Understanding 10% Provident Fund Contributions: Criteria and Potential Drawbacks?

What are the criteria to contribute 10% to the Provident Fund (PF), and what are the disadvantages (if any)? Kindly discuss.

Please see the attached government-circulated Contribution PF Rate of 10% & 12%.

Hi, if your organization employs fewer than 20 employees (along with certain other prerequisites as per the EPFO rules), the contribution rate from both the employee and the employer is limited to 10%. Out of the employer's contribution of 12% or 10% (as the situation stands), 8.33% is directed to the Employees' Pension Scheme.

Thanks, Lakshminarayanan Ji. If a very old establishment had 20 or more employees in 1980, but later the scale of operations was reduced, and from 1990 onwards, it had 15-16 employees (always less than 20), and then further reduced to less than 10 employees, what contribution rate would apply - 10% or 12%? Besides, if the employee strength is less than 20, what are the other prerequisites as per EPFO rules? Kindly elaborate.

Regards.

Thanks, Mr. S K Bandyopadhyay Ji, for the reply. Sir, there was a cut-off date notified in 1996 or 1997 (I think most probably it was 22/9/1997), and then, the rate of 10% was applicable to those employing fewer than 20 persons as of that date. As such, it applied to those who earlier were paying at 8.33%. (The rate of 12% was applied to those who earlier were paying 10% instead of 8.33%).

Could you please check and interpret that notification to confirm or disapprove this observation, Sir? If the strength, notwithstanding the number of employees at the time of coverage in 1996, was less than 20, then would 10% apply or not?

Regards.