HI friends, Now a days I am facing problem related to PF contribution of my company.
We are small scale company. we normally our salary structure is like.
Basic = 60% of gross
HRA = 40% of Basic
PF = 12% of basic
Because of this structure we have to pay 1800 pf for one employee
employee 1800 + employer 1800 + admin charge = 4000
we have more than 50 employees .so now its really difficulty for company to pay such big amount.
Please give suggestion for cost cutting in Pf
Or is their any rule related to pf so that company do not have to contribute in PF?

From India, Pune
Dinesh Divekar
Business Mentor, Consultant And Trainer
International Corporate Trainer / Hr (od)
Hr -executive
Harris Israel
Assistant Manager-hr
+2 Others

your company already covered under EPF Act. there is no question of cost cutting by way of not remitting EPF Contributions which may land your employer in a big trouble. think twice before you take any decision. you cannot avoid / go away from statutory contributions like EPF.
From India, New Delhi
As per the EPF rules, the contribution can have ascending trend; can not be decreased.
Moreover, the penalty and damages of EPFO is at the higher rate. Hence, on time remittance is the cost effective method.

From India, Madras
Dear Preetiwankhede,

The EPF compliance is not only a statutory benfefit but part of a Social Security System as well. As stated by the experienced members there is no way to escape from the liability. On the contrary if it is found u r doing something which is agst the Act, that could attract damages and penalties.

However, as mentioned by u, in ur company more than 50 empl. are working. You have considered Rs. 1800/- contribution for all. Means Rs. 15000/- salary per head.

But there may be some employees whose salary structure may not be that much, so u can deduct EPF on lower salary (Basic+DA). But pls note, if u have already deducted and deposited PF on higher rate, that can't be reduced. However, u can take care the point for fresh appointments (new employees). But pls make them aware at time of enrollment.

Moreover the EPF % for employer contribution is @ 13.36%, so on Rs. 15000 salary the employee and employer contribution will be 3804/-.

If ur co. really want some Cost Cutting, I would like to focus on other O/Heads (Staff Welfare, Printing, Conv., Travelling etc.

Pls don't try to manuplates the statutory benefits. These are related to people (like us) livings, savings and future security.

From India, Delhi
you can rather concentrate on others expenditure where you can reduce.
1) Don't recruit new employees
2) Reduce electricity consumption, remove ACs, use stationery sensibly. etc...
You can't reduce statutory expenses.

From India, Kolkata
Once covered under PF should continue contribution still he / she retires or leaves the organization. Discontinuing will lead your organization into big trouble.
One option is , from now onwards hire any new fresher candidate (Passed out batch) / employee ( has no pervious PF contribution) for them get fill form 11 , Pay basic more than Rs.15000 /- will be excluded employees & get exempted from PF contribution.
Hope others agree with me . Am right or wrong ? Kindly advice.

From United Kingdom, London
It will be wise to cut corners on wasteful expenditure. Why dont you look around your office and where the cost can be saved. May be you people are using paper cups, which is a colossal waste. Instead porcelain cups can be reused after proper wash. For making one paper cups , four litres of water is used, do you know ? Similarly, sending courier mail can be reconsidered. One can scan and send attachments. Except where physical document is mandatory, in other cases, use email, Wetransfer etc. can be used effetly. Nowadays there are options available. Private courier cost is now 3 times more than Postal Speed Post. It may take lot of time to get a POD from courier agent while through Speedpost, you can get an sms that your speed post has been delivered. Like these, there may be not of expenses which we may be incurring but not really focussing on. Electricity, water, unnecessary and avoidable Overtime, conveyance, hiring vehicles for each employee instead of clubbing assignments. There is something called Smart Working which is widely prevalent in industry these days. Do not compromise on employee welfare which is one among many. You take care of your employees first and they will take care of your customers.

Bet wishes

From India
Dear Pritee,
Other members have given their valuable comments. Now let me suggest you something different.
You may do the exercise on the MS Excel. Find out the employer's contribution for PF if the basic pay is 35%, 40%, 45%, 50%, 55% and 60% Find out any pattern emerges.
Lastly, I second views of Mr NK Sundaram. What you have calculated in only the visible "cost" (even if we consider PF is "cost" as such). While running an organisation, there are several invisible costs, what about curtailing those costs?
Dinesh Divekar

From India, Bangalore
Thanks all of you For your valuable Suggestion.
I will try to do such practises in my office . And working As Hr is really Important for me to take of of my employee and My company. I am fresher In this Field and Do not having that much experience in Legal Matter Like PF and other. I will Try to Solve this issue. Thanks

From India, Pune
you can change the salary structure . like lot of the companies follows
1) Basic - 35% - 50% of Gross
2) HRA - 40% of Basic for Non metro & 50% of basic for Metro
3) Con - Max Rs. 800/ P M which is Max of Rs. 9600 P A
4) Medical Reim - Max Rs. 1250 / PM which can be max of Rs 15000 PA
5) Spl Allow - Balance of Gross will be provided as Spl Allow
So automatically contribution will goes down from employer

From India, Pune

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