Provident Fund Capping

cool_shish
Hi All,
I have recently joined a new company. In my previous organization, the PF contribution was Rs.780 (12% of Rs. 6500) from both employer and employee. However, the "Basic" component was much more than Rs. 6500.
What I want to know is, can I have this same structure with my new company? Will there be any legal obligations for my company or me if we do this?
Also, can I have different "Basic" for PF and Income tax calculation like I had in my previous company?
If possible, I would like to back this up with documentation so that my new company can implement this.
Thanks ...
Saad_Masood
The PF contribution is 12% of Basic salary from both employee and employer. For the calculation the maximum limit of Basic is Rs 6500/-. It means even if the employee's basic salary is above Rs 6500/- the employer is liable to contribute only on Rs 6500/-, that is Rs 780.
However if an employee so desires he may voluntarily contribute more than 12%. Apart from it an employer also has to pay some administration charges.
cool_shish
Thanks for the reply Saad, however what I want to know is that if I have capping of Rs.780 as contribution, will I also have to keep my "basic" as Rs.6500 for taxation or it can exceed that and the PF still would be Rs.780.
abbasiti
The ceiling salary fpr PF contribution is Rs. 6500. But for Income Tax purpose the actual salary has to be taken into account.
Abbas.P.S
cool_shish
Does that mean I can have Rs.25000 as Basic and still have Rs.780 as PF? Is there any document to support the same? My company is asking for some documentation on the same ....
Saad_Masood
if the employee's basic salary is above Rs 6500/- the employer is liable to contribute only on Rs 6500/-, that is Rs 780.
However if an employee so desires he may voluntarily contribute more than 12%. Apart from it an employer also has to pay some administration charges.
cool_shish
I understand that part, however the confusion is that can my basic be rs.25000 and still I am giving PF of Rs.780? During tax calculation, can I have my basic as rs.25000? and is there any document to support this?
If you are knowledgeable about any fact, resource or experience related to this topic - please add your views. For articles and copyrighted material please only cite the original source link. Each contribution will make this page a resource useful for everyone. Join To Contribute