I want to know how do we calculate PF adminstration charge while filing the monthly returns of PF
Anjali Saigal (Accountant) (125 Points)
28 May 2008I want to know how do we calculate PF adminstration charge while filing the monthly returns of PF
Shreyalmuri
(CA Final)
(236 Points)
Replied 29 May 2008
Hi,
Employer
Coverage
Establishments employing 20 or more persons and engaged in any of the 180 industries / Classes of Businesses specified.
Co-operative Societies, employing 50 or more persons & working without the aid of power.
Establishments not coverable statutorily can come under the coverage of the Act statutorily.
An establishment continues to be covered under the Act, irrespective of the fall in the employment strength.
Since the Act applies on its own force to the establishments, the employers are required to file the particulars in the specified format for registration and allotment of business number.
Financial Obligations:
Contributions:
Statutory rate of contribution is 12% of emoluments (basic wages, dearness allowance, cash value of food concession and retaining allowances if any,) in the case of 175 establishments.
Rate of contribution shall be 10% in the case of the following:
Brick, beedi, jute, guar gum factories, coir industry other than spinning sector.
Establishments declared as sick undertakings by BIFR.
A matching contribution is to be collected from the emoluments of the employees.
Out of 12% (or 10% as the case may be) of the employer’s share of contribution, 8.33% is to be remitted towards pension fund.
Employer is also required to pay a contribution of 0.5% of the emoluments towards EDLIS’1976.
Administrative Charges:
An employer is required to pay administrative charges at 1.10% of emoluments towards provident fund charges and 0.01% towards EDLI Scheme 1976.
No separate administrative charges for pension scheme
Inspection Charges:
In respect of exempted establishment under P.F. Scheme employer is liable to pay only inspection charges at the rate of 0.18% of emoluments.
In the case of establishment exempted from EDLI Scheme, the employer is required to pay only inspection charges at the rate of 0.005% of emoluments.
Interest Liability:
For belated remittances of contributions, administrative / inspection charges interest at the rate of 12% on such remittances for the period of delay is to be remitted.
Damages:-
For all the belated remittances of contribution and administration/inspection charges damages are also payable as penalty ranging from 17% to 37% p.a. depending upon delay.
Duties of Employer
Enrol all categories of employees including the employees engaged by or through contractors and also piece rated, hourly rated employees.
Remit the contributions and administrative charges before the 15th of the following month.
File the initial returns of Form 9, Form 3(P.S.), form 5A.
File the monthly returns in Form 12A, Form 5, Form 10 and Challans for remitting the dues.
Maintain the contribution card in respect of each employee in Form 3A and submit the annual returns in Form 3A and 6A after reconciliation with Challans and form 12A.
The employer has to ensure that statutory dues in respect of contractors employees are remitted and returns filed.
Employer should attest the form No.2 and the claims forms submitted by the member/ legal heirs/ nominees.
Make available all relevant records for inspection of visiting officials with due authorisation.
Exemptions under the Schemes
Provident Fund
An individual member getting Provident Fund benefits on par with or better than statutory provisions can apply for exemption in Form 1 under para 27.
Employers can apply for exemption in respect of a class of employees getting similar or better benefits than the statutory P.F. Scheme under P. 27A subject to the conditons governing grant of exemption.
The employer can seek exemption from P.F. Scheme for the entire establishment if the majority of the employees also consent for exemption, subject to certain conditions governing grant of exemption and certain formalities.
Pension Scheme
Employer can avail exemption for the establishment as a whole, with the consent of majority of employees, if an alternative pension scheme is formulated by the establishment with benefits either on par with or superior to the EPS ’95 and subject to certification of the viability and long sustenance of the scheme by an independent qualified actuary and satisfying the other conditions prescribed governing the grant of exemptions.
There is no provision for exemption of individuals or for class of employees.
EDLI Scheme
The establishment can get exemption from the EDLI Scheme, if the employees therein are entitled for a benefit in the nature of insurance whether linked to their P.F. deposit or not and without paying any contributions.
Its very clear that 12% is deducted on allowances other than exempted ones like Conveyance Rs 800/m , Child allowance Rs 200/m for two children,Medical allowance Rs 15,000/ per annum & LTA.
Don't panic..what you do is calculate the cost or impact of the same and negogiate with them for the payment.
Ask for the copy for the judgement as they have claimed..couldn't find it..and let me know as i would put you across the right people in this field.
Regards,
$hreyalmuri...:)
Rushikesh
(Chartered Accountant - Manager Finance)
(2375 Points)
Replied 30 May 2008
Thanks for the information!!! very useful
Anjali Saigal
(Accountant)
(125 Points)
Replied 30 May 2008
The PF contribution is 12% of Basic salary from both employee and employer. For the calculation the maximum limit of Basic is Rs 6500/-. It means even if the employee's basic salary is above Rs 6500/- the employer is liable to contribute only on Rs 6500/-, that is Rs 780. However if an employee so desires he may voluntarily contribute more than 12%. Apart from it an employer also has to pay some administration charges. I explain you the various accounts of PF challan.
A/c No 1: PF contribution Account
A/c No 2: PF Admin account
A/c No 10: EPS account
A/c No 21: EDLIS account
A/c No 22: EDLIS admin account
PF admin charge = Employer has to pay 1.1 % of basic
EDLIS: Employer has to pay 0.5% of basic
EDLIS admin charge:Employer has to pay 0.01% of basic
Total additional percentage employer has to pay: 1.61% of basic
So employer has actually to pay 13.61 % of Basic and employee has to pay only 12% of basic.
Employees complete 12% goes to PF account while employer contributions' 8.33% goes to Pension fund and 3.67% goes to PF fund.
Now I am confused Do I have to deduct @ 12% on basic or 12 % of 6500 that is Rs 780 Can you please help
Jyoti
(job)
(37 Points)
Replied 19 June 2008
does anybody have form 12A in excel file if so pl revert me in jsahoo @ sify.com
Vinod Kashyap
(XBRL Training)
(451 Points)
Replied 20 June 2008
Ghata
(Accountant)
(56 Points)
Replied 10 July 2008
| Originally posted by :Guest | ||
| " | When an establishment is covered under PF act, kindly clarify if PF deduction can be exempted for a few employees only at their request. |
" |
An employer whom PF Act is applicable. In such case if any employee whos basic salary at the time of appointment is more than Rs.6500/- and he not a member of PF, then i such case I want to know, is it compulsary for employer to contribute any % towards share of Employers contribution towards PF . What are the statutory liability of employer in such case. Please reply.
Thanks & Regards,
CA. Heeralal Chaudhary
| Originally posted by :Guest | ||
| " | Hi All, can i get formate of forum in which we calculate PF administration charge while filling the monthly returns of PF |
" |
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