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EPF is now mandatory to all those whose salary is less than Rs.15,000

Recently Employee Provident Fund Organization (EPFO) changed few rules related to EPF, EPS and EDLI. These changes will come into effect from 1st September 2014.


Below is the graphical representation of how your EPF contribution along with employer contribution will get distributed monthly.

1.JPG

Please note that Salary for this purpose means Basic along with DA.

The above four changes in detail.

1) EPF is now mandatory to all those whose salary is less than Rs.15,000

Previously the limit was Rs.6,500. But this is now raised to Rs.15,000. So whoever falls below Rs.15,000 of salary per month then they will have to contribute compulsorily to EPF Scheme.

2) Minimum monthly pension will be Rs.1,000 per month.

Under new rules, widow of a member will get a minimum monthly pension of Rs.1,000. For children it is fixed Rs.250 and orphans it is Rs.750 per month. Also to arrive at pension, salary will be average of 60 months last drawn salary instead of earlier rule of last 12 months average salary.

3) Insurance coverage to member increased to Rs.3,00,000

Earlier each member who is part of EPF scheme had a insurance coverage of Rs.1,56,000. This insurance coverage now raised to Rs.3,00,000.

4) EPS contribution from employer raised

Earlier whether your salary was Rs.6,500 or at higher level, employer used to contribute fixed EPS contribution of Rs.541 i.e 8.33% of Rs.6,500. This is increased now to Rs.1,250 i.e. 8.33% of Rs.15,000.

Overall effect on you will be lesser take home salary. Because earlier whoever earning more than Rs.6,500 might contributed 12% of Rs.6,500. But now onward it will be 12% of your salary if you fall under Rs.15,000 and if more than Rs.15,000 then too 12% of Rs.15,000. So more outgo towards EPF and less take home. But do remember that you are indirectly investing rather than spending. So be happy

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88 Comments

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  1. praneeth kumar m

    Hi,

    I maintained the table changes in V_T511P and tested the same for the PF. it is working correctly. i didn’t apply any SAP Note or any ABAP manual changes, because my system level is 60063.

    pf form12a.JPG

    (0) 
    1. Geeta Ganpule

      Hi

      Clicking on the SAP PAtch level, it says:

      Support Package SAPK-600B3INSAPHRCIN

      PY-IN

      PY-IN

      1913265

      2

      INEPF : EPF minimum wage ceiling raised to Rs 15,000 per month

      Correction with high priority

      PY-IN

      PY-IN

      2037949

      2

      HINCANN0 : Inconsistency in ALV display

      Correction with medium priority

      PY-IN

      PY-IN

      2046186

      3

      PTax Basis Incorrect In Simulation Payroll

      Correction with medium priority

      PY-IN

      PY-IN

      2061214

      1

      IT0580 – Increase of field length for certain fields

      Correction with medium priority

      PY-IN

      PY-IN

      2061386

      1

      FORM24Q E-Filing : FVU Version 4.3 Release

      Correction with medium priority

      PY-IN

      PY-IN

      2061673

      1

      HINCALC0: PAN check for eligibility of Tax Credit

      Correction with medium priority

      PY-IN

      PY-IN

      2062996

      1

      Universal Account Number ( UAN ) for EPF

      Correction with medium priority

      PY-IN

      PY-IN

      2063773

      1

      HINCF24Q: Form 24Q files storage in Background processing

      Correction with medium priority

      PY-IN

      PY-IN

      2064059

      1

      Section 80CCC Limit

      Correction with high priority

      Regards

      Geeta

      (0) 
        1. Priya Gupta

          Thank you praneeth.  I heard PF should calculate on Take Home Pay Is that note related to that… Do we need to do test those scenarios too

          I will test and get back to you

          (0) 
      1. Narendra Chitragar

        Thanks for the information.

        Whether SAP has given any notification on which date this note will be released.?


        I have a doubt,

        Can’t we directly change PFBAS as 15k , I know its not best practice, What are the pros and cons if we do so.

        The reason is some clients has to do Full and Final for employees in Mid of September’14

        They can’t wait upto release of SAP note for the same.


        (0) 
        1. Rajesh Kumar Burra Post author

          Hi Narendra,

          PF related stuff is related to SAP Standard Tables Those are not customize tables We cannot make a change as and when we want to make change As of now we haven’t heard from SAP to make a change we are still waiting.

          If you want to make full and final settlement for an employee in the mid of the month. You can always do manual entries and make some adjustments.

          or You have to wait till SAP release a note to do full and final settlement for those employees. Its decision made by Govt and SAP will release a note soon.

          (0) 
  2. sajid khan

    Hi,

    Thanks Bro…for Valuable information, it is more explantive… 🙂

    Please Up date if the note is released?

    Thanks IN Advance  🙂

    Regards,

    Sajid 🙂

    (0) 
          1. Priya Gupta

            Hi Radha,

            SAP will release notes to upload in SAP Software If Patch Version is not up to date

            If we update Patch There is no need to follow manual instructions as it contains notes already

            Correct me if iam wrong.

            (0) 
        1. Rajesh Kumar Burra Post author

          As said by Geeta ,Radha and Praneeth The Patch Level B3 is not released If your patch is recent one You can go ahead and do manual instructions given in the document and also you need to implement note through SNote.

          Below is my experience

          For Unique Identification Number Note I did manual changes given in the document while making changes iam unable to find screen   MP018500 for UAN  given in the document. I told my basis consultant to upload SAP Note Once he uploaded i found screen MP018500 and  i did necessary changes. It worked out.

          For below

          1913265 – INEPF : EPF minimum wage ceiling raised to Rs 15,000 per month. You have to do same to reflect changes.

          Two important steps you need to follow

          Firstly

          You need to approach Basis Consultant to apply a note 1913265.

          Secondly

          After SNote is uploaded in SAP.  Do manual instructions given in the document.

          Still I havent tried 1913265 I would be doing it on monday. I will give clear picture once iam done with that Meanwhile please follow above ..

          (0) 
    1. Priya Gupta

      Hi Praneeth,

      My Patch Level is SAPKE600B1 . Do I need to follow manual instructions given in the note Will that be enough Are there any changes that we need to do

      please let me know

      (0) 
      1. praneeth kumar m

        Hi,

        As per the Note there is no program changes i checked it. your system patch is lower than the suggested patch level SAPKE600B3 in the Note. do manual changes in the table and test it and send to production server.

        (0) 
    2. Priya Gupta

      All are saying to go through the note I can only see the change of 6,500 to 15,000 in the table I dont see any changes apart from that in the document

      According to new rule PF should calculate on Take Home Salary How it is going to reflect Previously it was calculating 12% of Basic Pay Now it is 12% on Take Home Salary I dont see any configuration for that in the Note.

      (0) 
        1. Priya Gupta

          Hi Praneeth,

          Before also If you see below Even after giving LOP it is calculating 12% on Basic and not on Net Pay.

          I didnt do any configuration related to that note. I will start now but i dont see any table or note that is related to Take Home that should calculate 12% Can you please clarify

          Capture1.JPG

          (0) 
            1. Priya Gupta

              Hi KV,

              Thank you for replying. I need some clarity for above screens.

              The PF Contribution is 6500  Now they made to 15,000 when Iam executing Payslip for employee drawing less than 6500 PF is deducting Even though in the table it is maintained 6500 according to old rule

              I havent done any changes related to new rule Before that i would like to know the system behaviour.

              (0) 
          1. praneeth kumar m

            Hi Priya,

            I think you are doing PF calculations first time. PF deductions is only on wage types Basic, DA, and some Allowances only.

            Mostly Basic & DA 12% from Ee and 13.61% from Er.

            from your screen shots it is clearly saying that PF calculating on Basic WT from the RT Table. in the IT 0587 you selected PF contribution as PF Basis which means how much PF Basis is there it will calculate that amount * 12 %

            for example:

            Basis is 9666.67 * 12% = 1160.

            change the IT 0587 to Eligible pay or PF Basis whichever is less and test it. then it will calculate on PF Basis * 12% (6500 / 15000 * 12%) whether your Basic + DA is more than the PF Basis.

            (0) 
            1. Priya Gupta

              Hi Praneeth,

              Yes Right!  when Iam selecting PF Basis whichever is less It is calculating 12% on 6500 that is 780 If Iam selecting Pf Basis It is calculating 12% on Basic Pay (10,000) that is 1200 which is correct.

              According to new rule it should calculate 12% on 15000 that is  1800 which is correct

              Correct if iam wrong.

              How about Take Home Pay It has to calculate on Take home pay right.

              (0) 
              1. Leela Mohan

                Dear Priya,

                Your question is little confuse like…! 😕

                1. If you have changed the table 6,500 into 15,000 then again how system will calculate PF amount on 6,500…? 😯 it should calculate on 15,000..! ℹ

                2. PF calculation will be happened based cumulation class 11 (where you will select as per client requirement normally i think so every company will calculate PF based on Basic & DA…!)

                3. Check INEPF function in payroll log tree (Cumulation class /111)

                Note: Take home salary is nothing but

                Earnings    = xxxxx

                Deductions= xxxxx

                                    ———

                                    yyyyyy

                Legal Ded   xxxxxx

                                   ———

                Take Home zzzzzz

                ————————–

                Ur’s Mohan

                (0) 
              2. praneeth kumar m

                yes, 1800/- is 12% of 15K if PF Basis is more or equal to 15K. it is less then PF Basis * 12%

                Take home pay means after deducting any type of leaves (lop)

                PF will check only those WT which are check marked for CC 11 (as per rule- Basic  & DA only)

                (0) 
            2. Priya Gupta

              Executed Payslip from April till august it is showing 780 which is correct when iam executing for the month of September It is calculating Rs 1200 which is incorrect . it should show 1800 please help me out

              Capture1.JPG

              (0) 
              1. Leela Mohan

                Dear Priya,

                I’ve small doubt like If employee salary is 10,000 PF should be

                =10,000*12% = 1200

                I’ve small doubt like If employee salary is 15,000 PF should be

                =15,000*12% = 1800

                If I’m wrong kindly please correct me…

                Ur’s Mohan

                (0) 
  3. Rajesh Kumar Burra Post author

    Below is my experience

    For Unique Identification Number Note I did manual changes given in the document while making changes iam unable to find screen   MP018500 for UAN  given in the document. I told my basis consultant to upload SAP Note Once he uploaded i found screen MP018500 and  i did necessary changes. It worked out.

    For below

    1913265 – INEPF : EPF minimum wage ceiling raised to Rs 15,000 per month. You have to do same to reflect changes.

    Two important steps you need to follow

    Firstly

    You need to approach Basis Consultant to apply a note 1913265.

    Secondly

    After SNote is uploaded in SAP.  Do manual instructions given in the document.

    Still I havent tried 1913265 I would be doing it on monday. I will give clear picture once iam done with that Meanwhile please follow above .

    (0) 
    1. Geeta Ganpule

      Hi

      As per my basis consultant, he mentioned that once the patch level is raised from B1 to B3, all the 8 notes mentioned should automatically get implemented.

      But patch level B3 is not yet released.

      Thanks

      geeta

      (0) 
      1. Bhagyashree Naik

        I have done the corrections as per note and working perfectly fine if patch is current. No need to apply the note as there are no correction instructions for program available in the note.

        Regards,

        Bhagyashree

        (0) 
        1. Rajesh Kumar Burra Post author

          Hi Bhagyashree,

          As I said above Two Important steps we need to follow

          First – Applying a note

          Second – Following manual instructions given in the document.

          After doing manual instruction if it doesn’t work we need to apply a note through snote.

          If we do manual instructions and the configuration is working fine Its not required to apply SNote

          (0) 
      2. Rajesh Kumar Burra Post author

        Yes what he said was right When you implement Patch It will come along with notes.

        But you need to wait for sometime to release B3 Patch.  If you need now to implement changes you can goahead with SAP Notes if not you have to wait for sometime to release Patch Level B3.

        Updating Patch is time consuming process as Basis consultant need to update all three server and requires testing in all three servers  Also it depends on which patch level your system falls. If it is B1 it will take less time To be at safer side Keep your notes ready and try to implement the same rather than waiting for SAP to release Patch Level.

        8 notes what all those could you let me know?

        (0) 
    2. praneeth kumar m

      Hi Rajesh,

      I agree with you, but in this Note 1913265 there is no corrections code for program change. i already checked with Basis and Abap too. they said do manual changes as said in the Note it will work.

      (0) 
  4. Geeta Ganpule

    Hi All

    We have done the manual changes in table V_T511P but still the PF is calculating at the old basis, 6500?

    Do we have to make any changes in Wagetype /111 CC 11, it is mainatined blank

    Please advise

    Regards

    Geeta

    (0) 
    1. praneeth kumar m

      check the Feature 40EPF and table V_T7INF3 have you maintained any values in the last column PF Eligible pay ? if so change to 0 otherwise this value will re-right the payroll parameter PFBAS from the table V_T511P.

      (0) 
      1. Geeta Ganpule

        Hi

        Actually the wagetype PF Basis adjustment maintained in IT0008 ( Basic Pay) was maintained as Rs 6500

        Once I changed that to 15000, it is calculating 1800.

        For Basic pay above 15000.

        This change I have maintained from 01.09.2014

        And yes Praneeth, the table entries are maintained as you have mentioned.

        My query is in case a person is drawing 16000 or 20000 basic, will the deduction still be 1800 @ flat rate or it should be prorated?

        Regards

        Geeta

        (0) 
  5. Priya Gupta

    Dear All,

    According to new rule I have done manual changes If employee salary is more than 15,000 or equal to 15,000 it is calculating 1800 that it is 15000/12% =1800

    Throw some light on this experts

    Capture1.JPG

    If it is less than 15000 if it is 14,000 it is calculating 12% on Basic Pay that is 1680

    Capture2.JPG

    (0) 
  6. Priya Gupta

    Thank you Praneeth. So you want me to give LOP for the month of september and test it

    Would like to know about retro what exactly i have to do

    How about the option PF basis Could you please let me know As my user selected an option PF basis previously before for all employees.

    (0) 
  7. Priya Gupta

    What is Eligible pay or PF basis whichever is less and what is PF basis?

    Could you please let me know on what situation User will opt for Eligible Pay or PF basis whichever is less and on what situation second, option PF basis is used for?

    Iam totally confused on below two options? SAP has released a note on only on First option that is Eligible pay and not on second option

    Experts please clarify

    Capture1.JPG

    (0) 
    1. Geeta Ganpule

      Hi Priya,

      We are using Eligible Pay or Pf Basis., the first option to calculate the PF amount maintained in IT0008

      In our case, wherever the basic is less than 15000, we are maintaining in IT0008, the basic amount and the PF Basis Adjustment same as basic. For example, the basic drawn of an employee is Rs 14250, then PF (ER) will be 1710. To achieve this we maintain PF basis Adjustment as 14250, to get correct calculations.

      Hope this clarifies.

      Regards

      Geeta

      (0) 
      1. Priya Gupta

        Thank you Geeta for your information

        According to new rule So if an employee Basic Pay is less than 15,000 we have to select first option that is PF Basis which ever is less  According to calculations of new rule that is 12% of Basic pay as you said Iam clarified on this

        Need some clarification still If an employee basic pay is more than or equal to 15000 Do we need to select second option or we have to select first option that is PF basis which ever is less. and for second option The calculations according to new rule that is 12% on 15000.

        and For second option There is no note i believe.

        Before: Old rule it was 6,500 so for an employee drawing basic pay less than 6,500 so we need to select the first option

        My User selected second option for all employees before Iam not sure on this…

        could you please still clarify as iam confused on this thank you very much for your info

        (0) 
        1. praneeth kumar m

          This is not depends on the less and more salary. it is purely depends on the Client wise on which basis he want to calculate the PF amount.

          if you select the second option, it will calculate 12% on the Pf amount and Ee and Er has to give same amount. that’s why most of the org. go for first option which is PF standard from the govt. side also.

          (0) 
              1. praneeth kumar m

                Maintaining master data is the client wish. and he want to give 12% on total PF amount he choose second option. talk with the client and explain the process for both the options and after that do the corrections in the master data of the Employee’s.

                (0) 

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