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

  7. Rajendra M Tamhankar. says:

    I am receiving EPF pension of Rs 1053/month. I retired from my service at the age of 60 years from B{CL. In1995 my actual salary was Rs 5000/month where as pensionable salary limit was Rs 6500/month. Now since pensionable salary limit is increased to Rs 15000/month. Will my monthly pension increased above Rs 1053/month. My pensionable service is 9 yrs.

  8. Dr.A.Abdul Jameel says:

    Dear Sir,
    I am getting a salary of Rs.17000/p.m. My employer is not deducting for epf and he is also not contributing to the epf. The employer says that since the salary is above the statutory limit of Rs.15000/p.m., it is not necessary to deduct and to contribute for the epf. Is it Correct?
    Kindly answer me.

    Thanking you,

    Regards,
    Dr.A.Abdul Jameel

  9. Ashoka says:

    Is there any change in the monthly pension of employees who retired earlier to Sept 2014 clarefy

  10. Ashoka says:

    Completed 58 years as on 03.10.2011 and I am getting EPF pension of Rs.1919. Is there any possiblity of enhancing monthly pention as per the recent amendment enhancing the employees contribution from 6500 to 15000/- lease reply

  11. Devershi says:

    Dear Sir
    Please answer the queries of EPF Notification which reads”

    “The existing member as on 1st day of September 2014 who at the option of the employer and employee, had been contributing on salary exceeding six thousand and five hundred rupees per month, may on a fresh option to be excercised jointly by the employer and employee continue to contribute on salary exceeding 15000 per month
    Provided that aforesaid employee have to contribute at the rate of 1.16 per cent on salary exceeding rs 15000 as an additional contribution……… a fresh option will be exercised to by the member within six months………..if no option is excercised……….. it shall be deemed that member has not opted for contribution over wage ceiling and the contribution to the Pension Fund made over the wage ceiling in respect of the member shall be diverted to the provident fund account.”

    Q. 1. What is the meaning of the these lines. As I Know when the ceiling was Rs. 6500 then maximum amount which goes in pension fund is Rs. 541 irrespective of contribution above rs. 6500. Rs. 541 is fixed. Now when the ceiling limit has been increased the maximum amount of pension fund will be 8.33% of 15000= Rs 1250.

    Then in notification what is the meaning and which amount is being mentioned here “contribution to the Pension Fund made over the wage ceiling in respect of the member shall be diverted to the provident fund account.”

    Q. 2. There is a line in notification.

    “An employee earning more than Rs.15,000 in his first job and becoming a PF member from 1 September will not have the option to participate in the employees pension scheme. “As EPS will henceforth apply only to EPF members whose pay at the time of becoming a PF member is not more than Rs.15,000 per month on or after 01.09.2014,” the circular said, adding that “the entire employer and employees contribution shall remain in the provident fund and no diversion shall be made to EPS for all new PF members on or after 01.09.2014 having salary (of) more than Rs.15,000 at the time of joining”

    If any employee joins and his basic salary is more than 15000 then all the contribution will go to the a/c no. 1. Then he the person dies will he be eligible for pension or not.

    Q3. In my orgnisation, we deduct pf of all employees on Rs. 6500 whether their basic is more than Rs. 15000. I mean to say than if any employee salary is 16000 we deduct the pf of these employee on Rs. 6500. Then now how much deduction will be done when the ceiling limit has been increased to Rs. 15000. Please answer all these questions by giving examples.

    Sir I personally request you to please help me as soon as possible.

    Regards
    Devershi

  12. Abbas.P.S, ITI Ltd says:

    Dear Mukesh,

    I have already answered to your queries/posts. Even then you are asking the same thing. Kindly go through my two posts. If you have any further queries, kindly post.

    Abbas.P.S

  13. MukeshBThaker says:

    What about my comment of 1/10 and 3/10.

  14. Abbas.P.S, ITI Ltd says:

    Dear Mukesh,

    If your pension is Rs. 1000/- or above, there will not be any change in pension. Because your pensionable salary is already fixed based on the previous ceiling salary. To get the benefit of ceiling hike, member has to contribute on higher salary. This is only possible in the case of members who still continue in service and did not attain an age of 58 years.

    Abbas.P.S

  15. MukeshBThaker says:

    No feedback of previous comment.

  16. Abbas.P.S, ITI Ltd says:

    Dear Mukesh,

    Your contribution was on Rs. 6500/-. Accordingly your pensionable salary also already fixed as 6500/-. From 01.09.2014 onwards the contribution will be on salary up to Rs. 15000/-. Hence the pensionable salary for those contributing on higher salary will also get enhanced.

    Abbas.P.S

  17. MukeshBThaker says:

    Feedback of my comment of 01/10 and 02/10/14 respectively about revision of pension celling applicable.

  18. MukeshBThaker says:

    Please reply for the comment of 01/10/14 regarding the basis of Pension calculation as per revised on Rs15000 inplace of Rs 6500 wef 01/09/14.

  19. MukeshBThaker says:

    No reply of previous coment before one hr.

  20. MukeshBThaker says:

    Amount of Pension will be revised for me or not. Presently i am getting pension on basis of Rs 6500.00.Will it revised to 15000.00 as basis for calculation. Amount of pension for sept. 14 is received on basis of Rs 6500.00

  21. Deepak says:

    Now i getting salary+DA is Rs 11000/- n company pay PF Rs 780/- on 6500 After New Notification Can Compny change the salary Structure as Basic + DA 6500 ( as per Minimum wage ) & 4500 As other allowances & They Pay Pf on same as 780 on 6500 ?

  22. SREERAMULU says:

    very nice information sir, i have doubts about salary. my gross salary is 20,000/- pmt. but my management is slipting my salary as below.
    basic – 8000
    da – 3000
    hra – 5000
    conveyance – 2000
    medical – 2000

    is it correct, in this case how much PF to be deducted on what amount
    please reply sir.

  23. Minakshi Gulati says:

    if an employee wish to contribute more than 15000/- Limit and employer is to agree to contribute the same i.e.12% of salary than in addition amount can attract any other provision or account too? can an employer contribute more share in FPF ( pension ) which are prsent limit is 1250/-?

  24. Amit Agarwal says:

    If Employee or Employer willing to cotirbute more than prescribe limite in act, they can it. But EPS (Pension) contribution can not exceeds from it’s prescribed limit i.e. Rs. 1250/- balance amount will be deposited to EPF employee share account.

  25. Abbas.P.S, ITI Ltd says:

    The premium and admin charges for EDLI are restricted on ceiling salary. Previously its limit was Rs.33/- and Re.1/- respectively. After amendment w.e.f 01.09.2014, it will become Rs.75 and Rs.2. All other figures are wrong in this regard.

    Abbas.P.S
    ITI Ltd.,
    PALAKKAD.

  26. RAJESH KHEMESARA says:

    if an employee wish to contribute more than 15000/- Limit and employer is to agree to contribute the same i.e.12% of salary than in addition amount can attract any other provision or account too? can an employer contribute more share in FPF ( pension ) which are prsent limit is 1250/-?

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