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whether pf applicable if salary + da = more than 6500

RUPESH KUMAR (Accountant) (76 Points)

15 March 2011

Dear All,

i m feeling a confusion please resolve it,

whether PF applicable or not if the salary + da is more than 6500/-, if yes then in which conditions and what contributions :

Rupesh

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2 Replies

Shyam sasidharan Nair (Articled assistant) (34 Points)
Replied 09 April 2012

Dear ,

This a short summary of the PF ACT , as per this an employees salary if less than 6500/-(Total salary) will only come under PF applicablity

Provident Fund Act

Applicability of PF Act

PF Act applies to factories and other notified establishments employing 20 or more persons. Once an establishment is covered, its departments and branches, wherever they are, are covered. Once establishment is covered, it continues to get covered even if employment goes below 20.

Schemes under PF Act : Employees Provident Fund, Employees’ Pension Scheme and Employees’ Deposit-Linked Insurance Scheme [EDLI] are the three schemes covered.

Partial or full exemption : Exemption can be granted to certain establishments or employees

Contribution to Provident Fund : Contributions to Fund are made by employers and employees. The fund is administered by Central Board of Trustees

Contribution equal to 125/10% of pay by employer as well as employee

Both employer and employee contribute @ 12% of ‘pay’ to Provident Fund (in some establishments like any establishment employing less than 20 persons, sick units, Jute industry, Beedi industry, Brick industry, Coir industry other than the spinning sector, Guar gum factories., contribution is 10%).

Part of Employer’s contribution to FPF

8.33% contribution of employer goes to Family Pension Fund. Balance is credited to Employee’s PF account. Entire contribution of employee is credited to his PF account. Interest is paid on this amount. Since last 4 years, interest is 8.5%.

Employees required to join the Fund

Employee whose pay is less than Rs 6,500 per month is covered under the Act. ‘Pay’ includes basic wages, dearness allowance, retaining allowance and cash value of food concession.

Contribution limited to salary of Rs 6,500 p.m, but higher contribution permissible.

If an employee is member, he continues to be a member even if his ‘pay’ becomes more than Rs 6,500. Employer is liable to pay contribution only on salary of Rs 6,500, though employer can voluntarily contribute more (as extra employee benefit). Employee can voluntarily pay contribution on pay above Rs 6,500