Is PF Optional - Provident Fund
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Is PF Optional - Provident Fund

chaya.devi Started The Discussion:

Hi all,

Though am not a HR person but still for now taking up the hr task as ours is a very small organisation of 16 members and for any HR queries i take support of this site.

As per my knowledge PF is a must in all organisations.
However, off late i've gone thro' some offer letters of IT companies where the companies put PF under collective basket 'Benefit Plans' and make it optional so that they can give better package to their employees.

Is that right, can v do so.
is thr any amendment in PF rules.

Thanking you all in the anticipation of getting help.


regards,
Chaya.

Alin - Member Since: Mar 2007
Hi,

PF is not optional. Once a company touches a head count of 20, it becomes mandatory.

The Provident fund squad keeps visiting companies to see if they follow the correct provident fund practices. As and when they find incorrect practices, they are given notice and then if no action is taken, then fine is levied on such companies.

hope this helped

Sneha

mak007hr - Member Since: Jun 2007
Quote:
Originally Posted by chaya.devi
Hi all,

Though am not a HR person but still for now taking up the hr task as ours is a very small organisation of 16 members and for any HR queries i take support of this site.

As per my knowledge PF is a must in all organisations.
However, off late i've gone thro' some offer letters of IT companies where the companies put PF under collective basket 'Benefit Plans' and make it optional so that they can give better package to their employees.

Is that right, can v do so.
is thr any amendment in PF rules.

Thanking you all in the anticipation of getting help.


regards,
Chaya.
Dear Chaya,
P.F. is not optional, if the no. of employees in an establishment become 20 it is mandatory on the part of establishment to cover its organisation and make an application to concerned RPFC for allotment of E.P.F. code to the establishment with in 15 days of becoming 20 headcounts.

The monthly contribution deducted from the salary of employees alongwith the employers contribution is to be remitted with in 15 days of close of every month. and a monthly return in form 5, Form 10 , Form 12A is to be submitted to RPFC with in 25 days of the following month.

Similarly Annual return in Form 3A, Form 6A is also to be submitted all the aforesaid forms are available on the site of EPFO or in market also.

further for any query you can write me on .

Thanks,
Mohd. Arif Khan

chaya.devi - Member Since: May 2007
hi Sneha n Mr. M.Arif Khan,

thanks a lot for the useful information provided.
but still i have a question wandering in my mind.
then how some of these companies are giving pf optional?
is thr any provision to tk a special permission or so, if no, then how r they managing.

Thanks n Regards
Chaya

svsrana - Member Since: Mar 2007
lets take the example of a new joinee:
employee's basic is above 6.5 k and he was not a part of PF in his prev cos...

the employee in this case enjoys the discretion of not being a part of PF in your cos..
(note it is employee n not employer who has the discretion)

in case an employee wanst to avl of PF then both the contributions figure amongst his CTC

surya

chaya.devi - Member Since: May 2007
hi Surya,
thanks for the reply.

but in that case wt happens abt the PF rules.
is not employer taking any risk by not following the pf statute.
wont thr be any problems at later stage duuring inspection.

Thanks n Regards
Chaya

RAJENDRA NATH JHA - Member Since: Jul 2007
Hi Chaya

I am rajendra working in a mnc nearby 200 people in my company.
I am handling this issue with a consultant. As per my Knowledge PF deduction is mandatory from the date of appointment in any ltd. or pvt. ltd .company.

You have asked for optional things that starts with the person who is getting basic salary more than 6500/-per month. Total contribution of employer generally ends here i.g 780/- after that it is optional.

If you have any query regarding the same feel free to contact me on


Thanks& Regards
Rajendra

svsrana - Member Since: Mar 2007
lets take a practical example:
The employee count of the company is 700, profile is garment export in Okhla, the salary of the employees in question range from 20-50 k, basic varies rt from 6.5k to 17k...

more than 30 people who were not a member of PF in the previous organisation and have chosen to stay away from PF.


From an investment or social security point of view, there are several options avl better than PF.....

surya

Alin - Member Since: Mar 2007
hello chaya,

sorry for the delayed response

There is no special rule to accomodate any exceptions in the case of EPF. Any company, private or public, if it touches the headcount of 20, they have to go in for PF.

This number also includes direct and contract employees

If a company does not have 20 employees in its rolls (including direct and contract), it still has an option of being under PF , though its purely a management decision.

If a company that has over 20 employees and yet giving an option of PF is CERTAINLY taking a risk. It is definitely against the law not to provide PF.

Sneha

chaya123 - Member Since: Aug 2007
Hi Sneha,

Thank u for the guidance.

Actually the matter is one of the director is insisting on not having PF.

His thoughts are also correct as he says:

* we can find other avenues that provide better returns and tax free returns (eg., choose to part pay housing loan principle)

* Take home salary will be more than previous company and the employee will feel happy at the end of the day. (employee + employer will give an additional 25% take home)

* The forced savings will make people very happy when they leave their job rather than when they are with the organisation

* employee to be given option to choose to manage his/her own money than dealing with the pf organization.

* It is recommended for people who can't manage their personal finances and freshers.

Hence, better making no PF if basic is more than 6500 and optional to those who wants PF.

do you have any suggestions which goes as per law.
Pl let me know.

Regards,
Chaya



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