Navigating PF Deductions: How Can We Maximize Employee Take-Home Pay and Minimize Employer Liability?

Dear Experts, I would like to have your guidance on PF deductions. We are covered under the EPF Act (Media Co). We wish to deduct the minimum PF contributions so that employees receive the maximum in hand, and there would also be less employer liability. Hence, the following are my queries:

1. PF deductions for employees drawing basic + special allowance more than 15K and employees drawing basic + special allowance below 15K.

2. If all salary heads (monthly) are covered for PF deductions nowadays (effective January 2020).

3. Salary structure for both cases considering Minimum Wages - Maharashtra.

Dear Vedant, please find answers to your queries below:

PF deductions for employees drawing basic + special allowance more than 15K

You can restrict deductions to a maximum of 1800 for both sides if no previous higher deduction was in place. If there was a practice of deducting at higher rates in your organization and you want to restrict it to 1800, then you need to take written consent from the employees and submit it to PF authorities.

PF deductions for employees drawing basic + special allowance below 15K

If basic + special allowance is less than 15,000, then you need to deduct on the total gross amount excluding HRA. If the amount goes above 15,000, then you may restrict the deduction to Rs. 1800.

Coverage of all salary heads for PF deductions (effective January 2020)

Yes, since the Supreme Court's last judgment, it has been instructed to consider the complete salary structure for PF calculation except HRA/Bonus.

I hope this clarifies your doubts. Let me know if you need any further assistance.

Thank you.