In the context of the new Provident Fund (PF) guidelines in India, where an organization chooses to maintain a 10% PF contribution rate, the 2% of the employer's share that is considered as an employer saving does not need to be directly paid to the employee. Instead, this portion is retained by the employer as part of their contribution towards the PF scheme. Here's a breakdown of the situation:
- The employer's contribution to PF consists of both the employer's share and the employee's share. In this scenario, the employer is contributing 10% of the employee's basic salary towards PF.
- Out of this 10% contribution, 8.33% goes towards the Employee Pension Scheme (EPS) and the remaining 1.67% goes towards the PF account.
- When the employer opts to treat 2% of their share as an employer saving, it means that this portion is not directly deposited into the employee's PF account but is retained by the employer.
- The employer is not required to pay this 2% share to the employee separately. It is considered as part of the overall employer contribution towards the PF scheme.
It's important for organizations to ensure compliance with the specific guidelines outlined by the Employees' Provident Fund Organization (EPFO) to avoid any discrepancies or penalties related to PF contributions. If there are any further updates or specific regulations regarding this matter, it is advisable to refer to the official EPFO guidelines or consult with a legal expert to ensure accurate adherence to the PF rules and regulations.