.
- **Employer Contribution:** The employer's share should be equal to the employee’s contribution, but it should not be deducted from your salary.
### **Correct Method:**
1. **Employee PF Contribution:**
- **Deducted from Salary:** Your contribution of 12% of your basic salary (up to ₹15,000) should be deducted from your salary. For a salary of ₹15,000, this would be ₹1,800.
2. **Employer PF Contribution:**
- **Paid by Employer:** The employer must also contribute 12% of your basic salary, which should be ₹1,800 for a salary of ₹15,000. This amount is paid directly by the employer and should not be deducted from your salary.
### **Summary:**
- **Your Contribution:** ₹1,800 (if your basic salary is ₹15,000).
- **Employer Contribution:** ₹1,800 (paid by the employer, not deducted from your salary).
### **Action Steps:**
1. **Clarify with Employer:** Discuss with your employer or HR department to correct the contribution process. Ensure that your PF contributions are being handled according to the statutory requirements.
2. **Check PF Statements:** Regularly check your PF statements to ensure that the contributions are accurately reflected.
3. **File a Complaint:** If the issue is not resolved, you can file a grievance with the Employees' Provident Fund Organisation (EPFO) or seek legal advice if necessary.
This approach ensures compliance with the EPF Act and accurate management of your PF contributions.
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