Can Employees Adjust Their EPF Contributions to the Legal Minimum? Seeking Advice

Dear Seniors, We have a standard practice of deducting 12% of the entire basic salary as EPF from all our employees, with the same amount being matched by the company as Employer PF.

Employee's Request for EPF Contribution Adjustment

One of our employees, who is receiving a basic salary of INR 100,000 per month and contributing INR 12,000 per month as EPF, now wishes to contribute PF on the maximum basic salary of INR 6,500 (i.e., INR 780) as defined under the Act.

Advice Sought

I would like to seek your advice on the following:
1) Is it possible to limit his contribution to 6,500 now, even though the person has been contributing based on a higher basic salary previously?
2) If yes, can we follow this practice for some selected employees if they desire to do so?

Thank you,
Santosh Mishra

There is a limit of ₹6,500 because it's certainly helpful to management; otherwise, the cash outflow will increase. It's management's decision if they want to pay more than that; they can, but you have to consider the employer's perspective as well. You can practice and deduct ₹780 from those who are getting more than that also.

Understanding PF Contribution Limits

The law requires you to pay 12% of the salary to PF, subject to a maximum salary of $6,500. If you are deducting the full amount, it is voluntary (both for the employer and the employee). Therefore, there should be no problem if some employees want you to deduct and deposit only the statutory maximum.

Regards

Once a company has contributed 12% of the basic salary, i.e., 100,000/-, such employee benefits cannot be withdrawn. For more clarification, the contributions will be reflected in the accounts as given below:

A/c No.01: 12,000.00 + 11,486.00 = 23,220.00
A/c No.10: 541.00
A/c No.02: 1,100.00
A/c No.21: 500.00
A/c No.22: 10.00

Regards,
Shivnendra K

Once the company has contributed 12% of the basic salary, i.e., 100,000/-, such benefits for employees cannot be withdrawn. For more clarification, the contributions will be in the account as given below:

A/c No.01: 12,000.00 + 11,486.00 = 23,486.00
A/c No.10: 541.00
A/c No.02: 1,100.00
A/c No.21: 500.00
A/c No.22: 10.00

Regards,
Shivnendra K

Note: Earlier sums may please be ignored.