Vide notification dated 22.08.2014 Ministry of Labour and employment has enhanced the ceiling of wage from Rs. 6500/- to Rs. 15000/- for the computation of contribution to Provident fund for both employer and employee contribution.

Extract of the Notification

608(E)- In exercise of powers conferred by section 6A read with sub section (1) of section 7 of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952), the central government hereby makes the following, further to amend the Employees’ Provident Funds Scheme, 1952, namely:-

1.  (1) This Scheme may be called the Employees’ Provident Funds (Amendment) Scheme, 2014.

(2) It shall come into force on and from the 1st day of September, 2014.

2. In the Employees’ Provident Funds Scheme, 1952,-

(a) In paragraph 2, in clause (f), in sub-clause (ii), for the words “six thousand and five hundred rupees”, the words “fifteen thousand rupees” shall be substituted;

(b) In paragraph 26, in sub-paragraph (6), for the word “six thousand and five hundred rupees” the words “fifteen thousand rupees” shall be substituted;

(c) In paragraph 26A, in sub-paragraph (2), in the proviso, for the words “six thousand and five hundred rupees” wherever they occur, the words “fifteen thousand rupees” shall be substituted.

[F No.- S-35012/1/2012-SSII]

609(E)- In exercise of powers conferred by section 6A read with sub section (1) of section 7 of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952), the central government hereby makes the following, further to amend the Employees’ Pension Scheme, 1995, namely:-

  1. (1) This Scheme may be called the Employees’ Pension (Amendment) Scheme, 2014.

(2) It shall come into force on and from the 1st day of September, 2014.

  1. In the Employees’ Pension Scheme, 1995 (hereinafter referred to as the principal Scheme), in paragraph 3, in sub- paragraph 2, in the proviso, for the words “rupees six thousand and five hundred”, whenever occur, the words “fifteen thousand rupees” shall be substituted.

3. In the principal scheme , in paragraph 6, in clause (a), after the words, figures and letter “or 27A of the Employees’ Provident Fund Scheme, 1952”, the words “and whose pay on such date is less than or equal to fifteen thousand rupees” shall be inserted.

Impact on Employees

On Take Home

As a result of the above notification every employee whose salary is less than Rs. 15000 is comes under the mandatory requirement of contribution to the Provident fund.

Earlier the limit was Rs. 6500/- PM and employee was required to pay Rs. 780/- as contribution through his employer, and employees whose salary was in excess of Rs. 6500/- was not required to contribute to the fund. The same provision is continued in the above notification.

Through this notification, the department has widened the scope Provident Fund by enhancing the salary limit. As a result of the notification employees getting salary more than Rs. 6500/- and up to Rs. 15000/- also comes the umbrella of Provident fund. The above enhancement will reduce their take home ranging from Rs. 781/- to Rs. 1800/- depending upon the salary bracket in which falls.

However, this step will encourage saving and investment in the economy. Therefore, this will positively impact employee in terms of enhances capital receipt at the time of retirement.

Impact on Computation of Taxable Income

The above contribution will be eligible for deduction u/s 80C under the income tax Act 1961.

Impact on Employers Cost:

As a result of the above amendment in the provisions of Employees’ Provident Fund and Miscellaneous Provisions Act, 1952, employer cost will increase from 780 to 1800 depending upon the slab of the employees.

epf 1 epf 2

(Sensys Technologies- For any clarification and explanations on the above matter you may contact of experts of out panel at contact@sensysindia.com)

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0 responses to “Impact on employees of Enhancement of wage ceiling from Rs. 6500/- to Rs. 15000/-”

  1. Andresan says:

    Employees who have CTC of 11000 rs, in that case how much we as employee need to pay PF from their salary and how much employer are willing to pay to us …

  2. Prakash says:

    Dear Sir,

    We deduct the PF on Rs. 15,000/- only.

    If any employee basic is Rs. 20,000/-. And he has taken the leave of 1 day. Then please advice on which amount should we deduct the PF.

    Should we deduct on pro rata basis or not.

    Thanks in Advance.

  3. Yash says:

    HI,

    How about an employee whose previously covered under the EPF as his salary was 13,500/- and now revised to 17,000 inr. Will he still be covered under EPS and contribute to the EPF ?? Is the Employer also liable equally ?

  4. Yash says:

    Hi,

    If we hire an employee who was a PF Member in his ex company and was earning 13500 inr salary, but is hired in our company @ 18000 inr salary. Will the employee be exempt from EPF as its above the 15,000 inr slab ? Or the employee can force the employer to pay EPF on 15,000 inr just bcoz he was member of EPF in new company ??

  5. Ajay Kumar says:

    Respected sir.
    If the salary of Rs.12000 per month of the employee and what will be contribution from the employer either it will be 13.61% including EDLI, EPF admin charges and EDLI Admin charges or 12% (8.33 +3.67). As the employee is asking 13.61% from employer. whether all the expenses will be born by the employer. if the all expenses born by the employeer than it will be 13.61% not 12%. please clarify

  6. Dr. Kanchan says:

    Respected Sir, For the last 27yrs the PF deduction was 780/month. Now since Sept 2014, the PF deducted by the office is Rs. 1800/ what will be the pension, the EPFO will give, in 2018 when the individual retires? Somebody suggested, that we can increase our contribution to the PF. So I have instructed my office to deduct Rs 5000/ month. What will be the fate of the extra amount?
    Thanking you in anticipation
    Kanchan

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