Can Employers Limit PF Contributions to Rs. 6,500? Seeking Clarity on Possible Issues

Dear Members,

Here, I have a doubt. Suppose an employee coming under the PF scheme is drawing a salary (Basic Pay + DA) of more than Rs. 12,000, and the employer is deducting PF contributions at 12% of Rs. 12,000. The employer is also contributing an equal amount to the employee's PF account. However, now the employer wishes to restrict the contributions only to the statutory limit of Rs. 6,500. Is this possible? Are there any issues with this change? Kindly clarify.

Statutory limit is revised to 15,000 w.e.f. 01.09.2014, prior to this the limit was 6,500.

Please let me know if you need any further assistance.

Thank you for your response. Can you please provide me with information regarding the new limit?

Yes, the company can restrict its contribution to a maximum limit of 15,000*12%. In this case, employee contribution should also be the same as the employee's; it cannot be more.

Hi,

The PF contribution ceiling limit is Rs. 15,000. Therefore, the employer can contribute up to the ceiling amount. However, the employee has the choice of whether to deduct PF as per the ceiling amount or more than that.

Manoj Kamble,

This kind of contribution is termed as voluntary contributions, and the employer should be willing to pay higher admin charges. Both have to sign a joint declaration in such a case. The employee signs it as he allows the employer to deduct more contribution from his salary, and the employer signs it to indicate that he is willing to pay additional admin charges due to these non-statutory contributions. Please know the full requirements and then comment.