Employee Wants PF Deduction, But Management Disagrees – How Should I Handle This?

Dear seniors, I have questions about PF. One of my employees wants PF benefits, but his basic salary is more than ₹6,550. He is not eligible for PF deduction as per law. Now, my question is that he is ready to have his PF amount (12%) deducted, but management doesn't want to pay their PF contribution (13.61%). What can I do in this situation? Kindly give your suggestion ASAP.

PF contribution is necessary from both ends. If his basic salary is more than 6,500 Rs, the employer can limit the contribution to PF (3.67%) to 239 Rs (6,500 * 3.67%). Pension (8.33%) is, however, limited to 541 Rs (6,500 * 8.33%).

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

Regards,

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.

Regards,
Krishnakali

It is rightly said by Krishna that the employee has to contribute 12% on ₹6,500 - This is a must. An employee can contribute more than this, i.e., 12% on their full basic (greater than ₹6,500) - 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 ₹6,500 or the full basic) - This is VPF. The employer also has to facilitate this contribution.

Thank you.

Management's Obligation to Pay PF Contribution

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 ₹6,500, which is legal. The employer is not bound to pay above ₹6,500.

Regards,
Arun J.

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.