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Employees contribution in pf

BASNAIR (Manager-Accounts & IT Systems) (138 Points)

27 June 2018

One Employer have deducted their employees pf as per given below structure is it correct or not?

Example 1

Employee-1 Basic 32000 Employees Cont. 32,000/- x 12% 3,840/- Employer Cont. 15,000/- x 3.67% (EPF) 550/- 8.33% EPS 1250/-

Example 2

Employee-1 Basic 4800 (but employees total salary is upto 10,000/-) Employees Cont. 4,800/- x 12% 576/- Employer Cont. 4,800/- x 3.67% (EPF) 176/- 8.33% EPS 400/- is it ok deducted on 4800 or to be deducted on 10000/-

Example 3

If previous year the employee contribute his EPF @ 12% on his basic 32,000/-x 12% 3,840/- now he want to decrease to ceiling limit 15,000/- x 12% 1,800/- it is possible?

Please explain me if am wrong.

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3 Replies

Rammi_RP Rawat (Accountant ) (386 Points)
Replied 27 June 2018

example -3 Yes it possible, Emplyer has to deposit 12% of the basic salary of the emplyee on his behalf. if he deposit more then 12% then, it seem to be tax. Upto 12% cont. is tax free.

Mutyam (Employment) (83 Points)
Replied 27 June 2018

Answer to Example 1

Always there should be a matching contribution - both employee and employer and hence employer also has to contribute on Rs.32000/- basic salary and not on Rs.15000/-. In such case employer has to adjust the extra contribution from the employee CTC.

Answer to Example 2

It is correct to deduct only on Basic Salary + DA if any and not on the entire gross salary.

Answrer Example 3

Yes...mutually employee and employer can come to an agreeemnt and change the contribution level from "More than Statutory" to "Statutory" during any time. Only condition is in no case the contribution level should not be below the threshold as mentioned in the act.

BASNAIR (Manager-Accounts & IT Systems) (138 Points)
Replied 28 June 2018

Thank you very much,

that means, employee/employer can reduce their epf deduction to the limit of 15000/-. There is any minimum wages limit for epf deduction (its engineering consultancy firm)

means if one employee basic 4800 other allowance 5000 and they deduct EPFon 4800/- only its ok or this ok 4800+5000x12%. they have received notice from epf that

( The wages you are providing to the members have decreased and also the wages are less than the minimum wages set by the Delhi Government)