Navigating PF Contributions: Can We Adjust Deductions for Employees Earning Above Rs. 6500?

We are an SSI unit with about 37 employees and are covered under both PF & ESIC. This query is regarding PF contribution at 12%. Four of our employees have crossed the limit of Rs. 6500 some time back, and due to ignorance, we have been deducting PF at 12% on the higher pay during this period. Some of our other employees who have been earning below Rs. 6500 are also likely to cross the limit of Rs. 6500 shortly.

Now, we have been advised to e-file our PF from April 2012 and have an option to deduct PF at the pay of Rs. 6500. Please advise:

1. Can we now take the option for reduced deduction of PF for the four employees and deduct PF on Rs. 6500, while their actual salary may be more than Rs. 6500?

2. For the other employees, can we deduct PF on Rs. 6500 even if their salary might have crossed Rs. 6500?

Please advise.

Regards,
Ponnappan PJ
Managing Director
Southern Union Pharmaceuticals (Kerala) Pvt. Ltd.
T.R. Nair Road, XI/778

If the employee's Basic+DA exceeds ₹6,500, then the employee shall either contribute ₹780 (12% of Basic+DA) or they can contribute 12% on the full Basic+DA. However, employees can choose to restrict their contribution to 12% on ₹6,500. This decision is subject to management approval.

If Basic+DA is less than ₹6,500, then both the employee (EE) and employer (ER) shall contribute 12% of the same.

Thank you.

Thanks for the clarification. The query below is still unanswered.

PF Contribution Adjustment Query

An employee has been receiving Rs. 7,293 for more than 5 months, and due to ignorance, we have been paying PF of Rs. 875, i.e., on the higher pay, instead of Rs. 6,500 (@12%, Rs. 780). Altogether, 4 employees are being paid based on the higher pay, as mentioned above.

Now, in the e-filing options, we can limit the maximum to Rs. 6,500 for the above-mentioned employees. Can we do this and pay PF of Rs. 780 for this employee and the other 3 employees, even though their earlier contribution was Rs. 875?

The PF local office states that once we opt to pay on the higher pay, it cannot be reverted to the lower pay of Rs. 6,500. They also mention that all employees now exceeding the Rs. 6,500 limit will have to be deducted based on the higher pay by our company, or we need permission from the Regional PF office for deduction at Rs. 6,500.

As the employer, we would prefer to limit the PF contribution for all employees to Rs. 6,500 salary. Is this possible?

Please advise.

Regards,
PONNAPPAN PJ