Hi Seniors, I have a query regarding EPF deduction. One of our contractor deducting and paying EPF as per minimum wages(it is 9090/- including DA). But the security guard getting gross amount of Rs.13,500/-. Eg. Basic and DA- 9090/-
Remaining amount HRA + other allowance- 4410/-. Now my doubt is it right or wrong to deduct only on minimum wages. As per my knowledge he has to deduct on entire amount expect HRA as per new amendment. Kindly reply
From India, Hyderabad
1Remaining amount HRA + other allowance- 4410/-. Now my doubt is it right or wrong to deduct only on minimum wages. As per my knowledge he has to deduct on entire amount expect HRA as per new amendment. Kindly reply
From India, Hyderabad
First of all let me say that there is no such amendment taken place to the EPF & MP Act except a clarification of section 2(b) of the Act which says that basic wages mean the sum total of the amounts that an employee earns.
Now as per the above mentioned definition of wages, the entire amount will qualify for PF contribution. Although HRA is exempted from basic salary, the exemption is available only to such HRA which is paid over and above the salary. Suppose your security guards are given an accommodation near to your factory by the vendors. The rent payable to that accommodation is paid to the security guards separately. This is HRA. Alternatively, the vendors pay the rent of the house directly to the landlord. The cash value of the rent paid is included in the salary as part of their CTC. This component will not qualify for PF contribution.
As such Rs 13500 will qualify for PF deduction.
From India, Kannur
Now as per the above mentioned definition of wages, the entire amount will qualify for PF contribution. Although HRA is exempted from basic salary, the exemption is available only to such HRA which is paid over and above the salary. Suppose your security guards are given an accommodation near to your factory by the vendors. The rent payable to that accommodation is paid to the security guards separately. This is HRA. Alternatively, the vendors pay the rent of the house directly to the landlord. The cash value of the rent paid is included in the salary as part of their CTC. This component will not qualify for PF contribution.
As such Rs 13500 will qualify for PF deduction.
From India, Kannur
Madhu Sir,
Contractor is directly paying HRA to security guards. Sir, i have one more doubt that if any employee gross salary is 21,000/- and his basic+da is 14,000/-. What is the calculation for EPF, whether the total amount to be consider or only 15,000/- as per EPF wage
From India, Hyderabad
Contractor is directly paying HRA to security guards. Sir, i have one more doubt that if any employee gross salary is 21,000/- and his basic+da is 14,000/-. What is the calculation for EPF, whether the total amount to be consider or only 15,000/- as per EPF wage
From India, Hyderabad
If the vendor is paying it separately, then it will not attract PF but if it is paid as part of salary as a component of salary, it will certainly be a part of salary for PF contribution also.
If the gross salary is above Rs 15000,naturally, you can restrict PF contribution to 12% of Rs 15000,ie, Rs 1800. You need not pay it on 21000. In such cases, you have to create a component in the payroll,called PF Qualifying salary, and make it restricted to 15000 and put the formula for PF on that cell.
From India, Kannur
If the gross salary is above Rs 15000,naturally, you can restrict PF contribution to 12% of Rs 15000,ie, Rs 1800. You need not pay it on 21000. In such cases, you have to create a component in the payroll,called PF Qualifying salary, and make it restricted to 15000 and put the formula for PF on that cell.
From India, Kannur
Thank you Madhu Sir for your prompt reply. Basic+ DA- 14,000/- HRA-4,000/- and Other allowance- 3,000/- Total gross salary-21,000/- Based on that the above, we have to deduct EPF only on 15,000/- .
From India, Hyderabad
From India, Hyderabad
Dear Friends,
In the case of a supervisor(staff category) earning Rs. 21000, no EPF was deducted by the company, and she did not have any benefit under PF. She gave a complaint to the PF Department, which rejected her claim. PF Dept argued that it was the prerogative of company to include a supervisor/staff under PF. She contested the other supervisors and staff were availing PF deduction, so she challenged her being kept out. PF Dept stating that other staff also got deductions under a contract, which did not extend to her. How can we help her?
P Selvi
From India, Chennai
In the case of a supervisor(staff category) earning Rs. 21000, no EPF was deducted by the company, and she did not have any benefit under PF. She gave a complaint to the PF Department, which rejected her claim. PF Dept argued that it was the prerogative of company to include a supervisor/staff under PF. She contested the other supervisors and staff were availing PF deduction, so she challenged her being kept out. PF Dept stating that other staff also got deductions under a contract, which did not extend to her. How can we help her?
P Selvi
From India, Chennai
You have said that a supervisor was "earning" Rs 21000. What do you mean by this? Is it total amount inclusive of incentives? Confirm.
Now, there is nothing in the PF Act which says that PF is not available to 'supervisors' but is available to all employees. Only thing is that an employee whose wages "at the time of joining the organisation" exceeds Rs 15000,may be excluded from the coverage of PF. Accordingly, if the woman supervisor cited above has a "PF qualifying" salary of more than Rs 15000(Rs 21000 is anyway above Rs 15000) then she cannot become a member of PF unless the employer gives her coverage.
An important thing is that if the employee once covered will continue to be covered even if the salary exceeds Rs 15000. Similarly, if she was getting less than Rs 15000 earlier but now her salary has become Rs 21000, she could get coverage from retrospective effect.
Most of the companies pay PF on some of the components of salary, say basic salary and dearness allowance. The total salary may consists of basic wage, DA, HRA, Conveyance allowance, food allowance, medical allowance etc. The total salary may be Rs 21000 but the PF qualifying salary (the salary on which the company contributes PF) may be less than Rs 15000. If the company has been contributing PF of other employees on their Basic salary and Dearness Allowance only, and the basic and DA of this employee is less than Rs 15000, then also she is very well eligible to get PF. A company cannot have separate rules for coverage ( for coverage of employees taking their gross salary) and payment of contribution (for payment of contribution taking only Basic salary)
Please confirm
From India, Kannur
Now, there is nothing in the PF Act which says that PF is not available to 'supervisors' but is available to all employees. Only thing is that an employee whose wages "at the time of joining the organisation" exceeds Rs 15000,may be excluded from the coverage of PF. Accordingly, if the woman supervisor cited above has a "PF qualifying" salary of more than Rs 15000(Rs 21000 is anyway above Rs 15000) then she cannot become a member of PF unless the employer gives her coverage.
An important thing is that if the employee once covered will continue to be covered even if the salary exceeds Rs 15000. Similarly, if she was getting less than Rs 15000 earlier but now her salary has become Rs 21000, she could get coverage from retrospective effect.
Most of the companies pay PF on some of the components of salary, say basic salary and dearness allowance. The total salary may consists of basic wage, DA, HRA, Conveyance allowance, food allowance, medical allowance etc. The total salary may be Rs 21000 but the PF qualifying salary (the salary on which the company contributes PF) may be less than Rs 15000. If the company has been contributing PF of other employees on their Basic salary and Dearness Allowance only, and the basic and DA of this employee is less than Rs 15000, then also she is very well eligible to get PF. A company cannot have separate rules for coverage ( for coverage of employees taking their gross salary) and payment of contribution (for payment of contribution taking only Basic salary)
Please confirm
From India, Kannur
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