PF revised wage ceiling limit and its impact
-
Upload
greytip-software -
Category
Education
-
view
10.055 -
download
3
description
Transcript of PF revised wage ceiling limit and its impact
At the end of the workshop, participants will be able to:
• Understand concept of provident fund.
• Know Deductions as per new Ceiling limit.
• Who will be covered under PF scheme?
• Know the criteria for PF deduction
• Understand Returns and tax benefits.
• Understand how greytHR can help in including employees in PF scheme and file
EPF online without much hassle.
Objectives
What is Provident fund?
Provident fund can be termed as a social security measure implemented by
Government for the benefit of its citizens. An employee contributes some % of his
salary towards it and the employer is supposed to make the same contribution.
The employee can withdraw the PF amount on retirement/resignation from the
service/Unemployed.
EPFO revises ceiling limit
• Ceiling limit increased to Rs. 15000 from Rs. 6500
• W.e.f 1st september 2014, All the employees with Basic equal to or less than Rs.
15000/- will be mandatorily covered under the act.
• Employers to ensure that the basic salary is 50% of CTC for all the employees.
• Upto 50 lacs new employees expected to join PF scheme with the amendment.
Deductions as per new ceiling limit:
• PF deduction is mandatory for all the employees whose basic + da is less than or
equal to 15000.
• Employees with basic + da more than 15000 have an option to opt out of PF
scheme.
• Deduction will be 12% of basic + da for an employee.
• If the basic + da is more than 15000, employer have an option to pay 12% of actual
amount or base ceiling limit i.e Rs. 15000 (12% of 15000 = Rs. 1800).
PF deduction for Employers:
• All the organizations having an employee strength of 20 or more than 20 are eligible for PF deductions.
• Employer has to contribute 13.61% towards PF deduction. It is divided as:
- Pension Fund : 8.33%
- Provident Fund : 3.67%
- Employee Deposit Linked Insurance : 0.5%
- Administrative Charges for PF Scheme: 1.10%
- Administrative Charges for EDLI Scheme: 0.01%
Example:
An employee with Basic salary = 15000
Break up of contribution:
Employee contribution (12% of Basic salary) = 12% of 15000
= Rs. 1800
Contd..
Employer Contribution:
Employer has to contribute 13.61% towards PF deduction. It is divided as:
• Pension Fund : 8.33% = Rs. 1249
• Provident Fund : 3.67% = Rs. 550.5
• Employee Deposit Linked Insurance : 0.5% = Rs. 75
• Administrative Charges for PF Scheme: 1.10% = Rs. 165
• Administrative Charges for EDLI Scheme: 0.01% = Rs. 1.5
Employees with salary(Basic+DA) > 15000
Employees who have basic salary more than 15000 and want to be a part of PF scheme:
• The contribution will be only towards EPF.
• This is also applicable for employees, whose first salary (B+DA) is greater than Rs. 15000 and have joined on or after 1st Sept,14 will not be member of EPS (Employee Pension Scheme).
Voluntary Provident Fund (VPF)
• VPF is an option for employees, where they can invest more than the 12% limit in provident fund.
• The maximum limit is 100% of basic salary.
• The contribution over and above 12% will be deducted only from employee’s salary.
Tax benefits and ROI:
Tax benefit:
Sec 80 (C): Tax exemption on the investment up to 1.5 lakhs
Rate of Interest:
The current rate of interest on PF is 8.75%
PF e-filing process:
New joined employee added to PF scheme
Update the PF number
Create ECR file
Upload ECR file to EPFO. Generate Challan
Make remittance to EPFO
How to fill ECR?
• Step 1: Use any Spreadsheet (Open Office, Excel, Lotus etc,) for creating the member details as per the prescribed format and save the file in CSV (Comma delimited) format.
• Step 2: Open the CSV file in any text editor (notepad, edit plus, etc.,) and replace all “,” with “#~#”. Save the CSV file.
• Step 3: Change the file extension from CSV to TXT. Your file will be ready for upload.
How to file PF?
• Login to http://esewa.epfoservices.in/
• Upload the ECR file
• On successful upload of the ECR file, a Summary page of uploaded ECR file will appear.
• Fill in the details regarding EDLI and EPF/EDLI administrative/inspection charges.
• On click of submit button, a digitally signed PDF File will appear.
• Once you approve the PDF file, a challan will be generated with a TRRN (Temporary Return Reference Number) along with an acknowledgement slip for the uploaded ECR file. Print the challan and make the remittance.
Payment Options:
There are two options:
A: If you are a CINB (Corporate Internet Banking) customer of any of the 56 banks approved by EPFO, you can make online remittance using the TRRN.
B: The challan along with DD/cheque can be deposited to any of the SBI branches.
Note: The challan generated will be valid only for 15 days.
@greytip
/greytip
/company/greytip-software-pvt-ltd
For more details Write to us at [email protected] our Help Docs
Thank you +greytipIn
/GreytipOnline
Stay connected