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chaps_online
Hello Friends,
I came across a case and regarding that i need your suggestions please -
The employer is not deducting PF on the grounds that an employee's basic salary has exceeded Rs.6,500/- per month.
Now what if the employee wants to contribute voluntarily for PF (he asks the employer to deduct the PF amount from salary)..?
Is there any specific limit on his contribution..?
Will the employer be questioned for his non-contribution to match the employee's contribution..?
Kindly explain the statutory obligations on the part of the employer in the above case... is the employer liable to file any documents with the PF office...??
Thanks in advance for your suggestions and clarifications.
Best regards,
Chakrapani

From India, Madras
Sirisha Reddy
2

Hi Chakrapani,
Once the basic of an employee exceeds Rs 6,500/-, there is no compulsion that PF deduction has to be made. But if the employee is interested in voluntary contribution, he can go for it where the employer's contribution will not be put in the account and only employee's will be paid to the PF.
Even if the employee wants to make more than 12% of his basic for PF to avoid taxes, it can be deducted but the employer will be paying only 12%.
Might be your employer is under assumption that if you request for deduction, even they have to contribute their part (if you are paid by gross) and that is the reason why they are stopping from the PF contribution.
Any Seniors.... Please correct me if I am wrong..
Sirisha Reddy

From India, Bangalore
chaps_online
Hi Sirisha,
Thanks for the clarification.
Even if the employee is voluntarily contributing to PF @12%, the employer is not willing to contribute any amount.
The employer just deducts the 12% from the employee's salary and remits the same to the PF office... is this a valid scenario..?? Pls clarify..
Regards,
Chakrapani

From India, Madras
brilliance
1

As per the Act, in case the member wants to contribute more than this, voluntarily he can do so at any rate he desires. i.e. upto 100% of basic and D.A. But the employer is not bound to contribute at the enhanced rate.

brilliance
1

Apologies read your question incorrectly.

'Exempt' employee is one whose salary is over the INR 6500 limit. However it is considered a safe practise for the Organization to have a consistent approach regarding PF. If some employees are eligible and some are not then the employer may choose from the following:

1. Clearly not contribute (both employer and employee) for the Exempt employee.

2. Contribute upto INR 6500 for the exempt employees that indicates maintaining the contribution at Rs. 780 for the employee and employer. The employee can contribute higher. The employer does not need to match.

3. Contribute as per the entire basic salary without restriction.

Of all the above 3 option, the third is the safest. The PF Commissioner can open the case and raise an objection on the top 2 scenarios (2nd is safer than the 1st), the effort spent in justifying the above will be higher than the cost involved in paying the PF. The MD of the establishment is personally liable for lapses in following the EPF and MP Act.

Regards

Priya


chaps_online
Hi Priya,
Thanks for the information.
As you mentioned the 3rd option may be the safest but it does not go well with the Company, since they are not interested in the additional payout...
The company is following the 1st option as you hav mentioned (i.e) not to contribute on account of PF. However they increased the pay package and left the option into the hands of the employees to go in for a PPF.
What i wanted to know is that if an employee wants the employer to open an account for him, deduct and remit the PF amount (only his contribution)... Will the employer be questioned (by the PF authorities) for not contributing an equal amount..??
P.S. (Company has an account running with the regional PF office, but doesn't remit any amount as there is no employee who falls under the mandatory category)
Regards,
Chakrapani

From India, Madras
Sirisha Reddy
2

Hi Chakrapani,
There is no compulsion that the employer's and employee's contribution should match (obviously if the employee is making any voluntary contribution, it doesn't match). So, if the employer does not want to contribute any amount from its part, only the employee can contribute the required %. But you should be cautious at the time of submission of annual contribution forms where you need to fill in the forms appropriately specifying the amount only in employee's contribution.
Sirisha Reddy

From India, Bangalore
Sherine
20

Hi
To the best of my understanding (correct me if iam wrong) if an employee when he/she joined the organisation had a basic less than INR6500, then the employer needs to make the 12% contribution and (continue to make the contribution till the employee resigns) even if over the years of service, the employees basic goes beyond INR 6500. The employer may not be able to stop contributing once the PF account is opened unless the employee leaves the organisation
Thank you
Sherine

From India, Bangalore
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