Understanding PF Contribution and VPF: Employee-Employer Contributions Explained

Dear seniors,
I have questions about PF
One of my employee wants PF benefits but his basic salary more than 6550/-Rs. He is not eligible for PF deduction as per low.
Now My question is that he is ready for deduct his pf amount (12%) but management don't want to pay their pf contribution (13.61%) what can I do on this situation.
Kindly give the suggestion ASAP.

Dear Indravadan,

PF contribution is necessary from both ends. If his basic is more than 6500 Rs, the employer can limit the contribution to PF (3.67%) to 239 Rs (6500*3.67%). Pension (8.33%) is, however, limited to 541 Rs (6500*8.33%).

Now, if the employee wants to contribute the full 12% of his basic, he can do so if agreed upon by the employer. I hope your doubt is clarified.

Hi Indravadan,

There is an option of VPF (Voluntary PF contribution) under the PF Act. A member can opt for a higher PF deduction, which may be more than the PF contribution made by the employer. So, even if the management contributes 12%, a member can choose a higher contribution.

Krishnakali

Dear Indravadan,

It is rightly said by Krishna that the employee has to contribute 12% on 6500 - This is a must. An employee can contribute more than this, i.e., 12% on their full basic (>6500) - This is subject to the consent of the employer.

When it comes to Voluntary Provident Fund (VPF), an employee can contribute more than 12% of their basic salary (whether it is 6500 or the full basic) - This is VPF. The employer also has to facilitate this contribution.

Thank you.

Tell your management to pay their contribution. It is compulsory.

If management refuses to pay in the future, it will lead to filing a case against the employer by EPFO authorities. Not paying the contribution is an offense that leads to several punishments under the PF Act.

Management has no right to refuse to pay the contribution. As stated by all members, management can put a limit up to 6500, which is legal. The employer is not bound to pay above 6500.

Arun J.

What formalities to complete if I want to opt for VPF scheme? Who will take the lead, the employee themselves or the organization? Who will deduct and deposit the VPF if I give my consent? Is there any monthly/yearly limit on VPF contributions? Will PF authorities provide interest on the VPF deposit, and what is the current rate of interest? How is VPF different from PPF?

Ensure there is a single line break between paragraphs.

Hi,

It is a wish from the employee's end that he/she wants to contribute more to their PF. So, a written consent has to be taken from the employee stating since when and how much he wants to contribute to PF as VPF. VPF is taken care of simultaneously with PF. When you deduct PF in the payroll, VPF is also calculated and deducted, and while accounting, it goes into the employee's share of contribution.

There is no limit to VPF, but it can be changed (increased/decreased) only once in a year. At the beginning of the year, the employee has to declare how much percentage of VPF has to be considered. This cannot be changed or stopped in the middle of the year. Yes, VPF also gains the same interest as PF.

To understand PPF, you have various blogs and sites available. Please take a study.