Can Employees Choose to Increase Their PF Contribution, and How Does It Affect Employer Contributions?

Hi Seniors,

Is there any policy regarding PF in which an employee can have a desired amount deducted towards their contribution in PF (an amount larger than decided)? If yes, does the company also need to pay the same amount towards the employer's contribution, or can it be restricted to a limit set by the government?

Looking forward to your reply.

Thank you!
Neesu

An employee is free to contribute a higher percentage than the statutory rate of 12% towards PF. The voluntary contribution is a purely voluntary act of the employee, but the employer need not contribute the same higher percentage. His contribution will be limited to the statutory contribution of 12%, plus whatever administrative charges and EDLI contribution as applicable.

Regards, Madhu.T.K

Hi,

If the employee contributes a higher percentage than the statutory rate of 12% towards PF, then the balance (excess over the 12%) will be taxable and added back in the salary figures for the computation of TDS. It is very important to remember that if the employee's contribution is at a higher rate than the statutory rate.

That's not true! An employee may opt to contribute 100% of their basic salary + DA if applicable (it's the maximum limit) as PF contribution, and additional PF contribution will enjoy all the PF benefits, including tax benefits. Just note that the employer's contribution will not increase.

If PF is deducting from the employee's salary, then the employee has a right to deduct PF at a higher rate more than 12%, but the management is not liable to pay the same. Management will pay 12% of Basic salary + D.A. However, if the management wants to pay the same, then the management can pay PF equal to the employee's share.