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If an employee's Basic pay is Rs. 70,000/- and pf contribution is voluntary, after reducing the basic by employer his basic pay is 50000/- . As per EPFO Act, an employer can not reduce basic pay.
So, kindly tell me an employer can reduce the basic as per EPF Act.
Further, help to know if employer can reduce the Gross salary
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You cannot reduce the basic of an employee on any terms irrespective of following EPF norms to him.
For the purpose of PF contribution of employer, the rate is 12% of basic plus DA plus administration charges etc. The EPF coverage is only up to Rs. 15000/- and this is the maximum limit on which the employer has to contribute. However, the employee may contribute his share more than the basic salary (he may volunteer to contribute up to 100%) but the employer is required to contribute only up to the statutory coverage limit i.e. on basic of 15,000/-. Hence, whether you reduce his basic or not, your liability is fixed i.e. 12% of 15000/- only.
In support of this, the following lines have been picked up from the FAQs of EPF website:-
24) What is the voluntary rate of Provident Fund contribution by the member?
As per the Act, the member has to contribute at the rate of 10% or 12% of his basic pay, D.A. & retaining allowance if any. In case the member wants to contribute more than this, voluntarily he can do so at any rate he desires. i.e. up to 100% of basic and D.A. But the employer is not bound to contribute at the enhanced rate but only up to the maximum wage ceiling of Rs. 15000/- only.
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