Dear Seniors, At present, we are following a ceiling method for PF Contribution which is 12% on Rs.15000/- max, employees who are above 15K Salary we are contributing only Rs.1800/- Maximum.

But now few of the employees in our organization want to contribute 12% to the PF on the entire Basic salary which means that there will not be any ceiling amount of Rs. 15000/-.

Therefore, we want your opinion on this if this is allowed as per PF Act, and is it allowed to contribute 12% on entire basic for few employees.

We are planning to give the option to employees to opt this as an option to process 12% on the entire basic, it will be purely a voluntary selection, which means we will be running two options parallelly, 1. With ceiling 2. Without ceiling. Is it allowed?

Please advise. It will be a great help.

From India, Bengaluru
Doctor Siva Global Hr
Ceo-usd Hr Solutions
Legal Consultant

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Dear Colleague,
As per the Provisions of Provident Fund Act and Schemes, there are 2 contributions:
- Statutory Contribution in which both Employer and Employee Contributes 12% each. Here it is the prerogative of the employer whether he can restrict to 15K or pay contribution for full PF Wages. Legally no one can question provided he remits PF for 15K for all eligible employees. Here if you bring all employees to the net of full PF Wages for PF Contribution by both Employer and Employee, it will increase the Financial Buren of the employer and also will reduce the take home salary of employees. PF Act does not insist on this also. Hence think several times and then decide on this. Our suggestion is please restrict contribution to 15K only. If it is done it can not be withdrawn later and it becomes very cumbersome in many companies

In case of Voluntary contribution, where in the Employee can contribute over and above 12% any % of contribution to the fund as a saving ( say 12% plus 15%, or 20 % and so on) which he feels comfortable. Here employer is not under any obligation to pay any additional contribution but he will continue to contribute at 12% only.

Look for long-term focused approach
Take Care,
Doctor Siva Global HR
Tamil Nadu

From India, Chennai

It appears from the original post that few employees are interested to pay VPF and rest are not. It is absolutely accepted under PF ACT & RULES. Employer has nothing to do with this. Employees who will be interested to deposit VPF will authorize Employer in writing for amount of deduction.,

S K Bandyopadhyay ( WB, HOWRAH)
+91 98310 81531

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From India, New Delhi
Thank you so much for a valuable opinion.
From India, Bengaluru

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