Can EPF Contributions Be Adjusted After a Temporary Salary Increase? Seeking Advice

EPF Contribution Query

Please solicit the EPF contribution for the following case:

Suppose an employee's basic salary is Rs. 6500 for the month of May 2012, and his basic salary has been increased to Rs. 7500 by June 2012. If the basic salary for the same employee is revised back to Rs. 6500 for the very next month after having contributed to EPF for Rs. 7500 in June 2012, can the contributions be changed back to Rs. 6500 from July 2012?

Kindly advise on the EPF contributions for the upcoming months and guide in this case.

Regards,
Vijay

The contribution will definitely change because it depends on your basic salary. The 6500 criteria are for the pension calculation that is set. Otherwise, your PF will be deducted based on your actual basic salary.

Regards,
Ashwin.

EPF Contribution and Wage Reduction

Although Section 12 of the EPF & MP Act prohibits employers from reducing wages solely for the purpose of paying contributions, Rs 6500/- serves as a threshold limit. Employers can limit contributions to Rs 6500. Contributions exceeding Rs 6500/- require the joint consent of the employee and employer.

In this case, you can reduce basic wages to 6500/- because you are complying with the Act's requirements each month, even without obtaining the employee's consent for this purpose.

Regards,
Sanjay Malik
Legal & Compliance Consultant
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