Hello Sanjay,
Under the PF Act, an organization is applicable when it has 20 or more employees. Once the company is covered under the PF Act (whenever it employs 20+ employees), the company continues to be covered under the PF Act even if the employment drops below 20 at any given time.
Similarly, an employee is eligible for PF contribution if at the time of joining (or introduction of such policy) the basic + DA of that employee is less than or equal to 6500.
This means that all employees whose basic is less than 6500 (irrespective of gross/CTC) are covered under the PF Act and the contributions would be:
- 12% of basic by the employee
- 12% + 1.61% of basic by the employer, which is distributed as:
a) 8.33% to the pension scheme
b) 3.67% to the PF fund
c) 1.1% PF and pension account handling charges
d) 0.5% EDIL plan
e) 0.01% EDIL account handling charges
So if the person's basic is 3000, PF contributions would be:
Employee - 12% of 3000 = 360
Employer:
- Pension: 250
- PF: 191
- PF and Pension a/c handling: 33
- EDIL: 15
- EDIL a/c handling: 0.30 (rounded off to the nearest currency possible)
Hope this clears your doubt.
Now, if at any point the employee's salary is revised upward, then the employee continues to remain covered under the PF Act and a bare minimum of 12% of 6500 ought to be contributed by both parties. In such cases, a bare minimum of 780 Rs is to be contributed by each party.
Secondly, ideally, a person who is getting 20,000 as monthly gross and getting just 3000 as Basic raises some concerns. Obviously, the basic amount will depend on the components to be given and other factors, yet it will raise concern as, according to normal practice, we find the basic close to 40% of gross.
Hope this was able to clear your doubts.
Regards