Understanding Provident Fund Contributions with New Minimum Wages: What Should We Do?

Dear Sir,

Currently, 18 employees are working in our firm. As per the Karnataka Government Minimum Wages Act, we are required to pay Rs. 6751.20 starting from April 2015. Could you please advise on the amount of Provident Fund (P.F.) payable per employee by our firm? Additionally, should we include 1.10% + insurance charges in addition to the standard 12% contribution? It is important to note that we have not yet enrolled in the Provident Fund scheme.

Your guidance on this matter would be greatly appreciated. Thank you.

Dear Harsa,

As per the PF Act, you should deduct based on the current minimum wage. Additionally, administrative charges have been reduced from 1.10% to 0.85% effective January 15th.

If you have only 18 employees, why do you worry about EPF? It is not applicable. If you have 20 or more persons, it will be applicable. Admin charges are 0.85%, not 1.10%.

Dear Mr. Matthew,

It is employer discrimination regarding PF deductions, and it doesn't matter how many employees or workmen are working there. You can deduct PF if 10 persons are working there. Otherwise, below 10, you can obtain a code only for future planning.

Dear Harsha,

Under the EPF Act, your firm is not subject to the regulations as the total number of employees is less than 20. Therefore, it is not mandatory for you to register. However, if you wish, you may apply for registration voluntarily under the Act. Please proceed according to the decision/policy of the company.

Thank you.

Dear Sibabrat Majumdar,

We have been informed that the minimum number of employees required for PF liability is now 10. Could you please provide clarification on this matter?

Thank you.

The EPF Act has not yet been amended. Still, for the purpose of obtaining registration under the EPF Act, it is required to have 20 or more employees. The proposal does not indicate a law has been enacted. When the law is amended, we can discuss the matter at length.

Dear Sir,

In Karnataka State, the minimum wage under the Shops and Establishments Act is Rs. 6751. If a deduction of 12% of employees' contribution, i.e., Rs. 810, is made, the net payment of Rs. 5,941 is payable as the net salary. Is this stance correct? Please clarify.