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see i mean...
we all know that we can put 6500/- basic as the cieling limit for Pf. Even in our co. we do not pay Pf for over 6500/- basic i.e. all those people who have a basic salary of 6500 or more get fixed pf of Rs. 780/- p.m.
So say, person A gets 20K basic. His pf contribution is 780/- p.m. as we have a cieling.
So if his basic is made 12K per month even then his pf remains 780/- as his basic is still above 6500/-.
Now, what i mean to ask is that such cases which are not effected by decreasing the basic as far as Pf contri is concerned, can they be restructured without making them resign for one month.
Hope i m clear

dear rolly,

you are in big confusion.your knowledge is wrong that if employee is having 6500/- or more basic then his pf will be 780 fix.

see rolly, first dont say that 24k or 12k monthly is basic of any particular employee.these are gross salary not basic. now gross salary is devided in break-ups like basic+hra+special allownces+conveyance+medical etc(depends company's norms).

now, you can decide in your company the % of basic and % of hra.Example: suppose gross salary is 12,000(12k) of any employee,now you can decide in your company the % of basic(like basic will be 60% of gross,hra will be 30% of gross and special allownces will be rest 10% of gross)

now salary break up of gross-12,000 will be:-

basic-7200(60% of gross)

hra-3600(30% of gross)

Special Allownces-1200(10 % of gross)

now,come to pf,pf never is always 12% of basic(in this case pf will be 864).

and employer pf will be 864 too.(it is also 12% of basic).

Now the salary will be in hand-

12,000-864-864=10,272(now employer pf is deducted from the employee salary)

there is no such type of word of ceiling limit of pf(like780,as you said)but according to the law,again i will say,if employee is having 6500/- or less basic,then pf is mandatory and if basic is more then 6500/-its not mandatorybut pf will will be deduct always 12% of basic..........there is no ceiling limit.

now,if employee's salary is 24 k,then basic will be 14400(according to my example(60% of gross),then pf will be 1728(12% of basic)..................but if we make 12k basic,then respectively pf will be changed..

i hope,i have make you clear enough............still have query free to ask.


Dear Rolly,
1. Once the basic decided of an employee it can not be reduced because all ohter benefits are depends on the basic. Other allowances can be changed but basic can not be reduced.
2. If the management will talk to the staff/workers and justify them then it can be happened otherwise. you will face a lot of problems like dis-satisfaction of the staff/workers etc.
Ajay Sharma

hi deepika,
well i guess we need to recheck it.
I am quite certain that an employer can contribute pf on 6500 basic/- even if the basic salary is more than 6500/- (say 10k).
According to PF rules it is manadatory to give PF till 6500/- basic after that employee has an option to give pf on 6500/- or on actual basic @ 12% or not give it at all. It is totally employer's prerogative.
Still i will recheck and please if possible, do recheck it at your end as well.
Many companies give PF on 6500/- basic only though the actual basic may be more than 6500/-.

Hello ajay AND deepika
thanx for your reply...let me restructure my querry-
Just tell me one thing-if u r clear abt it...
If a person is out of PF and ESI because his salary is more, can we restructure his bifurcation for eg.
present slabs= 14K basic+ 2K HRA
proposed slabs= 12 k basic+ 2K HRA+ 2K special allowance.
Will it attract any legalities. Kindly note that the person is out of PF and ESI.

Sorry..replying late..but basic cannot be reduced...according to EPF is an can always increase it....coz all the other components r based on some1 said..the best option is to adjusting spl.allw..

now i understand your prolem.let me clear.............if once pf is applicable in one's salary,during tenure of employee,pf must be continue.but if employee is out of pf and esi then basic can be reduced whatever you want.but it should be more than 6500/-.
and no legal obligation will attrat this thing.

now i understand your problem.let me clear.............if once pf is applicable in one's salary,during tenure of employee,pf must be continue.but if employee is out of pf and esi then basic can be reduced whatever you want.but it should be more than 6500/-.
and no legal obligation will attrat this thing.

hey deepika one thing more...
As you said we can reduce basic if he is out of PF and ESI but reducing basic also effects his gratuity amount n gratuity is also a statutory obligation directly dependent on basic so are you sure is it workable?
Another thing-
If an employee is covered under PF when he joins and after subsequent increments suppose his basic exceeds 6500/-. Can his PF contribution be made at 6500/- basic with mutual consent or he shall have to necessarily contribute @ 12% of actual basic.
And yes, thanx for your reply.

basic salary is the guidance value of an individuals job position in any organisation. particularly the org. having different pay scales. basic salary will determine the provident fund, gratuity and whatever u claim as any allowance, it all relates with the basic salary. therefore, earned basic should not to be givenup for any reason. whatever u want extra, u claim seperately

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