Can We Adjust PF Contributions to Boost Take-Home Pay While Meeting Employee Preferences?

In our company, we want to apply the following things. Can it be possible? If not, then why?

PF Contribution Rollback

1) Can PF Contribution be rolled back as per PF rules? For example, suppose an employee's basic salary is ₹10,000 per month, and his PF contribution is ₹1,200. Now, management wants the PF contribution up to the ceiling limit of ₹6,500 per month. So, the PF Contribution would be ₹780. The basic idea of the management is to increase the take-home salary.

Employee Preference for PF Contribution

2) Some of the employees do not want the above structure; they want PF contribution on an actual basis. Can we follow both methods in our organization?

Thanks & Regards,
Narendra Prasad

It is based on the decision of the management whether to contribute the actual Basic (Basic+DA) salary or restrict it to Rs. 780 if the employee's Basic (Basic+DA) salary is more than Rs. 6,500. The employee can also make voluntary contributions of up to 100%, but the employer has the option to pay Rs. 780/- or, if they agree, they can pay 12%.

Recommendation for Consistency

As an organization, go with only one option because it will create human errors while processing salaries in Excel or spreadsheets for calculations.

Regards

Is there any legal restriction that prevents some individuals from contributing while allowing others not to contribute?

Regards

I want to know from Shri. Shenbagarajan if there is any provision or circular regarding PF Contribution rollback from the employer. Please substantiate your argument. Thanks.

In a company where the PF contribution of both the employee and the employer is part of the CTC, the employer's contribution can be on the whole ₹10,000 as the company does not bear the cost. However, in an organization where the employer's PF contribution is not part of the CTC, the company may contribute only up to ₹6,500, even if the employee is contributing ₹10,000. This depends on the organization you are working with and the CTC breakup you have opted for.

Regarding PF Rollback

There is no such provision under the PF Act. Once an employee/employer has contributed a certain amount, they cannot decrease it. Only additions are possible.

Regards, Gurpreet Aidhen