Dear Friends,
I have a query regarding waiving off the P.F capped basic. Our company is almost 10 years old; from inception, the restricted basic is Rs. 6500/- (capped basic), and we have been deducting the same accordingly.
Recently, our company has decided to waive off the capped basic from March onwards (the starting month of P.F contributions) and will deduct on the actual basic. I know according to P.F norms we can do that. The problem is, some of our employees are opposing this amendment because their take-home pay will reduce. As we are all aware, in the CTC concept, contributions from either side are included. We can agree with them, but once the company decides to impose this rule, employees should comply.
My Queries
Is there any clause in P.F stating that the company can opt for this for a few employees who are willing to accept?
Can we deduct P.F on the capped basic from employees who are not willing to opt for this since it will not affect their take-home salary?
I have asked about the same to one of the P.F officials. He said that the company should follow the uniform rule and, once decided, should deduct on the actual basic from all employees.
Hence, I am requesting all seniors to please clarify my query.
An early action in this regard would be highly appreciated.
Regards,
TSK
From India, Hyderabad
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86I have a query regarding waiving off the P.F capped basic. Our company is almost 10 years old; from inception, the restricted basic is Rs. 6500/- (capped basic), and we have been deducting the same accordingly.
Recently, our company has decided to waive off the capped basic from March onwards (the starting month of P.F contributions) and will deduct on the actual basic. I know according to P.F norms we can do that. The problem is, some of our employees are opposing this amendment because their take-home pay will reduce. As we are all aware, in the CTC concept, contributions from either side are included. We can agree with them, but once the company decides to impose this rule, employees should comply.
My Queries
Is there any clause in P.F stating that the company can opt for this for a few employees who are willing to accept?
Can we deduct P.F on the capped basic from employees who are not willing to opt for this since it will not affect their take-home salary?
I have asked about the same to one of the P.F officials. He said that the company should follow the uniform rule and, once decided, should deduct on the actual basic from all employees.
Hence, I am requesting all seniors to please clarify my query.
An early action in this regard would be highly appreciated.
Regards,
TSK
From India, Hyderabad
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As per the PF Act, you can deduct on mutual agreement with the employee. However, if you wish to do the same, utilize your HR skills by conducting a meeting with the employee and suggesting it to them. The company is also offering the same amount, so your savings will increase with that.
Regards,
A. Sharma
From India, Bangalore
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Regards,
A. Sharma
From India, Bangalore
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Dear TSK,
As Sharma said, gradually the savings of the company PF amount increase. Once they go beyond the capped amount, you can counsel each and every employee and explain to them the benefits they receive:
1. PF savings increase gradually.
2. Statutory deductions can be exempted in Income Tax.
3. Gradually, their CTC will seem to increase.
Ensure that the company does not decrease the basic amount or restructure the basic, as the PF contributions are paid to a greater extent. You can suggest to management that this could pose a problem in the future. Be specific before framing a policy—think, because in our company, we are facing the same problem.
Regards,
R. Ramkishore
From India, Bangalore
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As Sharma said, gradually the savings of the company PF amount increase. Once they go beyond the capped amount, you can counsel each and every employee and explain to them the benefits they receive:
1. PF savings increase gradually.
2. Statutory deductions can be exempted in Income Tax.
3. Gradually, their CTC will seem to increase.
Ensure that the company does not decrease the basic amount or restructure the basic, as the PF contributions are paid to a greater extent. You can suggest to management that this could pose a problem in the future. Be specific before framing a policy—think, because in our company, we are facing the same problem.
Regards,
R. Ramkishore
From India, Bangalore
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You may deduct PF on the ceiling amount for some of the employees and on the actual salary for the rest of the employees with prior consent from the RPFC. The contribution over and above the ceiling salary is allowed as a voluntary contribution, which is not compulsory for all, and uniformity is also not required.
Regards,
Abbas. P.S
From India, Bangalore
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Regards,
Abbas. P.S
From India, Bangalore
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Any prudent person should agree to your proposed move on voluntary PF contribution because:
i) The employee is getting additional indirect income by way of the employer's contribution.
ii) The employee is saving a lot through his and the employer's contribution.
iii) This saving has tax exemption.
I feel that you should be able to convince employees and explain to them the good gesture of your management, which has long-term benefits for employees. Maybe they may feel a little pinch in the initial months due to marginally reduced net pay.
I am not in favor of too many combinations and variations in policy. It becomes very difficult to take care of too many exceptions in the long run. So, stick to a well-thought-out, uniform policy for all employees.
From India, Pune
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i) The employee is getting additional indirect income by way of the employer's contribution.
ii) The employee is saving a lot through his and the employer's contribution.
iii) This saving has tax exemption.
I feel that you should be able to convince employees and explain to them the good gesture of your management, which has long-term benefits for employees. Maybe they may feel a little pinch in the initial months due to marginally reduced net pay.
I am not in favor of too many combinations and variations in policy. It becomes very difficult to take care of too many exceptions in the long run. So, stick to a well-thought-out, uniform policy for all employees.
From India, Pune
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As an employee, I suggest that if there is any representative body for employees, call them and advise them to pass a resolution in favor of the management's proposal at their general body meeting. Obtain a copy of the resolution with a covering letter from the representative body. This should be sufficient for such recovery.
As a manager, I would like to emphasize that without any demand from the employees, the company should not propose any additional expenses to the employees. If employees themselves are not in favor of the additional expenses, it means management needs to review the proposal to avoid incurring additional expenses.
From India, Madras
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As a manager, I would like to emphasize that without any demand from the employees, the company should not propose any additional expenses to the employees. If employees themselves are not in favor of the additional expenses, it means management needs to review the proposal to avoid incurring additional expenses.
From India, Madras
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PF NO Contribution on CTC.pdf