Navigating Provident Fund Changes: What Documents Are Needed for Salary Restructuring?

Here are some of my doubts regarding Provident Fund:

- What documentation should a company need when they want to reduce the EPF contribution of existing employees by restructuring Salary Component details? For example:
- Restricting EPF up to Rs. 6500/- limit only, which was not earlier in the company,
- Reducing Basic & DA wages and allowing them some Allowances for the balance salary entitlement. (By keeping in mind sec. 12 of the Act.)

- What documentation should a company need for a fresher employee drawing Basic & DA Salary more than Rs. 6500/- limit if the company doesn't want to make them EPF membership? Assuming that employees agree to the same.

Thanks & Regards, CA Shekhar.

Dear Shekhar,

As you have already mentioned Section 12 of the PF Act, which clearly states that you cannot reduce the wages of any existing employee, it means PF contributions of individuals cannot be reduced. Dear, now that you know the section and its provisions, how can you reduce it?

However, for new employees, you can take Form 11 and do not need to deduct PF if their basic pay + DA is more than Rs. 6,500.

Thank you,
J. S. Malik

Dear Mr. Malik,

Thank you very much for your valuable suggestions. However:

1) For existing employees: Due to the company's ignorance and innocence, the salary structure had never been designed. Now, if they wish, employees must be allowed to do so for the betterment. I believe that this must be supported by appropriate documentation. I would like to know the specific documentation required to prove this, if possible.

Thanks,

CA Shekhar.

Dear,

I feel now you cannot reduce the basic because ignorance of the law is no excuse. However, in due course, when there is an increment, you do not put anything in basic.

Thank you.

JS Malik

Hi,

Can I know my EPF No.? My actual amount credited in my PF account. Is there any site to suggest me?

Ramesh Jaiswal

Hi,

I want to know the method of preparing PF A/C statement. If anybody knows, then please let me know.

Thanks,
Ramesh

Hi Sekhar,

It is not possible for a person who is earning less than 6500/- to be eligible for PF. If the individual is earning more than that amount, then they are eligible for PF.

With Regards,
Ramesh.V

Dear Ramesh,

This is the calculation of PF:

Employee: 12% (P.F)
Employer: 3.67% Provident Fund (A/c 1) + 8.33% Pension (A/c 10) + 1.10% Admin Charges on PF (A/c 2) + 0.50% EDLI (A/c 21) + 0.01% Admin Charges on EDLI (A/c 22)
=> 13.61% on basic
* Pension (8.33% or 541/- whichever is less)

Regards,
Bindu

Thank you very much, Mr. Malik. Your opinion is really good and practical, no doubt. However, there is a huge burden in the company due to this ignorance. Now, I want to handle things properly and lawfully. Can you please suggest ways to improve the situation or anyone you think I should refer to?

Thanks,
CA Shekhar.

Employee Deposit Linked Insurance Scheme... Also, just an addition to the earlier post where you mentioned Employer contribution to admin charges for PF, and to EDLI and its admin charges, I would like to add that there might be Inspection charges:

- 0.18% for PF
- 0.005% for EDLIS

This is only applicable if the inspections actually take place.

Cheers

Hello and Hi, Bindu Ji. That is very kind of you to provide information on the calculation. However, the worrisome issue is that I tried hard to find this information but could not locate it. Can you please guide me on where I can access these valuable statutory guidelines for calculation or where I can find the official gazette? Kindly assist me with this. Take care.

Sarfaraj

Malikji, please tell: suppose an existing PF holder employee's basic salary increased above 6500, and the company doesn't want to deduct their PF and wants to make them exempt from PF. What procedure should be followed? Can filling out Form 11 and Form 10, showing that the employee left the PF scheme, make them eligible? Please guide us on what should be done for current employees whose basic salary has increased to above 6500. Immediate response needed.