Can We Limit EPF Contributions to Rs 6,500 for Contractor-Supplied Workers?

We are having an EPF code. We have 60 regular employees. Apart from these 60 employees, we have 300 workers supplied by a labor contractor. The labor contractor also has an EPF code. For our regular employees, we contribute 12% of full wages (i.e., if the salary is Rs 30,000, we contribute Rs 3,600). There is a provision that we have to contribute 12% up to the ceiling of Rs 6,500. Now we want to contribute up to Rs 6,500 for the workers supplied/employed through the contractor. Can we do this?

Hi Sitram,

You can deduct EPF on the ceiling limit of Rs. 6,500.00 by showing the employee's basic salary as Rs. 6,500. Firstly, as you have already deducted Rs. 30,000/- and deposited it, you need to write a letter to the Commissioner of PF stating that you wrongly deducted from the whole salary paid. Now, you want to deduct based on the basic salary or on the ceiling limit only. You must obtain prior permission from the Commissioner of PF.

You should show the other part of the salary, i.e., Rs. 23,500.00, towards allowances of any nature.

Mohan Rao Manager HR

PF Details and Knowledge

THE EMPLOYEES' PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT, 1952:

THE ACT PROVIDES FOR THE INSTITUTION OF PROVIDENT FUNDS
(1) EMPLOYEES' PROVIDENT FUND SCHEME 1952
(2) THE EMPLOYEES PENSION SCHEME, 1995
(3) THE EMPLOYEES DEPOSIT LINKED INSURANCE SCHEME, 1976

ESTABLISHMENTS WHICH ARE UNEXEMPTED/EXEMPTED HAVE TO COMPLY WITH THE REGIONAL PROVIDENT FUND COMMISSIONER. THE PRIMARY FORM ALL HAVE TO ENSURE IS FORM 2: NOMINATION AND DECLARATION FORM (SUBSCRIBER AND EMPLOYER HAVE TO ENSURE). FORM 3: CONTRIBUTION CARD FOR THE CURRENCY PERIOD FROM... TO... (FOR UNEXEMPTED ESTABLISHMENTS). FORM 3A: CONTRIBUTION CARD FOR THE CURRENCY PERIOD FROM 1ST... TO 30/31ST... (FOR UNEXEMPTED ESTABLISHMENTS). FORM 5: RETURN OF EMPLOYEES QUALIFYING MEMBERSHIP. FORM 5A: RETURN OF OWNERSHIP. FORM 6: RETURN OF CONTRIBUTION CARDS. FORM 9: RETURN OF EMPLOYEES. FORM 10: RETURN OF MEMBERS LEAVING SERVICES. FORM 12: STATEMENT OF CONTRIBUTION FOR THE MONTH... FORM 13: APPLICATION FOR TRANSFER OF EPF ACCOUNT. FORM 13A: APPLICATION FOR INTER-REGIONAL TRANSFER OF ACCOUNTS. FORM 19: SETTLEMENT. FORM 20: WITHDRAWAL BY MINOR/DECEASED MEMBER. FORM 31: APPLICATION FOR ADVANCE. FORM 1(IF): RETURN OF EMPLOYEES ENTITLED AND REQUIRED TO BECOME MEMBERS OF THE INSURANCE FUND. FORM 2(IF): EMPLOYEES ENTITLED FOR MEMBERSHIP. FORM 3(IF): RETURN OF MEMBERS OF INSURANCE FUND LEAVING SERVICES. FORM 5(IF): TO BE USED BY NOMINEE/LEGAL HEIR. FORM 12A: RETURN. FORM I: RETURN BY EXEMPTED ESTABLISHMENTS.

Thanks & Regards,
Sudhir Singh Rawat
9821443636.
Mumbai

Hi,

Please go through this attachment.

Thanks & Regards,
Sudhir Singh Rawat
9821443636
Mumbai

Dear Sitram,

As per my knowledge, PF benefits cannot be reduced, so you cannot reduce PF salary. In new joining, you can deduct PF on a maximum of 6500/- Basic.

Regards,
Jony_M

As my maximum contribution can be up to Rs 6500/-, it is essential to inform the PF office.

Abhijeet

As I understand from your query, you are allowing PF contributions on actual salary for the 60 odd employees. Let this practice continue.

You have a large workforce employed through an independent contractor who has a separate PF Code No. He can deduct PF from the salary of his employees, restricting it to the limit of Rs. 6,500/- provided under the Act, for his employees under his Code No. You only need to ensure that the contractor is complying with PF and provisions of other labor laws.

Vasant Nair

Dear Sitram,

About the contractor's people, you need not worry as the contractor is capable of handling the same when he withdraws the PF number. You can keep an eye on the contribution deposit.

For your people (60), you can have your own structure, but always keep in mind that the CTC sheet will have no impact on your basic salary as the cost will remain the same whether you put 6500 or 30k, as the increased cost will reflect on the cost sheet.

Dear All,

I am working in the Construction Industry. We engaged a labor contractor who does not have a PF code and has a labor force of 60 employees. He pays a daily wage of Rs. 300, resulting in a monthly salary of Rs. 7800, of which he takes a basic salary of Rs. 6700. My doubt is:

1. Does he have to comply with PF statutory requirements, considering the PF ceiling is Rs. 6500?

2. If he hires 3 more laborers in the future at a basic salary of Rs. 6000, can he obtain a PF code only for these three laborers, or does he need to include all 63 laborers?

Regards,
SAI
9789004466

Hello Sitaram,

From the text of your message, it appears that you have a separate code for your own employees, and the contractor has a separate code in which they are handling the PF matters of their labor force. As you are the principal employer, the responsibility lies with you to ensure that the contractor is regularly remitting the PF amount. You should ask the contractor to submit a xerox copy of the challan and a copy of the monthly return 12A to you regularly every month. Your responsibility extends up to this point. It's important to note that the contractor is a different company with its own payment structure for which you have no responsibility.