Understanding PF Contribution: Employee Deductions and Employer Obligations

Dear Friends,

Please give me clarification regarding PF contribution by employees. One of my clients' companies is deducting only Rs.780 from the employee and also contributing Rs.780 from the company's side. Is there any rule stating that the employer can only deduct Rs.780 from the employee? Or should 12% be deducted? Normally, the employee will contribute 12% of the basic salary, and the employer has the option to contribute Rs.780 if the employee's basic salary is Rs.6500 or above, or 12%.

Please clarify.

Regards,
Krishna T B R

Hi,

It depends on company to company. Many companies fix their PF amount at 780/-, and many companies make the contribution based on the actual basic amount. Both options are optional.

Dear Krishna TBR,

The statutory obligation is 12% on salary up to the ceiling limit, which is currently Rs. 6500 per month. Beyond the ceiling limit, it is optional but subject to the will and wish of the employee and employer.

Abbas.P.S

If PF contribution of Rs. 780/- is deducted from the employee by the employer, then it means the company is meeting a statutory obligation according to the Employees Provident Fund & Miscellaneous Provisions Act, 1952. However, employees can opt for a higher rate than 12% as their contribution, and such additional contribution goes to VPF. Companies can choose to make a contribution of a higher amount than the ceiling amount of Rs. 6500/-, but this is purely optional, not compulsory.

Thanks

R K Nair