Hello Sir,
This is Srinivas. I have some doubts about PF. Sir, we are currently paying PF based on the current basic salary. Now, management wants to decrease the maximum limit of basics to ₹15,000. Please see the example below:
E1 - Current Basic Salary is ₹24,000 and PF is ₹2,880.
We now want to reduce the Basic from ₹24,000 to ₹15,000 and PF from ₹2,880 to ₹1,800.
Please advise if we can make this change or not.
**Location**: Hyderabad, India
pf basic, basic salary, Country-India, City-India-Hyderabad
From India, Hyderabad
Acknowledge(0)
Amend(0)
1This is Srinivas. I have some doubts about PF. Sir, we are currently paying PF based on the current basic salary. Now, management wants to decrease the maximum limit of basics to ₹15,000. Please see the example below:
E1 - Current Basic Salary is ₹24,000 and PF is ₹2,880.
We now want to reduce the Basic from ₹24,000 to ₹15,000 and PF from ₹2,880 to ₹1,800.
Please advise if we can make this change or not.
**Location**: Hyderabad, India
pf basic, basic salary, Country-India, City-India-Hyderabad
From India, Hyderabad
Acknowledge(0)Amend(0)
To address the query regarding reducing the basic salary limit for PF contributions in India, specifically in Hyderabad, here are the key points to consider:
- Legal Compliance: In India, the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, governs provident fund contributions. The Act mandates that the employer and employee each contribute 12% of the employee's basic salary towards the EPF, subject to a maximum limit on the basic salary.
- Feasibility of Decrease: As per the current regulations, the maximum basic salary limit for PF contributions is ₹15,000. Therefore, if the management wishes to reduce the basic salary from ₹24,000 to ₹15,000 for PF calculation purposes, it is permissible and aligns with the legal requirements.
- Impact on PF Contribution: Decreasing the basic salary from ₹24,000 to ₹15,000 will also impact the PF contribution amounts. With the new basic salary of ₹15,000, the PF contribution at 12% would amount to ₹1,800, as opposed to the previous ₹2,880 based on a basic salary of ₹24,000.
- Employee Communication: It is crucial to communicate this change effectively to all employees to ensure transparency and avoid any misunderstandings. Clear communication should be provided regarding the revised basic salary structure and its impact on PF contributions.
- Documentation and Compliance: Ensure that all necessary documentation reflecting the revised basic salary and PF contributions is updated accurately in the payroll system and employee records to maintain compliance with the EPF regulations.
In conclusion, the proposed change to decrease the basic salary from ₹24,000 to ₹15,000 for PF calculations is permissible and can be implemented in accordance with the EPF Act. It is essential to follow the legal guidelines, communicate the changes clearly, and update all relevant records accordingly to ensure compliance and transparency in the process.
From India, Gurugram
Acknowledge(0)Amend(0)
- Legal Compliance: In India, the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, governs provident fund contributions. The Act mandates that the employer and employee each contribute 12% of the employee's basic salary towards the EPF, subject to a maximum limit on the basic salary.
- Feasibility of Decrease: As per the current regulations, the maximum basic salary limit for PF contributions is ₹15,000. Therefore, if the management wishes to reduce the basic salary from ₹24,000 to ₹15,000 for PF calculation purposes, it is permissible and aligns with the legal requirements.
- Impact on PF Contribution: Decreasing the basic salary from ₹24,000 to ₹15,000 will also impact the PF contribution amounts. With the new basic salary of ₹15,000, the PF contribution at 12% would amount to ₹1,800, as opposed to the previous ₹2,880 based on a basic salary of ₹24,000.
- Employee Communication: It is crucial to communicate this change effectively to all employees to ensure transparency and avoid any misunderstandings. Clear communication should be provided regarding the revised basic salary structure and its impact on PF contributions.
- Documentation and Compliance: Ensure that all necessary documentation reflecting the revised basic salary and PF contributions is updated accurately in the payroll system and employee records to maintain compliance with the EPF regulations.
In conclusion, the proposed change to decrease the basic salary from ₹24,000 to ₹15,000 for PF calculations is permissible and can be implemented in accordance with the EPF Act. It is essential to follow the legal guidelines, communicate the changes clearly, and update all relevant records accordingly to ensure compliance and transparency in the process.
From India, Gurugram
Acknowledge(0)Amend(0)Join Our Community and get connected with the right people who can help. Our AI-powered platform provides real-time fact-checking, peer-reviewed insights, and a vast historical knowledge base to support your search.
Salary Sheet & PF PT Calculation & Challan Nov 2010.xls