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Provident fund

FATEMA (CHARTERED ACCOUNTANT) (719 Points)

21 August 2013

Dear all,

The company has 20 employees in the month of september.It had less than 20 employees in previous months.is provident fund deduction for previous months compulsory or should we start deducting pf from september only?

Regards,

Fatema

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6 Replies

CA Simarpreet Singh Gulati (Chartered Accountant) (525 Points)
Replied 21 August 2013

The PF deduction should start from the month the number of employees reach 20 or above.

In your case, as the no. of employees have touched 20 for the first time in September, PF should be deducted from the month of September only i.e. prospectively and not retrospectively.

Hope this solves your query.

Best Regards,

CA. Simarpreet Singh Gulati

simarpreetgulati @ gmail.com

1 Like

Ankit (CA, CS) (3064 Points)
Replied 21 August 2013

Yes Fatema,

According to me, the deduction should start only after September since the act became applicable only then

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FATEMA (CHARTERED ACCOUNTANT) (719 Points)
Replied 21 August 2013

Any idea about ESIC?? When is that applicable?

Ankit (CA, CS) (3064 Points)
Replied 21 August 2013

you are welcome..:)

CA Simarpreet Singh Gulati (Chartered Accountant) (525 Points)
Replied 21 August 2013

ESIC is applicable for establishments with more than 10 employees if manufacture is done with the aid of power and more than 20 employees if manufacture is done without the aid of power.

Employee’ means any person employed for wages in or in connection with work of a factory or establishment to which the ESI Act applies. Employees drawing wages up to Rs. 15,000 per month can be presently covered under the ESI Act scheme [Section 2(9)]. However, employees having salary more than 15,000 per month can also be voluntarily covered under the scheme by the employer.

Both employee and employer have to make contribution to ESIC. The employer has to deduct contribution from wages of employee and pay to ESIC both the employer’s contribution as well as employee’s contribution.

The contribution is payable for ‘wage period’ i.e. the period in respect of which wages are payable to employee. Normally, ‘wage period’ is a month.

The Employee’s contribution is 1.75% of wages. It should be rounded off to next 1 Rupee. Employees contribution is not payable when daily wages are below Rs. 15/-.

Employer contribution is 4.75% of total wage bill of all employees in respect of every wage period. Thus, it is not necessary to calculate employer’s contribution separately for each employee.

4.75% of gross wages should be calculated and rounded off to next 1 Rupee. Employees drawing wages lower than Rs. 25 per day do not have to pay employee’s share.

Let me know Fatema if you still have any queries.

Best Regards,

CA. Simarpreet Singh Gulati

simarpreetgulati @ gmail.com