Dear all,Let me clarify the issue related to the reduction of Base Salary. Let me take an example of the case – an employee draws a gross salary of Rs 4 Lacs p.a. and his basic salary Rs 10 k/m or Rs 1.2 lacs p.a.On this basic salary, a statutory requirement of provident fund (PF) contribution - 12 % is calculated on the basic salary. 2. As per the Act herein;Section 12 of Indian Provident Fund Act: Employer not to reduce wages etc No employer in relation to an establishment to which any Scheme or the Insurance Scheme applies shall by reason only of his liability for the payment of any contribution to the Fund or the Insurance Fund or any charges under this Act or the Scheme or the Insurance Scheme reduce whether directly or indirectly the wages of any employee to whom the Scheme or the Insurance Scheme applies or the total quantum of benefits in the nature of old age pension gratuity provident fund or life insurance to which the employee is entitled under the terms of his employment express or implied. Therefore, one cannot reduce the basic salary of the employee under the Act which affects the PF contribution ( 12%), however the employer can reduce the other salary components and EVA/bonus.Company can reduce the components like HRA, Conveyance allowance etc hence the gross salary ( Rs 4 lacs p.a. to Rs. 3 lacs p.a.) and not on the basic salary which has a direct bearing on provident fund contribution. If you need any further information/clarifications, please feel free to ask.Regards,Rajat Joshi