The Provident Fund (PF) department, in its circular dated 28-Aug-2014, has notified the wage ceiling enhancement to Rs 15,000 per month from Rs 6,500 per month, effective 01-Sep-2014. Please ensure that PF deduction and contribution are calculated as per the new wage ceiling of Rs 15,000 from Sep 2014 onwards.
In other words,
a. If the PF wage of an employee is more than Rs 15,000 per month:
The minimum mandatory PF contribution (and deduction) shall be Rs 1,800 per month (12% of Rs 15,000).
b. If the PF wage of an employee is less than Rs 15,000 per month:
The minimum mandatory PF contribution (and deduction) shall be 12% of the actual PF wage.
If any of your employees has been out of the PF net so far on account of their having been receiving PF wage of more than Rs 6,500 per month, such employees will now come within the ambit of PF if their PF wage is now is less than or equal to Rs 15,000 per month.
Please note that the new PF wage ceiling could impact the compensation cost incurred by your organization on account of the increase in employer PF contribution. The employees’ take home pay too could get impacted.
You can read about the basis of PF calculations here.