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Dear friends,
i am a practicing labour consultant from last one year.In one of my client's office basic + da wages of all employees is more than Rs.6500. all of them are covered under PF.But while calculating the pf contribution we are restricting the basic + da to Rs.6500 contribution comes to Rs.780. Example if basic + da of an employee is Rs.15,000 pf is calculated on Rs.6500/- (contribution amounting to Rs.780) instead of Rs.15000/-.
please let me know is there any violation of law.
with regards
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There is a procedure where a co. can avail PF i.e is 12% on Basic + DA subject to 780(which is minimum pf contribution), or whichever is lower.
Thogh the employee's wages exceed Rs.6500/-( in your case it is Rs.15000/-p.m), the contribution can be restricted to Rs.6500/-p.m which comes to rs.780/-p.m on each emeployer's and employee's share.
B. Saikumar
HR & labour Law advisor
The employer have an option/ restrict to pay only Rs.780/-(Taking 12% of Rs.6,500/-). But the employee has an voluntary contribution option to contribute even 100% share. but most companies don't do that because of uniformity and calculation errors.
If more employees are willing to do the voluntary contribution in employee share then the company has to take steps to do as requested.
There was a proposal of increasing the PF limit from Rs.6500/- to Rs.10,000/- in 2009. but still pending.
ESI has increased its slab periodically but in PF after 2001 there was no amendment to increase the wage ceiling slab from Rs.6500/-
Thank you all for your reply. Please let me know is there any notification or circular or any section which permit us to calculate the contribution under this mathod. thanks
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