Pf act

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

30 May 2012 Hi Friends,
Can any one clarify 2 thing

there is 1 section in PF act , that allows Employer to Pay PF only on basic salary + DA of Rs 6500 ( it means there is a Cap of rs 6500 whether the employee is getting higher salary than rs 6500)
employer has to contribute only Rs 780 (6500*12%)
can any one tell me the relevant section ?

& 2nly there is 1 more thing , in PF act , there is one more option is available to Employees , if the employees having the basic salary of more than 15000, then the company can give him the option , whether he want to opt PF act or not to opt
can any one tell me the relevant section ?

waiting for your positive reply

Thanks in advance

visu iyer

visu iyer (Expert)
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30 May 2012 The ceiling contribution is Rs.6500/- on total salary except HRA (Basic +DA is out dated. Higher contribution is optional.

Regarding Q.2, it is no such provision for basic is more than Rs.15000/-
PF is applicable is for all subject to ceiling of Rs.6500/-

However, it is optional if any the employee submit form 11 exercising his willingness for non contribution. for which it does not require that basic is Rs.15000/- it can be >6500/-

visu iyer

visu iyer (Expert)
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Querist : Anonymous

Querist : Anonymous (Querist)

30 May 2012 Thanks for your Reply Visu,

Visu i need clarification on the following things
1. u r saying that ceiling contribution is 6500 , i thing it is salary

2. As per u , salary means total salary - Can u tell me the relevant section , because accoding to me it is basic pay DA , Cash value of food concession and retaining allowance

3. u r saying if his salary exceeds 6500 then there is no liability of employer to contribute PF

Waiting for your reply visu

Thanks in advance

visu iyer

visu iyer (Expert)
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30 May 2012 1.Yes 12% on the total salary except HRA subject to ceiling of Rs.6500/- ie Rs.780 the equal contribution per month

2. it is total salary except HRA
Section reference is not available from the Act, but it is the instruction given to EOs of the Dept.

3. It is optional upon filing form 11. by virtue of this; no contribution from both employer and employee.

Querist : Anonymous

Querist : Anonymous (Querist)

30 May 2012 Thanks Visu , for your valuable comments

but can u tell me the relevant section or case law , circular or notification

its urgent

thanks in advance

& but i think there is the limit of 15000 , i am not sure , bcoz i read it 3.-4 years back

visu iyer

visu iyer (Expert)
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30 May 2012 Rs.15000 for ESI and not for PF

Querist : Anonymous

Querist : Anonymous (Querist)

30 May 2012 Yes i know there is the limit of rs 15000, in ESI Act,

but i think there is the limit in PF act also

but can u tell me the relevant section , Circular , Case Law or notification for Rs 6500

waiting for u r reply

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Querist : Anonymous

Querist : Anonymous (Querist)

30 May 2012 Hi ,
still waiting for your replies experts

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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10 August 2024 Certainly! The PF Act has provisions related to contribution ceilings and employee options that can be a bit confusing. Let’s clarify these points:

### **1. Ceiling on PF Contributions**

**Section 6 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952:**

- **Contribution Limit:** As per Section 6 of the PF Act, the employer and employee are required to contribute to the PF based on the employee's wages. Historically, there was a ceiling on the wages for which PF contributions were mandatory. The ceiling was set at ₹6,500 per month. This meant that even if the employee's wages exceeded ₹6,500, the PF contribution was calculated based on ₹6,500 only.

**Relevant Provisions:**
- **Section 6(1)(a) of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952**: This section stipulates that the contributions made by both employer and employee are based on the wages of the employee, but with a ceiling of ₹6,500 per month for contributions.

**Current Status:** The ceiling of ₹6,500 was revised and increased over time. As of the latest updates, the wage ceiling for PF contributions has been raised to ₹15,000 per month for new employees joining on or after September 1, 2014.

### **2. Employee Option for PF Contribution**

**Option for Higher Salary Employees:**

- **Wage Ceiling Option:** Employees earning more than ₹15,000 per month can opt to not contribute to the PF if they do not want to. This is optional for the employee but must be elected at the time of joining.

**Relevant Provisions:**
- **Section 6 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952**: The Act mandates PF contributions up to a ceiling wage limit, which has been set at ₹15,000 as of now.
- **Employees' Provident Funds Scheme, 1952, Paragraph 30**: This paragraph provides that employees with wages exceeding ₹15,000 per month can opt out of mandatory PF contributions.

### **Clarification on Ceiling and Contribution:**

- **Historical Ceiling of ₹6,500:** Previously, the PF contributions were capped based on a ceiling of ₹6,500, meaning that the employer's and employee's contributions were calculated as if the wage was ₹6,500, regardless of the actual salary.

- **Current Ceiling of ₹15,000:** For employees joining after September 1, 2014, the ceiling for PF contributions is ₹15,000 per month. Employees with wages exceeding this amount can choose not to contribute to PF, but if they opt in, the contributions will be based on ₹15,000.

### **Documentation and References:**

1. **Notification No. S.O. 3407(E), dated September 1, 2014**: This notification increased the wage ceiling for PF contributions from ₹6,500 to ₹15,000.
2. **Employees' Provident Funds and Miscellaneous Provisions Act, 1952**: Provides details on PF contributions and ceiling limits.
3. **Circulars by EPFO**: Periodic circulars from the EPFO provide updates on these limits and options available to employees.

**In Summary:**

- **Ceiling for Contributions:** ₹6,500 was applicable before, but it has now been revised to ₹15,000.
- **Employee Option:** Employees with a salary above ₹15,000 can opt out of PF contributions, as per the provisions laid out in the EPF Scheme.

If you need specific case laws or circulars, you may refer to official EPFO circulars or consult a legal expert specializing in employment law for detailed guidance.