Saswatabanerjee
Partner - Risk Management
Mail8013
Hr Consultant
+2 Others

Sir,
Can we reduce PF deductions of employee. The min. wages of the employee is 10,000/-. We are paying him higher gross salary ~ Rs. 15000/-. Employee is getting less amount in hand because PF is calculated on 15000/- and current deductions are 3600/-. Can we reduce the PF deductions.
Regards,
Tijji
17th May 2016 From India, New Delhi
No, you are not allowed to reduce the salary taken for PF purpose. It is a violation of sec 11 of the act.
18th May 2016 From India, Mumbai
Tijji,
Please check the details that you have furnished in the message. You are saying that the gross is around 15000/- and hence the overall contribution towards the PF is about 3600/-.
Please note that the PF is to be deducted on the basic salary and not on the gross salary. If you deduct on basic salary, the overall deduction by way of contribution towards PF will be less and this will result in a higher take-home figure.
Check it out.
A.B.
18th May 2016 From India, Mumbai
Thanks for the response. However
my query is if we keep gross salary same and cut pf on basic wages..ie. Say 2400. Will there be any problems from the pf department. The difference in the gross and basic will be paid stating some other allowance etc. Overall no wages decrement for the employee but pf proportion would decrease, resulting in more cash in hand.
19th May 2016 From India, New Delhi
Tijji,
The PF contributions are calculated on the basic salary and not on gross salary.
So, irrespective of what you keep as the gross salary, the deduction (and subsequent contribution towards the PF) will be dependent on the basic salary. So, if you keep the basic as low as possible, the compulsory deductions (by way of PF) will be less and will result in increased cash in hand.
Hope the concept is clear now ?
Best of Luck,
A.B.
19th May 2016 From India, Mumbai
The answer is dependent on what you have done earlier.
Have you show basic at 5000 and shown that you are voluntarily deducting on full amount ?
If not, then if you have actually shown basic at 15000 in the ECR then you can not bring it down because you have already declared the basic and you can not being the basic down
19th May 2016 From India, Mumbai
Rs 3800/ pf deduction on a salary of Rs 15000 means ,the Co is deducting employers contributions also from salary.This is illegal.
20th May 2016 From India, Thiruvananthapuram
He is probably talking in terms of CTC, not gross pay deductions
21st May 2016 From India, Mumbai
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