Is There a Different PF Deduction Policy for MNCs? Seeking Clarity from Peers

Hi, I am working in an MNC RPO. In our organization, PF deduction is not there. I would like to know if there is any different policy for MNCs regarding PF deduction.

Regards,
Manik

No, there is no different policy for MNCs; even I am working in an MNC, and PF is deducted. In any company where there are 20 or more employees, PF is a must.

Chitra

Hi Chitra,

That's correct. Wherever 20 or more individuals are employed, PF deduction is mandatory up to a defined limit of Rs. 6500/- (Basic + DA), whether it's an MNC or any other national industry.

Best Regards,
Deepak Dwivedi

Dear Manikk,

As per the provisions of the PF Act, every establishment, which is a factory engaged in any industry specified in Schedule 1 and in which 20 or more persons are employed. Any other establishment employing 20 or more persons, which the Central Government may, by notification, specify in this regard. Any establishment employing even fewer than 20 persons can be covered voluntarily under Section 1(4) of the Act. So, there is no provision for non-compliance with PF in any establishment, whether it is an MNC or not.

Regards,
Manjeet Singh

Hi Manik,

As mentioned by other members, any establishment employing more than 20 employees must get itself registered with RPFC. It is a statutory requirement for every employer, which has been made mandatory with an objective to extend the benefits of EPF and EPS to all classes of workers. It gets deducted at 12% (monthly) on the sum of Basic, DA, and Food allowance, if any. An equal amount of contribution is also made by the employer towards it.

Any employee not receiving this benefit (subject to a headcount of 20 employees in the organization) may go to the labor court and claim it from the employer. It is the right of an employee. Employers not abiding by the same are in for some serious trouble.

Dear friends,

As per the provisions of the PF Act, every establishment, which is a factory engaged in any industry specified in Schedule 1 and in which 20 or more persons are employed, or any other establishment employing 20 or more persons which the Central Government may specify by notification, shall be covered. Additionally, any establishment employing even less than 20 persons can be covered voluntarily under section 1(4) of the Act.

Dear friends,

As per the provisions of the PF Act, every establishment, which is a factory engaged in any industry specified in Schedule 1 and in which 20 or more persons are employed, and any other establishment employing 20 or more persons which the Central Government may, by notification, specify in this regard, can be covered under the Act. Additionally, any establishment employing even less than 20 persons can be covered voluntarily under section 1(4) of the Act.

So, if you are receiving a basic salary of more than INR 6500, the company may have its policy regarding PF deductions from your salary. If the company deducts your PF, the cost to the company (CTC) of the employee increases because the employer has to add their side of the PF contribution, which is 12%, along with administrative charges for account numbers 2 and 22.

Hi Manikk,

I am working in an MNC RPO. In our organization, PF deduction is not applicable. I would like to know if there are any different policies for PF deduction in MNCs.

Regards,
Manik

Mr. Manik, I want to inform you that the deduction of PF follows the EPF Act and Miscellaneous Act as per other types of deductions for MNCs. The limit for PF deduction is based on a basic salary of 6500 as per rules, but voluntary contributions are also allowed as per choice. Is that clear?

Please ensure that the paragraphs are properly formatted and separated for better readability.

Hi,

As per the PF Act, the employer's contribution is 12% of the basic salary, and the employee's contribution is also 12% of the basic salary. The basic salary sealing amount is Rs. 6,500.

My query is if the employer is willing to pay his contribution of 12% for an employee who is drawing a basic salary of Rs. 10,000 (ten thousand), is it applicable, or do we have to restrict the deduction/contribution to the sealing amount of Rs. 6,500?

Please clarify.

Satheesh

Hi,

Yes, PF deduction is a must. But it's up to the company whether they need to deduct PF or not. You should also consult the same with the PF consultant. In this, there is also a provision where the company is registered for PF but the PF amount is not getting deducted for employees, which means NO PF DEDUCTION. Our company is also following the same rule. We are a software MNC with almost 50 employees, and our company is registered under the PF Act but does not deduct PF.

So please consult, as rules or provisions may vary from state to state.

Dear all,

The eligibility criteria to be covered under the EPF Act have been revised to 10 employees from 20. Now, any company having 10 or more employees is supposed to get enrolled under the act.

Regards,
Rahul