Confused About PF Rules After Inspection: How to Handle Basic Pay Concerns?

Dear All, Our company is in Chennai, and we have 130 employees. We had a PF inspection in our office, and I had provided all the required files and documents that he required. Now the problem is, after seeing our salary papers, he says every employee should pay PF for ₹6,500. Around 36 employees are getting a basic salary below ₹6,500. The PF officer says that other than HRA, we need to consider all the other breakup and pay the PF. He also said that in the salary breakup, around 70% of the amount should be the basic pay. Now, I really don't understand what I have to do. Is there any revised basic pay rule? Please help me in this regard.

Dear Prema,

Are you paying all the employees according to the Minimum Wage Act? If yes, there is no need to worry, as there is no clause for such claims in the P.F. Act. If the employee is earning a basic salary of more than 6500, then it is restricted up to 6500 rupees.

I believe he is trying to extract money from you by twisting the situation. Ensure that you are paying the minimum wage to all employees and contributing to the P.F. as per the regulations.

If you need further clarification, send me an email at [Email Removed For Privacy Reasons] with your contact number, and I will explain it to you.

Regards,
SIDMAN

Guidance for Resolving PF Inspection Issues

Take guidance from a legal consultant. Sometimes, if they want special attention from you, try presenting a new issue for them to address – either to resolve it or to satisfy them. Aim to resolve the matter through mutual understanding. Consider inviting them to dinner at a good restaurant and discussing the problem with them, while also seeking advice from a legal consultant.

Thank you very much for your advice. The PF inspector seems to be quite strict; he is not expecting anything, that's for sure. Now, I have to check whether we are paying minimum wages. I will look into it.

Actually, the minimum salary paid is $7,000 and not below that. It is actually paid as a stipend, and we also deduct 12% from $7,000, which means we pay $840 from both sides. I hope this should not be a problem. Kindly advise.

Prema, these people act too strict in front of us. Even I have gone through the same situation—came across a stiff inspector behaving very dedicated and tough. But I was surprised to hear his price of Rs. 30,000 cash through our legal consultant.

Dear all, we also faced the same problem two years ago. Following the advice of the Vigilance officer, we needed to pay the balance amount. The basic amount is below ₹6500/-. You can then add other allowances as well. Please liaise with the PF office commissioner to address this issue.

Regards,
KVR