Understanding PF Contributions: Can Employers Limit Their Share to 780 While Employees Contribute 12%?

Hi,

Could any one of you clarify for me if there is a provision in PF where the employee can contribute 12%, and the employer will restrict it up to 780? Is this provision included in the PF Act? Your valuable suggestions are needed.

Regards,
Ashok

Hi Kumaracme,

Thanks for your suggestion. Could you explain briefly if the provision is applicable only to those with a basic salary exceeding 6500?

Regards,
Ashok.

For the purpose of calculating PF, the ceiling is 12% of Rs 6500/- which comes to be Rs 780/-. An employee can have his own share higher than Rs 780/-. However, the employer is under no obligation to contribute higher than Rs 780/-. Yes, some employers do contribute a matching share even at a higher rate, but this is a pure gesture by employers and cannot be legally enforced.

Dear Ashok,

PF contribution is mandatory for those employees who are receiving a salary/wages up to Rs. 6500 per month. Salary/wages refer to the consolidated gross amount of salary/wages. However, if the employer desires, they may contribute up to any amount of salary. The contribution transferred to the pension fund would be Rs. 541.00 only (8.33% of Rs. 6500.00).

Thank you.

The provision is there in Section 6 where the employee may contribute at a higher rate, but the employer will not be under any obligation to contribute over and above his contribution payable under this section, i.e., 12% (up to Rs. 6500 salary).

Hi,

You can deduct Rs. 780/- from employees' salary as PF deduction because the maximum limit given by the Act is Rs. 6,500 (Basic + DA). Voluntary higher contributions are also acceptable at the joint request of the member and the employer.

Hi,

You can deduct Rs. 780/- from employees' salary as PF deduction because the maximum limit given by the Act is Rs. 6500 (Basic + DA). Voluntary higher contributions are also acceptable at the joint request of the member and the employer.

Hi,

I have a query regarding whether the employer can restrict their contribution to a total of Rs. 780/- (including pension and PF) for employees whose basic salary + DA exceeds Rs. 6500.

Regards,
Ashok

Dear Ashok,

Yes, the employer can restrict his contribution up to ₹780.00, including the Pension Fund, as the employee may contribute his share up to any limit.

Ajay Shukla Labour Law Consultant, Kanpur 09839066035

Dear Ashok,

I have another question attached for you, or for that matter, for everybody: If a company is already contributing more than 12% on the 6500 limit, can they change it to contributing only Rs. 780 rather than the higher amount contributed earlier? If this is possible, does the company need to inform or obtain permission from the PF office, or can they just start doing it? Obviously, they have to inform employees.

Regards,
Sansum
sansum05@gmail.com